Of all the aspects of smart financial planning, buying insurance is one of the most integral. In life and in business, there’s no knowing when you’ll be hit by bad news that leaves you in turmoil emotionally, physically, and financially.

With insurance, however, you can live your days not having to worry about covering unmanageable costs that result from you getting woven into various harmful situations. Church insurance companies protect you from financial distress in the face of adversities like injury, car accidents, and even property damage.

When you buy insurance, you contribute a little money to a very large pool created when countless more people purchase the same insurance as you. And when the need arises, your church insurance agency will have placed your nonprofit organization with a church insurance provider that covers the costs for you using money from that pool.

Like all sectors of the economy, the insurance industry also undergoes ups and downs. Sometimes, there’s a lot of demand for insurance. Other times, the opposite is true. The underwriting, or the insurance cycle, refers to fluctuations in the insurance market that happen over a period of time.

What are Different Insurance Market Cycles?

The insurance industry’s life cycle involves oscillating between being a soft market and a hard market. In a hard market, the supply of insurance coverage is unable to catch up to its demand, and in a soft market, it’s vice versa. An underwriting cycle typically begins with a soft market that eventually converts into a hard one with increasing insurance claims over time.

Currently, we are in both a hard insurance market and a soft insurance market.  Workers’ compensation insurance is currently in a soft market for the past 10 or so years.  Workers’ compensation insurance rates continue to bottom out, to the point insurance companies are just now starting to evaluate if they will further drop their pricing or not offer a quote. This could be a sign a slight hardening may be right around the corner. While property insurance is in a hard market in specific targeted areas.

In fire prone areas such as California, it can be near impossible to obtain church property insurance.  The Texas coast has experienced large increases and limited insurance companies willing to consider offering church insurance coverage, due to flooding and high winds.  Large deductibles are starting to become the norm, related to church building insurance, ranging from $2,500 to 3 percent or even a 5 percent deductible.

Here are more key differences between the two insurance market cycles:

Insurance Cost

People are drawn to insurers who have lower costs for insurance and superior church insurance package policies in place. In a soft market, since there are many insurance companies competing during a time there is a low rate of customers, the insurance cost is usually kept at a low value to attract more customers.

In contrast, a hard insurance market will require people to pay a lot more for insurance. This usually occurs after a natural disaster or naturally over a period of time as damages that people suffer from pile up. When demand for insurance coverage is high, so are the insurance premiums that are needed to accommodate a lot of people.

The pandemic has, in fact, thrown all of the world’s insurance industries into a hard insurance cycle.  Insurance companies who did not already have a virus exclusion included within their coverage form, quickly moved to include such exclusion.  While other insurance companies, further strengthened the exclusion related to viruses.

Underwriting Rules

Underwriting guidelines help insurance companies decide whether you’re eligible for insurance or not, and how much they are willing to price out your church based on all underwriting factors made available to them. Some of these underwriting factors involves an evaluation of your specific risk factor, coverage limitations, assets, income, debt, distance to a local fire department, flood mapping, and more. Insurers will also use all this information to justify how they determined how much you are to pay for the insurance, when they get audited by their management team and the state department of insurance.

In a soft market, underwriting criteria are usually relaxed. In a hard market, they’re stricter, and it can be difficult to be approved for insurance. At Integrity Now Insurance, we offer your church protection by connecting you to easy-to-access insurance services at reasonable costs. All insurance companies we link you to not only possess financial strength, but also specialize in church insurance in particular because we understand your facility’s unique coverage needs.

Reach out to one of our church insurance specialist, and we will conduct a complete church insurance review of your current church liability insurance.  This way you will know how your current church insurance program works, verses what we will be offering to your congregation.

Contact us now for church insurance in California, Washington, Arizona, and more states.