Big changes put property insurance in spotlight
|Church premiums increase, Trustees choose new company
By Holly McCray
The Board of Trustees’ decision to sign with a new insurance carrier requires attention this month by each church in the Conference-sponsored property and liability insurance program.
That’s about 500 of 530 churches—almost all are impacted by this change, which was effective Oct. 1.
The new carrier is CFR Inc. (Client Focused Resources), in Tulsa, led by Trey Biggs. Contact the agency at 1-800-375-8631.
"If you have questions, if you have not yet been in communication with CFR, you really have got to get on the phone and talk to them" this month, insisted Conference Treasurer Brian Bakeman.
Propelling his advice is another change, also effective Oct. 1: Churches’ premium payments surged by an average of 51 percent.
Billing will be in quarterly installments, with the first payment due Nov. 1.
A perfect storm. Several financial leaders invoked that term when discussing this.
Since October 2010, the plan had been administered by Church Agency Insurance Corp. (CAIC), a national UM program with multiple carriers. Then clouds began forming.
Rev. Bakeman reported customer service concerns developed. On June 7, officers of the Trustees and the Ministry Protection Committee met with CAIC representatives.
In July, the Conference leaders were notified that property insurance premiums would double for the next plan year (October 2011-October 2012).
The news was unexpected.
"We felt that was not a tenable position," Bakeman said. "We spent a month and a half scurrying, contacting insurance companies. It’s hard to place insurance for 500-plus churches. This year the national insurance market is going through a tough time anyway because of hurricanes and tornadoes."
On Sept. 17, the Trustees reconvened to consider three options, and voted to move the plan to CFR Inc. With Oct. 1 merely weeks away, the switchover was announced at The Bishop’s Gathering; in Treasury Notes, a monthly newsletter from Bakeman’s office; and via email messages. Churches also began receiving communications from CFR.
On Sept. 27, Bakeman updated the Council on Finance & Administration (CF&A).
"The UM program was pulling us out of the standard market because of our loss ratio. We have had more than $20 million in property claims the last five years," he said.
Three claims exceeded $1 million. The "vast majority" were for less than $25,000.
CF&A members concurred when Bishop Robert Hayes Jr. remarked, "Oklahoma is a disaster-prone state." They also agreed the higher premiums will create anxiety.
The bishop said, "We are struggling with it. People deserve to know why we find ourselves in this situation. It’s like the perfect storm; all these things came together."
Smaller churches will benefit from a sliding scale of deductible rates that CFR Inc. offers, Bakeman said. The property-insurance deductible for all perils other than wind and hail will be based on the insurable value of a church. Thus a church with less property will have a lower deductible.
All churches will have the same wind/hail deductible: $25,000.
The 2010 Journal states each church in the Conference is required to have insurance.
CF&A member Tom Junk said, "We’re really trying to provide a product for churches that do not have the ability to go out on their own. On their own, (the cost) could be way worse, if they could get coverage at all."
"For me, the purpose of the Conference program is to make sure every church has access to insurance," Bakeman said. "You are not locked into this. Our goal is not to control all of the insurance. This is a service to the local church."
He affirmed the Trustees’ choice of CFR Inc. and said the carrier brings credibility for the Conference-sponsored plan. Trey Biggs chairs the Tulsa-Boston Avenue UMC Board of Trustees. "He was chair when Boston Avenue renegotiated its insurance coverages last year," Bakeman said.
Coverage has been renewed automatically for all churches participating prior to Oct. 1 in the Conference-sponsored plan, he said.
Churches will receive invoices in pink envelopes from CFR Inc.—not the Conference Treasurer’s Office. Premium payments will be mailed to the Treasurer’s Office for processing. Call the carrier about any claims.