Emerging Insurance Trends for Nonprofit Organizations: What You Need to Know

The risk landscape is always evolving. Just when you think you’ve got a handle on the latest liability for your nonprofit or human services organization, a new trend emerges. From artificial intelligence to a fluctuating economy, several factors will impact the more than 1.8 million nonprofit and human service organizations in the U.S. today. Navigating these changes and adapting with them will be critical to the success of your mission.

Let’s take a look at some of the top insurance-related risks and trends affecting organizations in 2024 and into 2025:

Technology

Technology can play a key role in the growth of your organization, from staffing efficiencies to fundraising outreach. These organizations have been the target of cybersecurity attacks for some time now, but that risk has significantly increased in recent years. As digitization across the sector continues to evolve, we can expect to see an increase in data breaches, organizational exposures and the use of artificial intelligence.

While the right liability coverage can help safeguard against these escalating risks, nonprofits and human service organizations should implement additional privacy measures to protect against any potential claims. Cyber security training, two-factor authentication, updated software, employee background checks, internal security audits and consistent communication can all help to decrease technology related risks and liabilities across the organization.

Inflation

Inflation has created a unique burden for nonprofits. From strained budgets to the increased price of goods and services to the decline in grant funding and government support, nonprofits are struggling. While the current economy has fueled the demand for more nonprofit services, the organization’s ability to meet this demand is uncertain due to labor shortages, increased costs and reduced funding.

With both premiums and deductibles on the rise, nonprofits need an experienced insurance broker to help them navigate these financial challenges and secure the coverage they need to protect their organization, while staying solvent. Simply reducing coverage, lowering limits, or increasing deductibles to reduce premiums can backfire and result in significant, long-term financial consequences for any nonprofit organization. In addition to securing the optimal insurance solution for your organization, consider these tips to control costs during a potential economic downturn:

• Scale back on special events or non-critical programs
• Review any insurance-impacting factors such as the age of an auto-fleet to ensure you’re only paying for vehicles in need, and in good working order
• Diversify funding sources, for example explore new fundraising channels or pursue previously untapped grants
• Partner with another organization for support

Staffing & Talent Retention

Attracting and retaining the right talent has been a challenge for many industries, particularly nonprofits. Employees, especially the younger generations, are demanding more from employers in terms of communication, compensation, and flexibility in the workplace. Further, the absence of properly trained staff could impact the delivery of services, while potentially increasing the risk of claims or negligence.

Without the proper number of staff and adequate level of resources, some nonprofit and human service organizations may struggle to fulfill their mission. Or worse, the lack of proper support could increase the risk of errors, accidents and neglect which could lead to a major liability and/or potential costly claims for the organization.

On the bright side, there are many ways to attract and retain the best talent, while ensuring your staff is adequately prepared to carry out your mission each day.

• Create Standard Operating Procedures (SOPs) for all critical processes
• Document those SOPs and make them an integral part of employee training
• Make certain your team has the support they need to both understand and meet all regulatory requirements and employment laws
• Increase staff and volunteer diversity
• Observe and improve work culture as appropriate
• Conduct a risk assessment of your employment practices
• Work with your broker to ensure you have the right coverage in place to protect your mission against these risks

Now is a good time to review and update your employer’s liability and workers’ compensation policies with a specialized nonprofit and human service insurance broker like Lamb Insurance Services. In addition to coverage for property damage and personal liabilities, be sure to discuss your need for directors’ and officers’ liability coverage along with a management liability policy to protect against potential fundraising issues, injury or negligence claims or harassment. Regardless of the risk, Lamb can work with you to secure any critical areas of vulnerability for your organization.

Getting the right insurance protection in place is a key part of your overall risk management plan. Contact Lamb Insurance Services (www.lambis.com) to discuss a risk assessment to ensure you have the coverage in place to protect your organization and its mission today and in the future.