Risk Management Service (RMS) reports that insurers have experienced significant losses from natural, catastrophic perils in the territory of the South Pacific Division (SPD) of the Seventh-day Adventist Church over the past few years. Additionally, they have faced poor investment returns, increased costs of reinsurance, and claims inflation.
As a result, the RMS property cover placement team experienced their most challenging Australian property renewal negotiations to date. It has brought significantly higher premium prices, with insurers hardening terms and conditions, changing natural peril sub-limits, and declining the option of premium relief for higher deductibles or excesses.
In view of the sharp rise in costs and reduced coverage for Australian entities, RMS, in consultation with the Division Services Ltd. Board, has chosen to subsidize this year’s rate increase to Adventist entities in Australia.
Unfortunately, the rate rise will still impact local churches. However, this significant subsidy from RMS for the July 1, 2021, to June 30, 2022, property insurance renewal will offset a large portion of the cost increase Adventist sites would have otherwise experienced.
RMS manager Jonathan Hale said that the decision to subsidize the rate increase was needed to lessen the financial impact to Adventist sites already struggling with the challenges of the past few years.
“Our concern was that mission and ministry could potentially be hampered by this unprecedented rate increase,” Hale explained. “The RMS team and the board felt strongly that sharing this cost increase would ensure the church could continue the good work it does throughout the region.”
RMS hopes that rates will return to more tolerable levels over the next 12 months. However, it is recommended that leaders, treasurers, and CFOs set their budgets for a potential increase for the 2022/2023 property insurance renewal.
RMS is a service department of the SPD. It provides resources and advice to Adventist churches and other entities across the region. Recently, the department announced that it will undertake a five-year valuation program with the assistance and expertise of a professional valuation service company. Its goal, the department announced, is to obtain a complete picture of all Adventist-owned property for insurance purposes.
Hale explained that property valuations are necessary to confirm that covered values are correct and to provide protection for the church (and their officers) from financial risk. Valuations allow sites to reduce the risk of underinsurance and, conversely, provide savings if the site is identified as being overinsured.
Following a tender process, RMS selected a provider “with extensive experience working with faith-based organizations,” Hale said. “We’re looking forward to working with Adventist sites to ensure they have access to this opportunity.”