2025 Underwriting Trends for Worship Facilities

As insurers look to 2025, several trends are emerging that affect premium and deductible costs — leading to lengthy conversations between insurance agents and brokers and their customers.

For worship facilities, some of the most prevalent trends include:

• Weather-related disasters factoring into probability modeling.
• Social inflation and nuclear verdicts are forcing insurance companies to shift the burden of a rising number of claims to all their customers.
• The increased cost of building supplies means organizations should budget more for premiums.
• Aging infrastructure may lead to insurability problems.
• Increased online offerings could cause risks to organizations’ cybersecurity.

The rising costs resulting from these trends are forcing insurance companies to rethink how they calculate risks. Here is a closer look:

Weather-related disasters. Insurance companies rely on models to determine how much they will charge for premiums. However, weather-related disasters across the U.S. — including hurricanes, wildfires, flooding and severe storms — have resulted in more claims than usual, which have thrown off the original models.

Underwriters must now take the “new normal” into consideration when determining premiums and deciding the geographic areas where they can afford to insure. That affects individual organizations when they see their premiums rise and wonder what caused the increase.

Social inflation. Social inflation contributes to an environment in which insurance companies’ claims are increasing at a rate greater than normal economic inflation. As plaintiffs seek larger amounts for their injuries, the resulting “nuclear verdicts” require insurers to pay out much more than they anticipated.

These large payouts increase carriers’ overall costs, often resulting in higher premiums for customers.

Building supplies. Inflation has led to a marked increase in the cost of building supplies; it’s more expensive to replace a building than it was 10 years ago. While that reasoning is logical to most who work in the insurance industry, it may not be intuitive for customers, who do not understand why their premiums are rising. It is important communicate with stakeholders about the situation to avoid consequences for under-insuring a property.

Aging infrastructure. In the case of houses of worship, aging buildings could have a major effect on premiums, deductibles and insurability. Time is not usually kind to buildings — especially when they weather years of high winds, hail, snow, ice, and normal wear and tear.

Even when a building is only a few decades old, it is likely to require repairs. Insureds must decide if those repairs are worth the cost. Some organizations may need to upgrade certain vital aspects of their facility to keep their insurance policy. Buildings must be prepared for severe weather that could cause devastating damage to their infrastructure.

In some cases, the congregation may need to consider starting over with a new, modern building. It is possible this could save them money in the long run, because a newer building would have the latest upgrades and may reduce premiums.

Cybersecurity risks. After the COVID-19 pandemic forced organizations to move their operations online, many have learned some people prefer to have only online interactions. So they have further enhanced their network capabilities to have more virtual offerings.This opens organizations up to a significant amount of risk associated with cybersecurity. Organizations should be emphasizing efforts to protect their network and stakeholders’ personal and financial data.

Important risk management steps organizations should consider include:

It is important for anyone who works in the insurance industry to be aware of the above trends, as they may significantly affect interactions with customers.