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Rising insurance rates hurt Jewish institutions

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Message: If you are having trouble reading this email, you may view this article online at: http://www.jweekly.com/18276/full/18276/rising-insurance-rates-hurt-jewish-institutions/ Rising insurance rates hurt Jewish institutions Friday, August 16, 2002 | by ALEZA GOLDSMITH Jewish institutions in the Bay Area and throughout the nation are struggling with rising insurance rates—in some cases more than 100 percent—that threaten to erode critical funds. Many point to the Sept. 11 terrorist attacks and the ongoing crisis in the Middle East for the dramatic hike in fees at synagogues, Jewish community centers, federations and other agencies. In addition, the costs are often exacerbated by the economic downturn. Locally, synagogues seem to be feeling the brunt of the increase. Congregation Emanu-El in San Francisco, for instance, not only saw its liability and building insurance climb a whopping 125 percent in June, "but our coverage isn't even as good as it used to be," said Gary Cohn, executive director. In one year, the Reform synagogue's rates went from $84,000 annually to $195,000. For many Jewish agencies housed in office buildings, such as the Jewish Community Federation of San Francisco and several of its subsidiaries, the increase was approximately 20 percent. The Jewish Community Center of San Francisco similarly saw its property and liability package jump in May from $100,000 to $120,000 a year. Bill Lambiase, vice president of Willis Insurance in San Francisco—the broker for several Bay Area Jewish institutions—said the significant rate increases are not confined to Jewish and other religious institutions. "They are pretty much in line with what industry is seeing across all classes of business, even before Sept. 11," he said. Rates are going up for everyone, agreed P.J. Crowley, vice president of the Insurance Information Institute, a nonprofit group sponsored by the insurance industry. "Are Jewish groups being singled out? No," he said. "But insurers are being selective in providing coverage." Abraham Foxman, national director of the Anti-Defamation League, sees things differently, however. He sent letters to the White House and congressional leaders Tuesday expressing concern that Jewish community institutions are being "unfairly singled out for increased risk of a terrorist attack." But Gary Karr, spokesman for the American Insurance Association, said "almost everything" is a potential risk as a terrorist target, including prominent Jewish buildings. He said insurers have little to go on to determine risk factor except for the examples of Sept. 11 and government warnings. The FBI issued widely publicized warnings to Jewish institutions earlier this year, alerting Jewish leaders in May that U.S. forces uncovered Al-Qaida documents listing 12 Jewish organizations as potential targets. Then it issued another warning in late June that Al-Qaida might attack Jewish institutions with gas trucks, a warning that followed an attack on a Tunisian synagogue that killed 16 and injured 20. Al-Qaida later claimed responsibility for the attack. For the most part, the insurance industry and a number of local Jewish community representatives dispute Foxman's theory. But Lambiase did point out that many insurance companies "who historically wrote policies for religious institutions have gotten out of that area all together." With fewer carriers willing to insure religious organizations, Jewish institutions have had to scramble to put coverage in place, and it's a seller's market. "Obviously, there are heightened concerns [on the part of the insurer] surrounding the security of religious organizations and places of worship," he explained. "There's also concern about the situation in the Middle East when it comes to the Jewish side." The insurance company that carried Emanu-El for the past three years, for instance, canceled the synagogue when the policy came up for renewal in June. "They decided to get out of the synagogue and church business," explained Cohn. "It had to do with a combination of Sept. 11, the continuing conflict in Israel and the sexual misconduct problems with the [Catholic] Church." The synagogue searched on the open market for a company that would provide insurance to houses of worship, including terrorism coverage—a task that has becoming increasingly difficult since Sept. 11. "While some insurance companies haven't excluded terrorism coverage, some provide it for an additional premium. But in many cases, the insurance provider will exclude it all together," explained Lambiase. The U.S. House of Representatives and Senate are currently negotiating a compromise bill that would ensure that groups could get affordable insurance to cover terror incidents. In the meantime, Emanu-El found a carrier that included coverage for terrorism—"but that's probably why it was so expensive," said Cohn. And because of the expense, "we've had to make some cuts in our operating budget. We've slashed our advertising budget in half for the year," among other cuts. Because Emanu-El has about 1,900 members, Cohn hopes the insurance hike will not have "a dramatic impact on what we do since we have such a large synagogue with so many activities—to the community it should pretty much go unnoticed." But he noted that the increase is much more difficult for small and medium-sized synagogues with smaller operating budgets, which are seeing their insurance premiums increase by 25 and 35 percent. Administrators at Temple Isaiah in Lafayette noted a similar trend when bidding on builder's risk insurance for a remodeling project on the sanctuary and social hall earlier this year. "We found with this current project it's almost tenfold what it was in 1997, when we remodeled our education building," said Gail Schwartz, executive director. As for its other insurance premiums, she said the temple has a three-year renewal cycle, therefore avoiding the increases this year. "They'll probably get us next time," she said. Like Emanu-El, the S.F.-based JCF and 22 other Jewish agencies also had to find a new carrier this year. As in most Jewish communities, the JCF joins with the other Jewish agencies (including the JCC of San Francisco) to buy the insurance at a cheaper group rate. Even so, they all faced at least a 20 percent increase. Andrea Dapper, the senior planning analyst at the JCF, said 20 percent was a significant increase for the federation, but called it "the cost of doing business." She declined to give dollar figures, but noted that it will have an impact on the federation. "That's true for all nonprofits," she said. "If part of your overhead goes up, you're going to have to look at the impact on programming. It has nothing to do with us being a Jewish agency. It is just part of the general economy right now." The Jewish Federation of the Greater East Bay, meanwhile, had been prepared for an increase, "as much as 100 percent," according to a spokesperson. "Luckily it wasn't that high. Nonetheless, it was significant for an organization of our size." In Danville, the Reutlinger Community for Jewish Living administrator Suzanne Sloane was stunned when she found a 105 percent increase in the institution's general and liability insurance. Other areas of insurance, including earthquake, property and workers' compensation, were up 25 and 35 percent. "The increases are absorbing funds that were meant to go to enhancements," said Sloane. "Not only had I planned to put on additional staff, but raises were affected by this. I mean, there's only so much money in the pot." For the Jewish Federation of Greater San Jose, the most dramatic increase was a 50 percent hike in workers' compensation insurance, according to Janet Berg, assistant executive director. "But anything is a significant increase for us right now," she said. "Even though our campaign did well, so many of our costs have gone up because of the economy." Anita Friedman, executive director of Jewish Family and Children's Services in San Francisco—which has seen a 25 percent increase in its workers' compensation, health care and property and liability insurance—agreed. "It makes it harder to use the dollar for direct service. That's a big challenge right now for the management of nonprofit institutions, not just Jewish institutions. And the end is not in sight." As a result, many nonprofits, like JFCS, which participates in the S.F.-based JCF group insurance plan, will have to step up their community fund-raising efforts. "Our highest priority is our service to our client," she explained. "We will have to turn to our community in order to meet additional administrative costs."

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