According to our figures from MarketStance, there are 939,068 agencies. However, according to Mike Mullens, social service program manager of London American Risk Specialists, there are just over 250,000 agencies. Which number is right? Actually, both are, because the size of the market is based on which service providers are included. Day care represents a significant portion of the total but many social service specialists do not include them in their discipline. Sheila Shaw, vice president underwriting, Irwin Siegel Agency, Inc., says, “Social service is a very broad category that incorporates many different types of insured clients, from advocacy organizations that provide very little, if any, direct services all the way to large multifaceted organizations that provide residential services, including medical services, to their clients.”

Burns & Wilcox includes adoption agencies, alcohol and drug rehab centers, community action programs, sheltered workshops, meals on wheels, in-home assistance, humane societies, social clubs, art and cultural organizations, and youth recreation centers as just a few of the many health and human service nonprofit organizations it considers social service agencies according to Ken Laderoute, vice president of underwriting.

According to our experts, the market is fairly open for these risks and many are placed with admitted carriers. However, Katie Detroit, area vice president and manager-social services, National Insurance Professionals Corporation, a division of Risk Placement Services, Inc., believes that because social service agencies encompass various types of exposures and coverage requirements can be changed by regulations, it is vital for these agencies to work with carriers or underwriters with specific knowledge of their industry.

Nancy G. Williams, vice president, marketing and sales, NIF Group, Inc., points out that, while admitted paper is available most of the time, “the more difficult exposures such as adoption, foster care, difficult medical exposures and accounts with claims problems may be placed in nonadmitted markets.” Ms. Shaw added youth residential services and incarceration programs while Mr. Mullens sees nonadmitted paper used on most of the agencies he works with.

Directors and officers coverage is very important, according to our experts, in addition to general liability, property, workers compensation and hired and nonowned automobile coverage. Other coverage recommendations depend on the services the agency offers. Professional coverage is important, even if there is only a vicarious exposure due to volunteer involvement. In addition, abuse and molestation coverage is very important for many of these agencies.

Professional coverage can vary considerably by company. Ms. Williams explains that many companies have enhanced coverage forms that are very important in competing for business and points out that the definition of "professional" may vary by carrier. Ms. Shaw explains that some programs do not cover an agency’s professional employees or contracted professionals, or may only cover them on an excess basis. Some carriers also have minimum underlying coverage and limits requirements for any professional who works with the agency.

Abuse and molestation coverage also varies by carrier. According to Ms. Williams, the enhanced forms have broadened definitions of abuse and molestation that are important to consider. Ms. Shaw explains that some carriers cover only employee-to-client abuse, while the broader programs cover employee-to-client, client-to-client, client-to-employee, client-to-third-party, and third-party-to-client. She also explains that some cover only sexual abuse or molestation and not physical abuse.

Ms. Detroit adds crime and coverage for medical professional and owned auto coverage to the listing. Mr. Laderoute goes a little further and includes equipment breakdown, EPLI, umbrella, employee benefits liability, and coverage for fundraising events on his essential list.

Even though the marketplace is fairly open to providing the needed coverage to most agencies, there are problems in certain areas. Ms. Williams says “hired and nonowned auto liability can be difficult when small agencies have a large number of employees using their own vehicles.” Mr. Laderoute says abuse and molestation for family services and housing, and directors and officers for family support and services such as adoption agencies can be difficult. General liability coverage written on an occurrence basis can also be difficult, according to Mr. Mullens.

Many situations present the potential for significant coverage gaps. As mentioned above, abuse and molestation and professional coverage gaps exist because of the difference in definitions among carriers and the coverages offered. It is extremely important to compare coverages, especially when changing from one carrier to another. Mr. Laderoute also says defense costs outside of limits is a fairly common coverage gap along with the vicarious liability of subcontracted physicians. Ms. Williams considers coverage for contracted employees in general as a coverage gap area. Sub-limits for abuse and molestation are a concern according to Ms. Detroit, in addition to the form to which the coverage is attached. Some carriers include abuse and molestation with the professional form while others include it with the general liability coverage. Mr. Mullens adds products coverage as a final item to our listing of potential coverage gaps.

This is a very competitive marketplace. As a result, there are many coverage enhancements to consider. A number of carriers have both enhanced property and enhanced general liability endorsements. Ms. Detroit points out that general liability enhancements include a “clarification of liquor liability to provide coverage for social service fundraising and additional insured status for various funding sources.” Ms. Shaw mentions coverage for property of home care providers, spoilage of patient’s medication and money and securities of patients as just a few of the property enhancements. She also states that volunteer accident, environmental and HIPAA protector coverages are enhancements available to specific types of agencies.

All of our experts say the market is very competitive and pricing is soft but not as soft as other commercial lines, according to Ms. Shaw. What concerns Ms. Williams is that “in a soft market, we start to see competition from non-specialist players.” Mr. Laderoute says that the market is “softer than a year ago for good risks with excellent loss records.” Mr. Mullens also sees a competitive market with about a 20% reduction in pricing on renewals compared to a year ago.

The marketplace is quite similar to others, as far as availability and pricing. Property coverages are a concern in coastal areas while legal issues and rate regulation affect the availability of liability coverages.

Ms. Shaw adds, “In these difficult times, it is more important than ever for social service and nonprofit agencies to seek carriers that understand the funding issues they deal with on an ongoing basis and the need for nonprofit agencies to have a consistent stable premium that they can include in their annual budgets.”

As you consider the coverage and pricing needs of social service providers, please consider how you might help one or more social service agencies in your community through your time or your finances. In this time of economic turmoil, your help is needed now more than ever.

If you know of an independent agent who has devoted time, energy and resources to help the less fortunate, consider nominating him or her for the Rough Notes 10th annual Community Service Award. Click here for more information.