SPECIALTY LINES

There are several problems facing insurance agents
who are involved in providing coverage to churches

By Dennis Pillsbury

Religious organizations traditionally have been important markets for independent agents. This market provides some $398.5 million in commercial premium and an attractive loss ratio averaging in the mid-50s, according to data from IMR (Insurance Market Research) Corp., one of the PLP Companies. IMR data also show this to be a growing market with real growth averaging about 5.6% annually over five years and premium growth of more than 11.4% a year.

At the same time, many agents are involved in another capacity--as parishioners and, quite often, as members of the board of trustees. It is hardly surprising that, when it comes to insurance concerns, those same agents are the ones who provide coverage and advice.

Unfortunately, this arrangement of helpful sharing of expertise no longer is viewed as benign in some circles. Lawsuits involving religious organizations are on the rise, and both the clergy and insurance agents are targets.

There are several problems facing insurance agents who are involved in providing coverage to churches, and they can be exacerbated if the agent is a member of the board of trustees.

We talked to Clarance E. Hagglund, a litigation attorney practicing primarily in insurance coverage, about these issues. Hagglund, who is the senior partner of Hagglund & Weimer, P.A., in Minneapolis, cautioned agents to be extremely careful to make certain that they inform their church about the need for clergy malpractice and other coverages, especially if they are members of the board of trustees. "The duty to advise increases with time," Hagglund warns, "as the agent learns more about the business." Another concern is "whether or not there is an arm's length transaction if the agent is on the board of trustees."

Courts are reluctant to touch cases involving religious doctrine. However, secular activities are not protected under the First Amendment, an expert warns. Wrongful discharge, sexual harassment and intentional acts are considered to be in the secular domain.

Returning to the issue of suits against the clergy, Hagglund points out, "The cornerstone of legal issues involving churches and the clergy is the First Amendment--the separation of church and state. Courts are very reluctant to touch cases involving religious doctrine." However, he goes on to warn that secular activities are not protected under the First Amendment. Matters such as wrongful discharge, sexual harassment and intentional acts or torts all are considered to be in the secular domain. "Agents need to recognize the difference between the secular and the religious when evaluating the risks," Hagglund says.

Counseling is an area where the lines between religious and secular can become blurred, he warns, and where liability could occur. Clergy often provide counseling as part of the pastoral duties, Hagglund notes, but adds that they need to make it clear to the people whom they are advising that they are not providing psychological or psychiatric services.

Defamation is another area of concern for members of the clergy. Hagglund explains that the church normally can admonish members. However, if remarks are made concerning a nonmember, then a defamation suit could be successful. Hagglund points to one suit where a minister falsely accused a Maryland couple of child abuse. The minister claimed his statements about the suspected abuse were made in the course of his ministerial duties. The court, however, refused to dismiss the lawsuit because the couple were not members of the church. The court noted, however, that there would have been immunity if the couple had been members.

Hagglund also notes that emotional distress claims, while generally unsuccessful, have been allowed in extreme cases.

The question of when ministerial duties end also has led to disputes in the courts. In a recent case, Hentges vs. Church Mutual, the minister went hunting with several parishioners. He accidentally shot one of the parishioners. The issue in the case was whether the minister was acting within the scope of his employment when he was on the trip. His contention was that getting close to parishioners was part of his job. At trial, the court held that he was motivated by employment concerns. However, the appellate court overturned the decision, saying that the minister was not performing duties related to the church. That decision ran against some earlier cases, Hagglund points out.

Hagglund says that the largest exposure that churches face can be wrongful discharge. The CGL policy does not provide coverage for intentional acts or employment practices, he warns agents. He adds that some EPLI policies do have coverage for intentional acts. "An agent has to know if the EPLI policy does provide such coverage." Another exposure that needs to be considered is auto coverage when volunteers drive church vehicles.

In an article Hagglund and Britton D. Weimer wrote for the Professional Liability Underwriting Society's News & Views, they suggest that agents suggest to their church clients implementation of the following claims-prevention procedures. (The quotes from that article are used with the permission of CSS Publishing of Lima, Ohio. If you are interested in additional information about clergy malpractice, CSS will soon publish Hagglund & Weimer's book, Stay Out of Court and Stay in the Ministry.) *

Claims-Prevention Procedures

1. If the church offers psychological or psychiatric services, you should obtain an appropriate malpractice insurance policy.

2. Provide a written notice to people who receive regular counseling, clarifying that the church is not providing psychological or psychiatric services.

3. The church should keep information disclosed in counseling sessions strictly confidential.

4. Volunteer church counselors should be fully trained and "backed up" by a referral network of pastoral and professional counselors.

5. Do not charge for counseling services.

6. Church discipline should be done in full consultation with church leadership and with careful documentation.

7. Use discretion when discussing negative information about former church members.

©COPYRIGHT: The Rough Notes Magazine, 1998