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In an effort to obtain information on liability insurance for nonprofits that rely upon volunteers, the Bureau surveyed twenty insurance companies that purportedly conduct the most business in Hawaii, in terms of volume of general liability insurance policies sold. A copy of this questionnaire is found in Appendix I. The response rate was disappointingly small. Only seven companies responded to the Bureau's inquiry. Of these, four reported that they do not insure any nonprofit organizations in the State. Two of the these companies are subsidiaries of the same parent company, which responded that they are no longer licensed to conduct business in Hawaii. A third insurer responded that the company does not provide general liability insurance to any nonprofit entities in Hawaii only because it has not been asked to by any of their agents.
Only the fourth insurer's response provides any evidence that insurers may be reluctant to insure Hawaii's nonprofits. This insurer stated that it does not provide general liability insurance to any nonprofit entities in Hawaii for the following reasons: small premium size relative to exposures; no financial stability; volunteer workers; and difficulty in underwriting hazard involved.
Thus, only three insurers completed and returned the Bureau's questionnaire. Of these, one only underwrites umbrella and excess liability insurance, not primary commercial general liability and automobile insurance. Moreover, it indicated that only one of its insureds in Hawaii is a nonprofit organization. However, echoing the comments of another insurer mentioned previously, it noted that: "We have no underwriting or rating standards which preclude us providing insurance for nonprofit organizations. We would certainly consider issuing policies for them, but we either have not been offered applications or our proposals have not been accepted by non-profits." The remainder of this chapter presents the responses of the three insurers, who are devoted for simplicity as (a) through (c).
To the best of your knowledge, how many Hawaii nonprofit entities do you insure?
(a) - 1
(b) - 40
(c) - 52
What percentage of your business in Hawaii does this figure represent?
(a) - .037
(b) - 13.6%
(c) - Unknown
In the past 12 months, what was the dollar amount of earned premiums for nonprofit entities in Hawaii?
(a) - $21,000
(b) - $273,334
(c) - $130,419
In the past 24 months, how many claims by Hawaii non-profit entities have been incurred?
(a) - None
(b) - 9
(c) - 42
Representing how much in claims in Hawaii? %
(a) - N.A.
(b) - 4%
(c) - Unknown
In the past 24 months, have you had to increase rates for property-casualty coverage for non-profits in Hawaii?
(a) - No
(b) - No
(c) - Yes, By 6.4%
Reason given: Rate increase across the board to include the Hawaii
hurricane relief fund assessment charge.
During the past 24 months, have you refused to renew a policy that was in force to any non-profit entity in Hawaii?
(a) - No
(b) - No
(c) - No
Has your reinsurer limited the kinds of coverage you can offer to Hawaii non-profit entities?
(a) - No
(b) - No
(c) - No
Has your reinsurer limited the amount of coverage you can offer to Hawaii non-profit entities?
(a) - No
(b) - No
(c) - No
During the past 24 months, have you experienced an increase in the amount you must pay for reinsurance for Hawaii non-profit entities?
(a) - No
(b) - No
(c) - No
In response to the question what the insurer would expect insurance premiums and reinsurance rates to do if large numbers of Hawaii non-profit entities formed a risk purchasing group, assuming all other factors remained the same, the responses were as follows:
(a) - Don't know
(b) - No answer
(c) - Expect rates and reinsurance costs to remain the same or possibly
go down, depending upon the type of nonprofit in the group.
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