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Not paying premiums affects everyone, leaders say

Not paying premiums affects everyone, leaders say

e-Review Florida United Methodist News Service

Not paying premiums affects everyone, leaders say

Nov. 9, 2007  News media contact: Tita Parham*
800-282-8011  Orlando {0762}

An e-Review Feature
By Erik J. Alsgaard**

LAKELAND — Imagine driving a car and getting into an accident. Even though you haven’t paid a penny for insurance in 2007, you’re still covered and the repairs are made with little or no money out of your pocket.

A wild dream? Some part of fantasyland Disney doesn’t tell you about?

Hurricane Charley in 2004 left the steeple from Aloma United Methodist Church in Winter Park in shambles. The Florida Conference insurance program helps churches recover after such natural disasters, but the number of storms hitting the conference also affects the amount the conference pays for that coverage. Insurance premiums across the insurance industry skyrocketed after the 2004 and 2005 hurricanes. Photo by Don Youngs. Photo #07-0703.

Not in the Florida Conference, where that kind of good fortune is very much a reality. It’s the Florida Conference property, casualty and workers’ compensation insurance program at work.

“In the Florida Conference, all our churches are required to be in our insurance program,” said Mickey Wilson, conference treasurer. “In fact, for many churches, we’re the only place they could get insurance, even if they tried outside vendors.”

Every Florida Conference church is expected to participate and “play its part” by paying its fair share of the overall premium, Wilson said.

“Even when they don’t,” he adds, “because we’re a connectional church, they’re still covered.”

A church’s fair share is determined by its location, recent or new construction, the size of its buildings, the number and type of vehicles it owns, and other factors. The amount billed to local churches in 2007 was more than $20,588,552.

As of Oct. 31 more than $4 million remained to be paid for 2007, or about 20 percent of the total amount billed, according to Wilson. Records from the treasurer’s office show about $1.5 million went unpaid in 2006, representing 10 percent of the total amount billed.

That unpaid balance is carried forward and added to churches’ totals for the next year, according to Mark Thomas, director of the Florida Conference Department of Ministry Protection.

“Included in the insurance premiums churches pay is an amount for self-insured retention obligations the conference pays on claims on behalf of local churches,” Thomas said. “This includes workers’ compensation and automobile claims, as well as occurrence retentions on property and casualty claims.” 

How the program works

Every year, churches update the total value of their property — sanctuaries, fellowship halls, cemeteries, offices, camp facilities, parsonages, and other structures. In 2008, that will amount to slightly more than $2 billion.

Churches also report the number of employees and staff who need to be covered by workers’ compensation and the vehicles the conference insures — vans, buses, automobiles. In 2008, that will equal about 8,500 people, receiving salaries of more than $170 million, and 720 vehicles.

When all that information is compiled, staff members in the Ministry Protection and treasurer’s offices, along with the conference’s insurance broker, Arthur J. Gallagher and Co., work to find the best rates for the best coverage and with the best service. In 2007, the Florida Conference worked with nine different insurance companies on property insurance alone, which provided $46 million in insurance per occurrence.

The cost of this coverage is not cheap. Four hurricanes in two years have resulted in skyrocketing insurance premiums. In the past three years, the price Florida Conference churches have paid for coverage has more than doubled, from $9.7 million in 2005 to $20.5 million in 2007.

The Florida Conference finances and pays interest on this insurance premium over the course of a year. Churches then pay back the conference over the next 12 months. Churches paying their full amount in the first 30 days of the year are given a 2 percent discount as incentive to make full, early repayments.

How conference churches are doing

As of Oct. 31, 328 churches still owed money, with amounts ranging from $231,681 at one church to 50 cents at another. The list includes churches that have been making regular payments and are expected to pay in full by the end of the year to those that have paid nothing for 2007. A few have paid nothing in years. Still, they are covered.

“We know that there are churches that will not be paying one penny for this year,” Wilson said. “They have told us that they either won’t or that they can’t. When we compute next year’s premiums, we have to factor in the unpaid amount.

One church, Wilson said, has a bill of $196,000 and says it can’t pay this year. “But the total premium has to be paid, every year, by the conference,” Wilson added. “Everybody is paying extra to make this up.”

For Wilson, the issue of paying insurance premiums strikes at the heart of what it means to be United Methodist and connectional.

“We’re the envy of the non-connectional churches,” he said. “Because we’re connectional, we show it by taking care of each other. We show this on many levels throughout the life of our church, and this is one key area where it happens.

“Is our insurance costing you more because we have a large number of churches within 20 miles of the coast? Yes, it is,” he said. “We’re connectional, this is what we do; we’re United Methodist, this is who we are.”

Five things churches can do to reduce 2008 premiums

•  Pay the entire premium early. Local churches that pay within 30 days of the receipt of their invoice receive a 2 percent discount.

•  Pay the entire premium by Dec. 31, 2008. Every church paying its fair share increases the likelihood the total amount billed the following year will decrease, depending on if and how many storms strike the conference. Additionally, when a church pays its entire premium the likelihood its bill will decrease also improves.
•  Manage risk. Churches should perform routine safety and facility condition inspections and not defer needed maintenance. The Florida Conference Department of Ministry Protection can assist churches with hazard identification and correction. Churches may contact the department at 800-282-8011, extension 137, or

•  Provide accurate values to the conference. Every year, the Florida Conference gathers information from its churches to use as values for insurance purposes. Accurate numbers ensure accurate quotes for premiums.

•  Pay the premium — because, Wilson says, it’s the right thing to do.


This article relates to Florida Conference Insurance.

*Parham is managing editor of e-Review Florida United Methodist News Service.
**Alsgaard is director of communications for the Florida Conference.