The insurance market for foster care providers faces significant challenges. As reported by the Association of Children’s Residential and Community Services, a nationwide survey of 327 providers across 46 states found that 50% experienced premium increases of 100%, and 25% saw premiums rise between 200% and 1800%. The foster care insurance market is complex for many reasons, including attitudinal changes, legal developments, and escalating awards in favor of plaintiffs. For example, in Illinois, the 2019 removal of the statute of limitations for sexual abuse claims, along with increased plaintiff litigation funding, has led to more lawsuits and higher settlements. While these changes support justice, they complicate insurance risk management, which depends on predictability and control—conditions perceived as lacking in foster care.
Specialized brokers with expertise in the foster care sector play a critical role in navigating these challenges. Foster care agencies working with brokers who understand the unique exposures and have established relationships with insurers are better positioned to secure coverage, often at more reasonable premiums than the national averages suggest.
Best practices for foster care agencies seeking to secure a favorable renewal include:
- Engage a broker who specializes in foster care. Insurers are concerned with the abuse & molestation risks and prefer to work with brokers who understand the exposures and have long-standing relationships with the insurers who consider writing the business.
- Implement risk management protocols and best practices to increase the controls around the risk. Expertise in this area is essential, as it can influence insurer willingness to provide coverage.
Why partner with a specialized broker in a hard market:
- Partnering with a specialized broker ensures you move beyond relying solely on standard applications and generic supplemental forms. At Marsh McLennan Agency (MMA), we develop detailed risk profiles that accurately highlight your agency’s actual exposures and implement granular risk management strategies that set your agency apart from others.
- Specialized brokers understand that claims in foster care can be significant but infrequent. We start with a comprehensive review of your agency’s risk management strategy and provide detailed narratives of past claims, including mitigation efforts and lessons learned. This thorough approach demonstrates how your agency has evolved its controls over time, which helps build insurer confidence, improving your likelihood of securing favorable coverage.
- Brokers can leverage supplemental applications to collect specific exposure data and verify consistency across all submitted materials. This enables a more accurate risk assessment based on new placements, active cases, caseloads, and types of placements.
- While the legal and regulatory environments often remain outside the control of agencies and brokers, working in collaboration with childcare agencies and the insurers can provide effective risk management solutions.
For more best practices or ways to secure a favorable rate in foster care or childcare agencies, contact an MMA advisor.
