As funding challenges and governance scrutiny intensify, some non-profit boards are still leaving themselves exposed – especially when it comes to management practices, employment decisions and rising claim costs in healthcare settings.
For Alexander Blair‑Johns (pictured), CEO of Signal Underwriting, the story starts with how different parts of the sector are feeling the squeeze.
“For non-healthcare non-profits, wrongful terminations and expenditure governance claims are rising most rapidly,” he said. “Both can be mitigated with appropriate risk management practices.”
That combination – employment disputes and questions around how money is being used – reflects the operating reality for many organizations that depend on donors, grants and volunteers. When resources are tight and expectations from stakeholders keep climbing, decisions about staffing and spending are more likely to be challenged.
Blair‑Johns’ point about risk management is a reminder that not every issue needs to become an insurance problem. Boards that invest in clear policies, documentation and oversight can often defuse tensions before they escalate. But when those controls are weak or inconsistent, disputes are far more likely to turn into formal complaints.
The way organizations insure these exposures varies widely. Blair‑Johns notes that, “coverage gaps vary significantly depending on the board's risk sophistication.” In practice, that often comes down to how experienced the leadership team is with governance and how seriously they treat their obligations to staff, beneficiaries and funders.
At the smaller end of the spectrum, the protections can be surprisingly thin. “Some smaller entities forgo even basic directors & officers insurance,” he said. In other words, the very people making high-stakes decisions on behalf of the organization may have no dedicated protection for claims tied to their oversight role.
By contrast, more established groups tend to build a deeper risk transfer program around their activities. Blair‑Johns points out that “larger, more risk-aware organizations ensure they have comprehensive P&C coverages along with D&O, EPL, abuse, E&O, and other relevant protections.” Those boards are more likely to treat insurance as one pillar in a broader framework that also includes internal controls and specialist advice.
The picture looks different again on the healthcare side of the non-profit world. Here, the pressure is being driven less by management‑style disputes and more by the cost of resolving injury-based claims.
“For healthcare-based non-profits, claims pressure stems primarily from increased settlement costs in medical malpractice claims,” Blair‑Johns explained. That isn’t happening in isolation. “All bodily injury claims are impacted by inflationary increases, as rising healthcare costs directly affect claim settlements.”
Put simply, when the underlying cost of treatment climbs, the amounts required to resolve bodily injury cases follow suit. That dynamic feeds directly into what providers and their insurers see on the claims side, even when the frequency of incidents is stable.
This helps explain why pricing in this line behaves differently from what boards might be used to in other areas of their portfolio. As Blair‑Johns put it, “unlike other insurance lines where soft markets allow for premium discounts, medical malpractice rates that simply hold steady are actually losing ground against inflation, which is why pricing doesn't fluctuate as dramatically in this space.”
For non-profit leaders, that comment goes to the heart of expectations management. A flat renewal in this context is not a sign that insurers are being generous; it may indicate that margins are already under strain because claim severities are moving ahead of top‑line premiums.
Taken together, Blair‑Johns’ observations sketch out a sector where exposures are evolving faster than some boards’ understanding of their own risk profile. On one side are organizations facing increasing challenges over staff decisions and financial stewardship, sometimes without even basic protection for those at the helm. On the other side are healthcare‑related entities grappling with the steadily rising cost of resolving injury‑based cases in an environment where pricing doesn’t behave like more familiar property or casualty lines.
The thread running through both is the need for leadership teams to engage more deliberately with their insurance arrangements – and to match those arrangements to the realities of their operations. Whether that means finally putting dedicated management liability in place, revisiting long‑standing assumptions about medical malpractice programs, or tightening internal practices so they align with coverage, the message from Blair‑Johns is clear: under pressure, gaps that once felt theoretical can become very real, very quickly.
