New York lawmakers have introduced legislation to establish an assigned-risk market and a $20 million bridge fund for voluntary foster care agencies, as the sector faces a mounting insurance crisis driven by Child Victims Act litigation.
Senate Bill 9113 would require all carriers writing commercial risk insurance in the state to participate in the assigned-risk program, helping foster care agencies secure coverage when admitted carriers decline to underwrite the risk. Policies would cover professional liability as well as sexual abuse and molestation.
Private foster care agencies in New York face around 800 lawsuits under the Child Victims Act, according to a survey by the Council of Family and Child Caring Agencies. In nearly 40% of those cases, the insurance policy in place at the time has since been voided, leaving agencies responsible for full settlement costs.
Kathleen Brady-Stepien, director of the council, warned that "widespread financial failure brought on by potential multimillion-dollar payouts would devastate the system."
Agencies nationwide are reporting premium increases ranging from 30% to 400%. A California Alliance of Child and Family Services survey found premiums rose by an average of $163,484 over a year, with one agency seeing costs jump from $300,000 annually to $1 million.
In Connecticut, The Village for Families and Children saw insurance costs climb from about $300,000 in 2021 to nearly $1 million this year, according to CEO Hector Glynn. New Britain-based Klingberg Family Centers experienced an eight-fold increase while having to reduce its umbrella policy from $10 million to $2 million.
"I don't think we, or any of the foster care providers can absorb this dramatic increase in cost and increase in risk exposure indefinitely," Klingberg CEO Steven Girelli said.
Damien Zillas, senior corporate counsel at Nonprofits Insurance Alliance, noted: "We are not seeing an increase in claims. What we are seeing is an increase in claim value." A Sonoma County jury recently awarded $25 million to three siblings who sued an agency over sexual abuse by a foster parent.
The coverage crunch extends well beyond New York. In California, at least 19 of approximately 220 foster family agency programs have closed since non-renewal notices began circulating last year, according to the California Alliance.
In Pennsylvania, more than half of foster care providers report lacking available and affordable liability insurance.
A March 2025 American Enterprise Institute report attributed the crisis partly to New York and California eliminating statutes of limitations on abuse claims, "putting insurance companies on the hook for decades-old incidents."
The bill would also direct the Office of Children and Family Services to revise state payments to ensure reimbursement levels reflect actual insurance costs. Washington Insurance Commissioner Patty Kuderer, who released a report in January finding that a joint underwriting association would not be viable in her state, suggested "we may need federal action as well."
