Faith and religious organizations can face many new and unique challenges to their operations. Through proper risk assessment and awareness of vulnerabilities and risk management, these dangers can be identified and reduced.
By Aliya Daya, Senior New Business Specialist and Account Executive, Commercial Lines
Faith and religious organizations are the cornerstone of any community; in addition to fulfilling a spiritual mission and offering worship, they are places of celebration, remembrance and gathering places tied to a communal identity or history.
On a personal note, this subject matter is important to me because my faith community is the anchor that not only defines my sense of self, but is the driver in all my personal life, career choices and decisions. They ground me and provide a sense of spirituality, belonging and direction. Feelings that I know many others identify with.
The last two years has been a been a tenuous and difficult period for these organizations and associated groups. Many having faced numerous concerns including:
- Having to adapt and pivot with technology and finding various ways to keep their members engaged in worship throughout the COVID-19 pandemic.
- Struggling to assist/counsel their congregants and members with mental health issues, addiction problems, inter-personal relationships, etc.
- Having their finances stretched; some organizations had to permanently close their doors due to lack of financial resources.
- Being targeted due to their specific religious beliefs or due to historical associations.
- Having their mission remain relevant, being present in the community, and keeping their volunteers and members active while adhering to pandemic restrictions.
With these changes and stressors, have come some not-so-new challenges and some unique ones as well. The key for faith-based organizations will be to assess and manage new and emerging risks and consider a full risk management approach as we enter a post-pandemic world. Here are some areas of particular concern:
Cyber & Privacy Breach Liability
Faith and religious organizations are not immune to cyber risks; in fact, they are a prime target for cybercriminals. What started out as a trend, cyberattacks exponentially accelerated during COVID-19 as churches, synagogues, mosques/masjids, temples, non-profits and others moved increasingly online for worship and to keep lines of communication open between management, employees and volunteers.
IT infrastructure requires monitoring, security policies and protocols, and adherence to specific rules and government regulations. Many faith organizations have limited financial investment in their IT, no IT support professionals on staff, and often no means of ensuring data security procedures and policies are implemented and followed. This leaves them extremely vulnerable to cybercrime, which can threaten operational continuity and create financial and legal liabilities.
Cyber and privacy breach insurance policies protect faith and religious organizations from data/privacy breach exposure, helping to cover expenses such as notification, regulatory fines and penalties, business interruption, data loss, cyber extortion (aka ransom), computer fraud and reputational harm.
Active Assailant and Terrorism
In the current climate, institutions must be aware of and prepared for the risk that active assailant attacks pose. The frequency and severity of these attacks has been rising rapidly in recent years, making active assailant attacks a very real threat to the general public and organizations all over the world. With their mission to be open and welcoming, houses of worship are particularly vulnerable to armed intruders and active threat situations.
I am a practicing Muslim and, after the Quebec City terrorist attack a few years ago, I live with the constant knowledge and anxiety that my community and place of worship can easily be the next news story or target.
The rising prevalence of active assailant tragedies has increased demand for coverage designed to protect faith and religious organizations from the financial and emotional/mental ruin that can happen in their wake.
An active assailant insurance policy is designed to address the impact of these events on the victims and the organization effected. Policies include victim compensation and support (including to faith community members and congregants), as well as incident response and crisis management services. Coverage is also offered for legal liabilities (victim lawsuits), damage to property (building or property repairs) and business interruption.
Insurers are also taking steps to help religious organizations manage risk by creating seminars and informational guides aimed at educating their staff members on developing security and response plans. Organizations should also try to create a strong relationship with local law enforcement for additional support.
Professional Liability or Errors & Omissions
Many faith and religious organizations provide spiritual counselling, other professional counselling services (like marriage counselling, financial counselling, addictions counselling) or other services (like adoption services, employment, social services, educational/tutoring classes) and are trusted to provide guidance and advice to their members. This leaves their organizations highly vulnerable to liability for financial loss and physical or emotional injury to congregation members who feel negatively impacted by such guidance.
From a risk management approach, a faith organization should also know:
- when to refer cases to a licensed professional;
- when the rules of confidentiality apply;
- how to avoid undue influence; and,
- how to reduce sexual misconduct or abuse risks.
An errors and omissions or professional liability policy can also protect faith and religious organizations and their service providers (either professionals, community leaders or members and volunteers) from professional negligence claims. These policies are written specifically for an organization’s particular risks and can help religious organizations weather lengthy cases and potentially catastrophic losses resulting from professional liability claims.
Abuse & Sexual Misconduct
Faith and religious organizations are at risk for abuse and sexual misconduct allegations when working with vulnerable adults, seniors/elders and children. It’s important that faith-based organizations ensure there are adequate policies in place to protect the communities that they serve; there are several practices that can be implemented to reduce an organization’s exposure to abuse or misconduct claims, including, but not limited to:
- developing adequate personal conduct policies;
- ensuring the proper selection of staff and volunteers;
- performing reference checks;
- continuing background checks; and,
- providing training.
Abuse and sexual misconduct liability protects the organization’s employees, directors, officers and volunteers on a claims made basis (most often) and covers legal defense costs against allegations associated with physical or emotional injury resulting from physical abuse, mental and emotional abuse, sexual abuse, molestation or exploitation. To obtain this type of coverage, faith organizations must prove they have performed background checks on employees and volunteers. Insurers also may require those with schools and daycare centres to have rules in place mandating a specific teacher-to-student ratio and rules that prohibit an adult employee from being alone with a child. All of this will be stipulated in the application process.
Directors & Officers Liability (D&O)
The leaders of faith-based and non-profit organizations face the same exposure to lawsuits as those at for-profit corporations; in fact, exposure related to a faith organization or non-profit is more critical as boards are often made up of (very) dedicated volunteers who have less formal understanding of financial accounting, employment laws and more. Directors or officers can be held personally liable for financial damages that result from their actions, including but not limited to:
- failing to maintain adequate financial records;
- discriminating in membership;
- defamation;
- exceeding the authority granted by an organization’s charter or bylaws; and,
- using budgeted or donated money in a manner differently than originally intended.
The potential financial damage from directors and officers’ liability claims supports a risk management approach that should include this cover for all faith and religious organizations and non-profits. A D&O policy would pay for legal fees or damage awards related to a lawsuit. Even if a claim is unfounded, the costs associated with legal disputes remain. D&O insurance, as a result, provides peace of mind for these organizations so that they can focus on delivering their services.
Protection for Faith-Based Missions and Communities
Religious and faith-based organizations face numerous and constantly evolving risks daily. If not properly addressed, these issues can detract from the organization’s core mission. But, through proper risk assessment and awareness of vulnerabilities and risk management, these dangers can be identified and reduced.
Our Faith Guard team at Acera Insurance will work with you to develop a customized, all-encompassing insurance program to protect your faith organization. Contact us today to learn more.
Aliya Daya is a Senior New Business Specialist and Account Executive, Commercial Lines, with Acera Insurance. With more than 20 years of experience in the insurance industry, Aliya specializes in innovation, technology, manufacturing/fabrication/wholesale/distribution, hospitality, religious organizations and disruption/emerging industries.