Connecticut Seeks Consultant to Explore Nonprofit Liability Insurance Options

The Connecticut Insurance Department (CID) is seeking a consultant to conduct a study and present options to improve the liability insurance market for nonprofit organizations operating in the state.

A report issued in January by a working group of legislators, brokers, insurers, regulators, and nonprofit leaders found that the nonprofit human services sector is experiencing rising costs and reduced availability of liability and other property/casualty insurance coverage.

In addition to recommending strengthening nonprofits’ risk management practices, the working group offered several other recommendations for consideration. These include exploring a state-run captive or pooling mechanism to operate alongside the commercial insurance market; whether certain well-funded nonprofits could self-insure for motor vehicle risks; and how third‑party litigation financing, settlement dynamics, and broader tort cost drivers may influence claim severity and insurance pricing.

The General Assembly allocated $200,000 to support the hiring of a consultant to explore the issues identified by the working group. Proposals are due July 28, 2026. The insurance department’s request for proposals (RFP) and solicitation materials are available on the CTsource Bid Board. The selected consultant is expected to issue a final report by February 1, 2027.

Working Group Report

Key findings of the Nonprofit Liability, Property & Casualty Insurance Working Group were:

• Coverage availability and affordability risks are increasing.
• Claim severity—especially abuse and professional liability exposures—is the primary cost driver.
• Most nonprofits lack capital reserves necessary for meaningful self‑insurance.
• Risk mitigation improvements alone are unlikely to fully counter broader market forces.
• Structural participation mechanisms may be necessary to stabilize the sector long‑term.

According to the working group report, organizations serving higher‑risk populations—particularly social services, behavioral health, foster care, residential programs, and justice‑involved populations—face increasing difficulty obtaining affordable and adequate coverage.

Testimony indicated that the challenge is driven by rising claim severity, reduced insurer capacity, growth of excess and surplus markets, reinsurance pressures, third‑party litigation funding, and long‑tail liability exposure.

Several brokers described emergency placement into secondary markets or significant premium spikes following a single large claim.

“A balanced approach is needed that supports practical risk mitigation while also exploring structural solutions to stabilize coverage availability and affordability.,” the working group concluded.

“The nonprofit sector provides critical services that support individuals, families, and communities across Connecticut,” said Insurance Commissioner Josh Hershman. “As we work to support stable and healthy insurance markets, this study will provide objective analysis and expert insight into potential approaches that may improve access, affordability, and long-term sustainability for nonprofit liability coverage. The goal is to gather the data and expertise needed to help inform policymakers and support thoughtful, evidence-based decision-making.”

Topics Liability Connecticut