Jewish Groups Feeling the Pinch After Post-9/11 Hikes in Insurance

Beefing up security in the aftermath of Sept. 11 isn’t the only new hurdle for American Jewish institutions.

Jewish institutions are struggling with new insurance rates — 50 percent increases or more in some cases — that threaten to consume critical funds.

At the same time, these institutions — including federations, Jewish community centers, synagogues and organizations — are fighting to maintain their protection in the event of a devastating terrorist attack.

“This is a major crisis for our system,” said Diana Aviv, vice president of public policy for the United Jewish Communities.

The situation is the result of major changes in the insurance industry, which suffered staggering losses from the terrorist attacks on the World Trade Center and the Pentagon.

Insurance companies have distributed those costs to their clients, and are also cutting back on providing the terror coverage they once routinely did.

And in the few states, including New York, that prohibit companies from excluding terrorism coverage, it is proving even more difficult to find companies to cover them.

But the question among Jewish organizational leaders is whether they are being unfairly targeted.

They suspect the answer is no, but are posing the question regardless.

Abraham Foxman, national director of the Anti-Defamation League, sent letters to the White House and congressional leaders Tuesday to urge examination of the issue.

“In the aftermath of the Sept. 11 terrorist attack, many non-profit organizations have also been dramatically affected by increased premiums, but we are also concerned that Jewish community institutions might be unfairly singled out for increased risk of a terrorist attack,” Foxman wrote.

The insurance industry rejects that notion.

Rates are going up for everyone, according to P.J. Crowley, vice president of the Insurance Information Institute, a nonprofit group sponsored by the insurance industry.

“Are Jewish groups being singled out? No,” he said. “But insurers are being selective in providing coverage.”

Insurers have to go on a case-by-case basis to determine whether they can provide coverage, he said.

High-profile organizations in major metropolitan areas will find it difficult to get terrorism coverage and the coverage will be extremely expensive, said Crowley.

“Almost everything” is a potential risk for being a terrorist target, including prominent Jewish buildings, said Gary Karr, spokesman for the American Insurance Association.

Insurers have little to go on to determine risk factor, Karr said, except for the examples of Sept. 11 and government warnings.

Indeed, the FBI issued widely publicized warnings to Jewish institutions earlier this year.

The FBI alerted Jewish leaders in May that U.S. forces uncovered Al-Qaida documents listing 12 Jewish organizations as potential targets.

Then the FBI issued another warning in late June that Al-Qaida might attack Jewish institutions with gas trucks, a warning that followed an attack on a Tunisian synagogue that killed 16 and injured 20.

Al-Qaida later claimed responsibility for the attack.

While groups responded with extra vigilance, Jewish leaders downplayed both threats, calling evidence vague, outdated and uncorroborated.

Meanwhile, the U.S. House of Representatives and Senate are negotiating a compromise bill that would ensure that groups could attain affordable terrorism insurance coverage.

Insurance coverage for commercial property was increasing at 15 percent to 20 percent the year before Sept. 11, but is up 30 percent on average since then, Crowley said.

He said it is not unusual for some premiums to go up 50 or 100 percent.

The New York State Insurance Department, a regulatory agency, has begun a review to investigate any discriminatory behavior against Jewish groups in New York, according to Gregory Serio, the department’s superintendent.

The department has scheduled a meeting with Jewish organizations at the end of the month.

Jewish groups often fit into high-risk categories for insurance carriers, such as landmark sites or places of public assembly, Serio said.

Still, he said, “if there are risks to Jewish groups or Jewish facilities, we need to make sure the company’s responses are reasonable. Insurance law just doesn’t allow insurance companies to walk away from their obligations.”

But across the country, community leaders are feeling the pinch.

Insurance rates nearly doubled for the Jewish Federation Council of Greater Los Angeles when it renewed its policy shortly after Sept. 11.

This year, it will be even worse, according to Jack Klein, executive vice president and chief operating officer of the council, Los Angeles’s Jewish federation.

Klein described “a difficulty or inability to secure policies without a terrorism exclusion, and if you could get that policy, we’re looking at up to a 40 percent increase for this year.”

The UJA-Federation of New York and its 44 beneficiary agencies in the area have also seen their insurance rates skyrocket.

The group’s general liability rates soared 65 percent, from $2.4 million to at least $4.8 million, and property insurance shot up from $870,000 to $1.7 million, said John Ruskay, executive vice president of the UJA-Federation of New York.

Those costs could have significant ramifications for the services and programs that the federation provides.

“It comes at a particularly difficult time in terms of the economy” and cutbacks in government funding, Ruskay said.

The high insurance costs “will lead to difficult choices about priorities and programs” throughout the entire system, Ruskay said.

The UJC, the umbrella group for North American federations, confirmed that insurance hikes have afflicted many of its member federations.

At a UJC meeting earlier this week in which 22 federations in the Southeast were represented, some federations “indicated that they had experienced a significant increase in insurance costs related to safety and security issues,” said Barry Swartz, vice president of consulting for the UJC.

Programs are not being cut out, but in order for organizations to afford their insurance coverage, they are pressured to reduce their programs in some way and it’s not possible to serve as many people, said Aviv of the UJC.

The increased cost of insurance meant Congregation B’nai Jeshurun, an 1,800-family congregation on the Upper West Side of New York, had to “put off hiring some new people” and it “hurt us generally in expanding all of our programs,” according to Ron Seitenbach, the synagogue’s director of finance and administration.

Mike Scheinblum, a volunteer risk manager for the Greater Miami Jewish Federation, called the premium increases “passive discrimination” against Jewish groups.

He was quoted by The Associated Press as saying, “The word ‘Jewish’ is an unwelcome word in the world of insurance today.”

While concerned about the adverse financial implications of higher insurance rates, most Jewish leaders aren’t crying discrimination.

“To the best of my knowledge,” the inflated rates are “not directed at Jewish institutions,” Foxman told JTA. All public institutions are facing higher insurance costs, he said.

According to Ruskay, “We have been informed by numerous experts in risk management and insurance that this is industry-wide and particularly significant in the New York area since 9/11.”

But he added, “I have not yet seen a careful study which has made that comparative assessment.”

Michael Tarnoff, chief financial officer of the Jewish Federation of Metropolitan Chicago — which held onto its terrorism coverage with a rate increase of 20 percent — agreed with his colleagues.

“In my view, I think it’s unlikely that Jewish organizations were affected disproportionately,” he said, referring to Jewish and non-Jewish organizations that have borne the brunt of the insurance crisis.

Indeed, health and human service providers of the Lutheran Services in America are scrambling to determine how to keep insurance coverage and save programs.

“They have seen huge rises in premiums,” said Jill Schumann, the group’s president and CEO. “They face hard choices.”

Putting the crisis into context, Serio said the “World Trade Center event alone is a $50 billion insurance loss.”

That’s two and a half times the size of the next largest insurance loss — Hurricane Andrew in 1992, which totaled $20 billion in insurance losses, Serio said.