Connecticut's insurance regulator has issued a request for proposals to hire a consultant to study the state's nonprofit liability insurance market. The move implements Public Act 26-47, which directs the Connecticut Insurance Department (CID) to examine coverage access, affordability, and structural alternatives for nonprofit organizations.
Public Act 26-47 also directs the CID to complete a feasibility study, develop a financial analysis, and submit a legislative report. The legislation came in response to worsening insurance conditions for nonprofits operating in the state.
Human service providers in Connecticut have reported rising premiums, reduced market options, and changes in coverage conditions. A January 2025 survey by the National Organization of State Associations for Children (NOSAC) found half of 327 providers had seen premiums double since 2019. The survey, conducted across 46 states, found one-quarter of respondents had seen increases of 200% to 800% in the same period.
Risk Strategies' 2025 Insurance Trends Report projected increases of 10% to 30% across most nonprofit coverage lines. Abuse and professional liability lines were forecast to rise 15% to 20%, with umbrella coverage expected to increase 20% to 30%.
The nonprofit liability insurance market has shown increasing reliance on excess and surplus (E&S) carriers as admitted markets restrict appetite for human service risks. Key exposures include sexual abuse and molestation liability, professional liability, and expanded statutes of limitation that have broadened the timeframe for historical claims. Workforce instability and the heightened liability profile of organizations serving vulnerable populations have added further pressure on underwriting terms.
Connecticut's study follows similar legislative actions in other states confronting the same market conditions. Hawaii lawmakers have moved to limit legal exposure for child welfare nonprofits after lawsuits and large judgments forced providers into E&S markets. New York has separately considered creating an assigned-risk market for foster care agencies facing coverage withdrawal.
CID is seeking firms with expertise in insurance feasibility studies, actuarial analysis, captive insurance structures, risk management programs, and public sector insurance initiatives. The selected consultant will evaluate liability risk pooling, captive insurance, and risk management options alongside actuarial and financial analyses and regulatory considerations. Proposals are due July 28, 2026, and the General Assembly has allocated $200,000 to support the work.
The study will provide "objective analysis and expert insight into potential approaches that may improve access, affordability, and long-term sustainability for nonprofit liability coverage," Insurance Commissioner Josh Hershman said. The goal is to gather data and expertise needed to inform policymakers and support "thoughtful, evidence-based decision-making," he said. Hershman described the initiative as part of the department's response to insurance market conditions affecting nonprofit organizations across the state.
The General Assembly's Insurance and Real Estate Committee established a working group to examine market conditions and potential solutions ahead of the study. The selected consultant is expected to deliver a final report and legislative recommendations by February 1, 2027.
