Agencies stunted by rising insurance costs

Posted: Thursday, February 27, 2003

The rising cost of insurance is affecting nonprofit agencies on the Kenai Peninsula, and they are left with limited options to combat the financial strain of these increases.

"It's the most difficult issue we have to face as staff manager," said James Shill, executive director for the Central Peninsula Counseling Services in Kenai.

Shill stated he has seen insurance rise as much as 5 to 30 percent each year for the last few years. Health insurance has been the hardest hit.

"About three years ago, we had to cancel dependent coverage for all employees." Shill said. "We just couldn't afford it."

CPCS still offers full coverage to employees, but the employees have to pay if they want coverage for their spouse, partner or children.

"It caused a lot of discontent and some staff turnover," Shill said.

"We can barely offer competitive salaries, but nonprofit agencies are losing people to the school district and state because they have richer benefits plans. It's a competitive disadvantage."

Fred Lau, administrator for Homer Senior Citizens Inc., has faced a similar dilemma.

"All of our costs have gone up in the last five years, but the last two years it's really risen for general liability and property insurance," Lau said. "It went up 15 percent in 2001 and probably doubled that in 2002."

One possibility for the rise in insurance at the Homer facility may be due to it providing assisted living in addition to its other services. This may mean it is being lumped in with long-term care facilities similar to ones providing hospital care. This has been a real challenge for the assisted living program.

"The senior center can seek funding from the state, city and borough and through applying for grants, but the assisted living has to stand by itself because there aren't many grants or other avenues for funding," Shill said.

The rising costs can't be attributed to larger claims being filed, either, according to Lau.

"We've never filed a claim in the five years I've been here," he said.

He said he suspects they're being pooled by the insurance companies with other similar agencies that have filed claims.

When asked what his alternatives were to compensate for these rising costs, Lau said, "We'll either have to cut back on expenses or increase services fees."

Leigh Hagstrom-Sanger, director and program administrator for the Nikiski Senior Citizens Center, said the rising insurance costs have put the center in a serious bind.

"Insurance is something we can't not have, so we have to cut back in other ways," Hagstrom-Sanger said. "We're having van trouble and can't afford to buy a new one now. We're still able to provide meals and transportation, but it has made it difficult."

She hopes to come up with the funds to meet the rising costs through "creative budgeting" and more fund-raisers.

"We've got to come up with the money somehow," she said. "You don't have a choice. You have to pay because you have to have insurance."

She said they've tried shopping around for lower rates, but it's not like in the Lower 48, where lots of companies are competing for your business.

"The pool is small in which to choose insurance companies in Alaska," she said. "There's really only three or four companies that will insure in the state."

Jan Fena, director of the Soldotna Senior Citizens Center, agrees with her colleagues.

"It has profoundly affected us," Fena said.

"As a nonprofit agency, we can't pass that on to our clients, so we absorb it," she said. "We absorb all of it, and then we try to cover the cost through fund-raisers to meet this increase."

There fund-raisers have gone up from six events to 11 per year, which has been a tremendous amount of work for the staff and volunteers to contended with.

"We don't want to cut back programs, but the 10 to 15 percent increase in insurance is adversely affecting us," Fena said. "There are no funds now for vehicle upkeep and repair. If one of the vans should fail, it would cut our Meal on Wheels program and other transportation in half."

Joy Plumridge, an accountant for Frontier Community Services in Soldotna, said her agencies too has seen dramatic insurances increases.

"Within the last year, workman's compensation increased 55 percent, health insurance and professional insurance increased 26 percent and liability by 26 percent," Plumridge said. "We're expecting workman's comp to go up again this year."

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