The Connecticut Insurance Department is seeking a consultant to study whether the state should create a risk pool or captive insurance company to help nonprofits cope with rising liability insurance costs.
The department on Tuesday issued a request for proposals for a feasibility study required under Public Act 26-47, which Gov. Ned Lamont signed in May.
The legislation grew out of recommendations from a General Assembly working group that spent months examining why nonprofit human services providers are struggling to find affordable coverage.
The General Assembly allocated $200,000 for the study. Proposals are due July 28.
The selected firm will evaluate liability risk pooling, captive insurance and risk management options, and provide actuarial and financial analyses to support a report and legislative recommendations to the General Assembly. The department said the report is due by Feb. 1, 2027.
“The nonprofit sector provides critical services that support individuals, families, and communities across Connecticut,” Insurance Commissioner Josh Hershman said. “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 Nonprofit Liability, Property & Casualty Insurance Working Group, convened by the legislature’s Insurance and Real Estate Committee, reported in February that nonprofits serving higher-risk populations — including behavioral health, foster care, residential and justice-involved programs — face escalating premiums and shrinking coverage options.
The group heard testimony that the problem is largely structural, driven by rising claim severity, reduced insurer capacity, reinsurance pressures and third-party litigation funding. Some providers described being pushed into secondary markets or hit with major premium spikes after a single large claim.
Nationally, insurance brokerage Risk Strategies, in its 2025 market outlook, forecast rate increases of 15% to 20% on abuse and professional liability lines for nonprofit and human services organizations, and 20% to 30% on umbrella coverage, with carriers reluctant to offer umbrella limits above $5 million.
The state’s consultant will assess the structure, initial investment and future premium costs of any such program, including whether it could meet the statutory operating ratios required of a licensed insurer or reinsurer in the state.
The RFP and solicitation materials are available on the CTsource Bid Board.
