Jeff Koch knows a lot about church risk management. Jeff became the President and CEO of United Methodist Insurance Company, Inc. and United Methodist Insurance Agency, Inc. in 2019. He has 35 years of experience in the development, marketing, and management of group insurance programs; risk management; and alternative risk programs.
Did you know there were “New Proper Insurance Standards” and Book of Discipline Responsibilities?
The Book of Discipline requires the General Council on Finance and Administration (GCFA) to provide churches with a schedule of proper insurance standards (¶ 2533.2). At GCFA’s most recent August meeting, the Board of Directors approved the revised standards for churches. The newly released documents are available on both the GCFA website and the United Methodist Insurance Program’s website (I cannot find the link on the website).
The new standards include changes that were brought about by reviewing:
- Publicly available information from United Methodist programs and programs from other denominations,
- Sample surveys of UMIP insureds from a variety of different size churches, and
- Consultation with legal and insurance professionals.
The main changes are as follows:
- There are now three size categories where there were only two before. A set of standards for churches with fewer than 100 members was added, as their needs differ from those of churches with 250 members.
- Each church is now advised that it is responsible for maintaining proper coverage for its ministry. Their actual needs for limits and coverages may exceed those of the standards. This should be accomplished in consultation with an insurance professional with experience in providing coverage for churches.
- Churches in monopolistic workers’ compensation states (North Dakota, Ohio, Washington, and Wyoming) are reminded that their workers’ compensation coverage does not include employers’ liability coverage.
- Additional guidance is provided on functional replacement valuation for property coverage. Churches should be aware that coverage terms vary by carrier and of any additional risk using this valuation method.
- Note that equipment breakdown/boiler and machinery, flood, and earthquake insurance may be required.
The same section of the Book of Discipline that requires GCFA to issue this schedule requires church trustees to compare their coverage to these standards. The comparison is to be documented and reported to the Charge Conference (¶ 2550.7) along with a plan to bring the church in compliance with the schedule’s proposed standards. The new schedule also advises church trustees to ensure that their needs may exceed these standards. These forms can be found on GCFA’s Chronicles system.
The Book of Discipline also requires that church treasurers be bonded (¶ 258.17). In practice, your crime coverage may be sufficient. You should ensure that everyone responsible for handling your church’s funds is properly covered by your insurance or by a bond. You should also ensure that your coverage limits are adequate.
You should also take practical steps to minimize the chances of theft and embezzlement. There are many resources available online to help you, including one from the Arkansas Annual Conference governing internal controls: Click here to see that resource.
Each church is required to have written financial policies to document internal controls (¶ 258.4c). Local churches are also required to make provision for an annual independent audit of the church and all its organizations and accounts (¶ 258.4d.) That same paragraph also defines what an audit entails and who should perform the audit.
Maintaining proper insurance coverage and having strong internal financial controls are an essential part of good stewardship. UMIP and GCFA have resources available to you to help you fulfill these responsibilities. Protecting the people, property, and finances of your ministry is essential to carry out the work of making disciples of Jesus Christ for the transformation of the world.
Jeff Koch became the President and CEO of United Methodist Insurance Company, Inc. and United Methodist Insurance Agency, Inc. in April of 2019. He has over three decades of experience in the insurance industry. He is a member of Brentwood United Methodist Church in Brentwood, Tennessee.