Shortly after September 11, when the Jewish Federation of Greater Los Angeles (JFGLA) renewed its insurance policy, it found that rates nearly doubled.
This year, it will be even worse, according to Jack Klein, the Federation’s executive vice president and chief operating officer.
Across the country, as American Jewish groups worry about beefing up security in the aftermath of 9/11, they have another hurdle as well: soaring insurance rates. Jewish institutions are struggling with 50 percent increases or more in some case, hikes 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 (UJC).
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 this month to urge examination of the issue.
"In the aftermath of the Sept. 11 terrorist attack, many nonprofit 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 Qaeda documents listing 12 Jewish organizations as potential targets. Then the FBI issued another warning in late June that Al Qaeda might attack Jewish institutions with gas trucks, a warning that followed an attack on a Tunisian synagogue that killed 16 and injured 20. Al Qaeda 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 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.
Jewish groups often fit into high-risk categories for insurance carriers, such as landmark sites or places of public assembly, Serio said. Still, he added, "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."
Community leaders are feeling the pinch.
Klein, The Federation’s COO, 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 UJC, the umbrella group for North American federations, confirmed that insurance hikes have affected many of its members. At a UJC meeting earlier this month 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.
