What are the biggest insurance issues for NFPs in 2025?

ICDA’s insurance partner shared its predictions for key trends likely to affect organisations this year.

Aon’s not-for-profit senior client manager, Derek Turner, said that that while some areas of the market were stabilising, others – particularly molestation cover and governance-related claims – remained volatile.

Legal risks are rising

Turner said his top concern was linked to government regulations and statutory bodies.

“Over the past few years, we have seen increased trends of claims against boards of management for employment and ‘governance-style’ incidents.

“Due to increased claims and incidents, we are seeing regulatory bodies shine a more focused light on legislative and statutory breaches.”

He said it appeared that government agencies and regulators were increasingly concerned about good governance, and were seeking to ensure that bodies had “appropriately skilled and qualified” leaders.

This trend had emerged in the health and care sectors, but was now “across the board”.

“In many cases, not-for-profits are under even greater scrutiny because they often lack the resources to fully adhere to guidelines,” Turner said.

He said that NFP leaders should review internal policies, strengthen governance training, and review insurance cover to manage these risks.

Molestation cover harder to get

Aon analysis reveals that molestation cover remains one of the most difficult and costly forms of insurance for organisations in the childcare, aged care and disability sectors.

Turner said claims costs in this area remained alarmingly high, and no new insurers were entering the market, while others had withdrawn.

Existing insurers continued to impose heavy scrutiny on applications, offering reduced coverage, charging higher premiums, and requiring large excesses, he said.

Cyber insurance premiums stabilise after spike

Aon said that while NFP concerns about cyber threats were rising, cyber insurance premiums had remained relatively stable after years of steep increases.

Turner explained that in response to a surge in cybercrime six years ago, insurers pre-emptively raised prices to offset future losses, meaning that many organisations were now seeing minimal further increases.

However, smaller organisations were seeing significant variations in premiums, depending on IT risk management, level of cyber protection, and policy settings.

He warned that organisations without basic IT safeguards or dedicated personnel were almost “uninsurable”.

He predicted artificial intelligence (AI) would emerge as a risk area, especially without clear legislation governing AI risks. He predicted insurers would take a cautious approach to AI cover.

Natural disasters could cause insurance chaos

Aon believes natural disasters are the most unpredictable force on insurance.

Since 2020, large-scale fires, floods, and storms have cost insurers over $100 billion globally, significantly affecting their profitability.

As a result, insurers have sought to recover losses through rate increases and reduced coverage, but 2025 could see a softening market – and reduced premiums – if no further catastrophic events occur, Turner said.

He said increased competition, improved pricing and better reinsurance terms could lead to improved conditions for insurance buyers.

Sporting clubs struggle with insurance affordability

While some sports clubs have shut down, citing unaffordable insurance, Aon believes this reflects a wider funding crisis for NFPs.

Turner said the fact that NFPs relied on grants and funding, more than other forms of revenue, meant that any premium increases hit harder, especially in a tough economic climate, which had seen rising costs in all areas stretching budgets.

He said some sports, such as rock climbing, motor racing, and horse riding, were now relying more on national peak bodies to secure collective insurance schemes. But he noted these arrangements often only covered core activities, which left clubs with coverage gaps for extra programs.