The editors of Ministry recently sat down with the team of Adventist Risk Management (ARM) officers in an effort to learn more about their work—which is truly a ministry. The ARM administrators, headquartered in Silver Spring, Maryland, United States, consist of president Robert Sweezey, and vice presidents, Arthur Blinci, Karnik Doukmetzian, Michael Jamieson, and Byron Scheuneman.
Willie Hucks (WH): The first time I heard the term risk management my reaction was, what’s that? And I suspect a lot of our readers feel the same way. So let’s begin with that. What do you actually do?
Robert Sweezey (RS): That’s real simple, we manage risk. Every major organization has a risk management department. What we do for the church is not unlike what corporate bodies do, with a few distinctions. Because of the nature of Adventism, our job really facilitates the church working together. All insurance, to some extent, is people working together. From the early days in the United States with Ben Franklin and his Fire Societies, people worked together to protect their assets, protect their homes. For example, I buy insurance on my home; if it burns down, the insurance company sends me money, but where did that money come from? It came from other home owners who also bought insurance to protect their homes. That is how a group of people work together to protect the assets of their homes. Commercial insurance companies, of course, are into making money. As an Adventist organization we are not driven by making money. We are interested in spreading the gospel. So, how does Adventist Risk Management and our sister organization that we manage, Gencon Insurance Company of Vermont, help spread the gospel? We do that by working together. We take the risk of one small part of the mission and combine it with the risk from other parts of the mission, so that the risk of loss is shared between the entities, the administrators can balance their budgets, and the mission can be pursued at the least possible cost.
Nikolaus Satelmajer (NS): Is there a difference between risk management and insurance?
RS: Insurance is a sub part of a risk manager’s tool bag. Risk can be eliminated by means other than insurance. For example, I do things to protect my home from burning down: clear the weeds around the house, keep my kids from playing with matches, etc. Instead of hiring an insurance company to work with competitors, organizations have discovered that they could retain within themselves a portion of managing risk. In lay terms, the simplest way to do this is to take a big deductible. There are other mechanisms as well that help to manage risk without simply giving the job to an insurance company. Now, because an insurance company is interested in making a profit, it is going to be careful in which risk they insure. For example, insurance companies may prefer to insure your home because you don’t have little kids at home that could play with matches, but may not insure my home because I have kids. Well, that is also true when we look at the world church and the mission we want to pursue. Risk management and the insurance component of that is only one element of how the church works together financially. I’ll illustrate this with the other components first. For example, you want to build a new school in a country in crisis—politically unstable and at war all the time. Who is going to loan you money to build a school in a country like that? Where do we get the money? Well, every quarter we as a church collect our Thirteenth Sabbath Offering, we get a chunk of asset money and we invest it in that unstable country where no one else will go. Now that you have that building, who’s going to insure it? Commercial markets won’t because they think they won’t make money, but Adventists can if we work together. I have used this mission example for years, but that example is coming closer to home, even in the United States, in view of what we saw recently by way of natural calamities in 2004 and 2005. Suddenly no one wants to insure churches in Florida or in New Orleans. But by working together we can protect the mission in those parts of the world and the gospel can go forward.
NS: Do you insure even in these high-risk areas?
RS: If it’s part of the church, we can care for each other by the church working together.
NS: Do you operate in all the world divisions of the church?
Karnik Doukmetzian (KD): We operate in every division field of the world church. We maintain five offices. In the United States our main office is at the General Conference headquarters in Maryland; we have offices in California and Georgia, and outside of the U.S. we have offices in Brazil and England.
WH: You’re talking about insuring churches. Are you also responsible for insuring workers for the church?
Arthur Blinci (AB): It depends on what you mean by “insuring.” What church employees and church volunteers do when serving the church is insured by Adventist Risk Management and Gencon Insurance Company. So, if a lawsuit was brought against a pastor and they were charged with being negligent in supervising that church activity, they are covered under the liability insurance policy of the church.
KD: We don’t insure individuals, but we do insure organizations and their employees and volunteers.
AB: The church sends thousands of volunteers for mission projects, such as construction. We provide accident insurance for those volunteers. If they are injured while building a chapel somewhere in the Caribbean, for instance, we care for their medical expenses.
RS: There are many other things we do, but every activity is designed to support the mission of the church so we have property and liability insurance, which protects the church, its agents, employees, and volunteers. We also support workers that are asked to go to parts of the world and put their personal safety and their assets at risk. In the United States and in some other divisions, we also play an active role in helping the church with its most valuable resource—its employees.
Byron Scheuneman (BS): The church is generous in its benefit program, especially in its relationship with its family of workers. The most significant part of that benefit program, after the retirement program, is health care. The church, in the United States, has asked Adventist Risk Management to administer its health-care program. Because of the willingness of the church to work together, ARM can negotiate with major companies the group purchase of health-care products, such as prescription drugs, at a much deeper discount, for both employees and retirees. In addition, relationships with nationwide entities such as the BlueCard PPO programs save the church over twenty million dollars annually in health-care costs. And this is only possible because the church is willing to work together so that a small academy in a remote part of the country can realize the benefits of a large group in these negotiations with a vendor. In addition, we have a group that works with life-insurance programs that can be secured at a much more favorable rate for the church. We also make sure that every worker has a basic coverage and a supplemental coverage with group rates versus individual rates. In addition to these programs and products, we have secured a variety of products that assist church workers as they travel and engage in activities on behalf of the church.
NS: Imagine a church board meeting. The treasurer says that next month the church has to pay an increased premium to the conference. And a board member says, “I know where we can get good coverage for much less than that and so I think we ought to move.” What advice do you have in such a case?
KD: Don’t do it! When you’re looking at insurance you have to look at different aspects including what’s covered by the policy. Is the property appropriately valued for insurance so that if it were to be damaged you would have enough insurance proceeds to rebuild it? Are you getting the coverage that you need? Is the conference, the owners of the property, able to determine that? The coverage we provide to the conferences and then to the churches is broad enough to make sure the widest-ranging possible coverage is provided. You may find cheaper coverage elsewhere just as you find cheaper vehicles. But you may not get exactly what you’re looking for or have the options you desire. The time when you find out about the value and benefit of your insurance policy is not when you buy it, but when you have a claim. And, when you have a claim, it’s too late for you to say, “Oh, I wish I had the other coverage.”
RS: Commercial insurance, more than homeowner’s or consumer insurance, is really different from carrier to carrier, and needs to be carefully evaluated for property insurance. For liability insurance, it is good to remember how intertwined Adventism really is. In America, for example, we live in a very litigious society, and plaintiff lawyers, when they sue, typically sue everybody. Well, who is everybody? Think about a local church. The church has a Pathfinder club of about a dozen kids. Most of the exciting things that the little Pathfinder club does are conference- or union-wide activities. In one such activity, a child is injured. Is that a local church function, a conference function, a union function, a North American Division function or a worldwide function? Well, the plaintiff is going to fi nd out by suing everybody. If everybody has a different insurer, everybody’s insurer is going to come to the table and fight about whose fault it was and who should provide the indemnity to the injured person. What we need to do is protect the injured person; and if the church is wrongly accused, the church needs to stand together to defend. You have difficulty doing that when you have different financial parties and interests representing you. Not only is it nice when we’re all working together but, in the long run, much cheaper for the church.
AB: There’s another aspect that a church board needs to consider. When a conference office puts together an insurance package for its churches and schools, there are certain costs that the conference may socialize with all its churches and schools. The local church may get an invoice that only says “church insurance” and they don’t really understand how broad that is. For example, every one of the church board or school board members is covered with directors and officers liability insurance. Many of the other companies would say that you have to buy that kind of coverage separately. But with our policies, you don’t. You already have that coverage because you’re part of the sisterhood of churches. The church treasurer, the school treasurer, and any volunteer who helps the deacons to count the money all have crime insurance so that if funds are stolen from the church, the church is protected. And again, this is something that a conference typically provides to all of its churches through its full conference program. For a church to get such coverage on its own, it has to go outside of the church family to buy insurance.
KD: We were talking earlier about working together. This also applies in the conference and church setting. Individual churches may be able to find cheaper insurance elsewhere, but working together reduces the overall cost of insurance for the whole group. One or two may be able to find cheaper insurance, but others may have to pay more if they were to go out on their own.
RS: Another point needs to be noted. There are places in the world where one can’t get insurance. Being a Seventh-day Adventist means you’re a part of a worldwide system, and you can get your church insured.
NS: Are you saying that when you provide service for the church, conference, or local congregation, it is designed to work within the context of the local as well as worldwide mission?
NS: Some providers may say, “Yes, we can insure your building,” but in effect they may not fully meet our need.
RS: Recently, one carrier who specializes in insuring houses of worship went to a local conference and offered to provide that conference a price lower than the ARM price for insuring their churches. Their offer covered all but six churches in the conference. Who’s going to insure those remaining six churches? Gencon Insurance Company of Vermont? How could Gencon insure just the six poor-risk churches? You see, it takes the whole system working together.
WH: Let’s say I’m a pastor of a church. According to what you have said earlier, my church leaders—elders, deacons, youth leader, Pathfinder director, etc.—carry liability insurance. One day, a parent comes to me with a complaint that her daughter was abused by a local church leader. How do you respond to such cases?
KD: Abuse happens. Some denominations have taken the position to deny, deny, deny—until the courts intervene. Many insurance companies take a similar position. We, over time, have developed a process that when such allegations arise, we immediately investigate, involve the conference officials, counselors, and our staff, to try to minimize the damage caused to individuals and to the church. The point is one of quick response. Other insurance companies won’t even become involved at this early stage. They let the church handle the problem on their own and let them do what they want to do. In effect, they tell the churches, “When you have been served with a lawsuit, call us.” Our position is different. We like to be involved at the early stages so that we can work with the local church, conference, and church attorneys. The expertise that the whole group has developed together comes into action to try and minimize the pain and suffering caused by the abuse.
WH: What should they do before something like this happens?
KD: As a minimum, every individual involved with children should complete a volunteer application form and undergo appropriate background checks. We have some guidelines to help pastors on how to deal with staff and volunteers, how to train them for their work, how to do background checks, and how much involvement they should have with those with whom they work.
RS: Just like a financial audit of a treasurer is not an attack on the treasurer’s character, training a volunteer working with children and youth is not an attack on that person’s character. Our Web site www.adventistrisk.org lists resources and guidelines to help protect the reputation of those working with kids.
NS: One of the accusations made in sexual abuse cases is that the church has ignored the victims. What do you do to take care of those who feel they have been wronged?
KD: My first advice for pastors: get professionals to help you as soon as you hear of a sexual abuse case. Don’t express disbelief. Don’t make comments such as “this thing could never happen in our church.” Inform the conference and ARM immediately. Let us know what happened so that we can work with you and with the victims, get them counseling or whatever is needed in order to assist them in their recovery.
NS: So you’re not treating them as adversaries.
KD: Not at all. You can’t afford to do that. The moment the complainants become angry, they turn against the church, they turn against the individuals who are trying to help them. And recovery for them becomes virtually impossible.
RS: The victims, especially in a minor’s incident, want to be heard, want to be taken seriously. For example, the North American Division has set up a process through the sexual ethics panels to make sure everyone gets due process and is heard. We encourage every pastor to do that. Sometimes we are tempted to forget that our mission is always to help and protect the children. When an incident occurs and you’re the pastor and now the local TV news person has a microphone in your face and the camera lights are on you, and you are being questioned, what do you say? The tendency is to say that you are not aware of all the facts, and that you have not had time to investigate the case fully. A better response would be, “We’re here to protect our kids, we’re worried about our kids’ safety, and we’re going to do what it takes to keep our kids safe. And we will cooperate with the authorities.” As you work through the process, seek the help of professionals. The conference and Adventist Risk Management are here to help.
NS: Michael, when you deal with premiums, resources, pulling things together that involves money, what do you as a CFO do on behalf of Adventist Risk Management to safeguard, to manage these significant assets?
Michael Jamieson (MJ): My primary role is to care for financial operations, including budgeting and reporting. This allows management and the ARM Board to make good decisions, thus ensuring the best use of our resources for the protection of the Lord’s assets. Our products are set up to care for the mission of the church. Everything that we are and own belongs to the church. When claims are low in a given year, the assets remain in the Lord’s treasury. As a result, Gencon Insurance Company of Vermont, the risk-bearing arm of the church, has about twenty-six million dollars for managing future risks. As this value grows, we are able to assume more of our own risk, which reduces insurance cost, saving money for the church and its mission.
NS: Because ARM is a church entity, all its assets are part of the church. Nothing goes to any stockholders outside of the church.
MJ: That’s right. ARM and all of the ARM group of companies is owned and operated by the General Conference. We do not have any outside stockholders and none of our profits can be distributed to anyone other than the General Conference. We even pay rent to the General Conference, not to someone else. All of our assets are the Lord’s.
NS: So, when we collectively minimize our risk, we all save.
KD: That’s correct. One blessing I see in ARM is that it works only with the church. We sell insurance only to the church. We don’t have one hundred thousand clients; we have only one— the Seventh-day Adventist Church. We know the church, we are all members of the church, we know how the church operates, and our bottom-line desire is to protect the church in all aspects.
NS: Occasionally, someone says, “Why do we need to insure anything? We should just trust the Lord.” How would you answer that question?
RS: God expects order in an organization. The Adventist Church has functioned in that fashion. Every aspect of its work requires order, which means orderly budgeting and orderly caring for risks that may occur. People sometimes quote Ellen White to say she was against insurance. Ellen White did make several interesting statements, but very few on property and liability insurance. What few statements she did make about property or fire insurance were private statements to her family to care for family business and make sure her house was insured when she was out of town. She did make a number of negative statements about life insurance. These statements were made at a time when life-insurance companies were not regulated and were unscrupulous. How much life insurance should an individual buy? The goal is not to leave your children or someone else a huge inheritance and make them lucky because you’re dead. The goal is to provide a financial tool to make sure that those who are dependent upon you financially have their needs cared for if you are unexpectedly taken from them. Both the Bible and Ellen White’s writings uphold one’s responsibility to make provisions for one’s family so that loved ones are not left behind without any support and care.
NS: So life insurance really is income replacement. Calling it life insurance is a misnomer.
RS: Yes, it is income replacement, not a get-lucky-if-Grandpa-dies scheme. One of the changes in the regulations of life insurance since Ellen White’s day is the concept of insurable risk. In property insurance, if you don’t own it, you can’t insure it. You can’t insure my house for fire hazard. Only I can. In life insurance, there has to be a family or financial relationship between you and the person that you’re buying the policy on.
WH: So a sensible plan for a young family with children would be to have insurance sufficient to cover the house and the children’s education.
RS: That’s reasonable. Now, the denomination in North America, and by and large around the world, provides a basic level of protection for its workers, and ARM facilitates that. Think of the risks that a young pastor faces, such as disability and injury that may prevent him from working. What then? Denominational employers provide assistance through ARM. Such assistance includes basic life insurance for the worker and dependent family members. Part of that is provided by the employers through mechanisms managed by Adventist Risk Management. Basic life insurance is provided to employees, but if you are a young person and have many children, you’ll find the basic is not adequate, so you may have to purchase additional coverage. As you grow older and the children complete their education and embark on their own lives, you won’t need as much life insurance. You can lower those expenses and then funnel those funds into mission.
WH: What satisfaction do you personally receive from your work?
KD: Using my expertise in law and insurance, I feel, helps save the church’s assets for its mission, being able to help resolve problems, or clean up issues that had the potential of giving the church a bad name or negative press. Other things that give me satisfaction: writing a check for two and a half million dollars to a church that burned down last year. It would have taken many years for that church’s one hundred and thirty members to recover from that disaster and raise the funds to rebuild, but having the backup of the church’s insurance company allowed them to promptly rebuild their sanctuary and continue worshiping together. Two or three years ago we had the hurricane losses in Florida and the Caribbean. Over six hundred church properties were damaged or destroyed. Gencon Insurance Company of Vermont, and our reinsurance partners, paid over thirty-four million dollars to help these churches rebuild. This gives one a lot of satisfaction—being there to help in time of crisis or need.
RS: Risk management in the church is a staff function. If you ask, “What is a good day at work?” my answer would be, “A good day at work is when I helped a fellow church administrator solve a problem that was hindering their ability to carry out mission.”
MJ: Another good day would be when someone has lost a loved one and you’re able to call the administrators, and help them work closely with family, assuring them that they have insurance coverage to care for some of their immediate expenses—and their future.
BS: We administer thousands of healthcare claims that come in from church workers and retirees across the United States. Nothing is probably more personal to an individual than their health care. When workers fall ill, they need to feel that they’re going to be cared for. Our goal is to do just that and at the same time save a significant amount for the mission of the church through our concerted and cooperative efforts.
AB: One area of personal satisfaction for me is working with church administrators and lay people to better understand and appreciate the work of ARM. We have this educational and understanding partnership with various church entities such as the church ministries department, the youth department, and Adventist Community Services. It is satisfying to see people understand for the first time that risk management is more than insurance, and that it is careful stewardship of assets the Lord has entrusted to the church. When people really see ARM’s work in that light, they begin to understand that Adventist Risk Management is active stewardship.
MJ: The greatest risk management story ever told is the story of redemption. The risk management plan was in place before man’s fall into sin.
WH: Thank you so much for taking the time to share with us concerning your ministry.