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An insurance crisis has forced many foster family agencies to close. What will help keep the rest open?
LA County and the state are setting aside money to help foster family agencies stay open amid an insurance crisis.
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Noé Montes
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LAist
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An insurance crisis has forced many foster family agencies to close. What will help keep the rest open?
The county joins the state in offering bailout dollars for surging liability insurance premiums.
Foster family agencies contract with counties to certify and train foster parents for thousands of children in the state.
Listen
0:44
An insurance crisis has forced many foster family agencies to close. What will help keep the rest open?
Last fall, an insurer that provided liability coverage to the majority of those agencies in the state pulled out of the California market, citing a rise in legal costs.
That led to upheaval in the insurance market as providers scrambled for alternatives.
It’s now been one year since those non-renewal notices started going out, and across California, at least 19 foster family agency programs out of about 220 have closed in the months since, according to the California Alliance of Child and Family Services.
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How the insurance crisis started
The insurance crisis stems back to last year when the Nonprofits Insurance Alliance of California announced it would stop renewing policies, saying the cost to cover agencies was becoming unsustainable.
In L.A. County, about 1,800 children are placed in foster homes supported by these agencies.
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On Tuesday, the L.A. County Board of Supervisors voted to set aside $1 million to help foster family agencies stay open amid the insurance crisis. The state has also allocated $31.5 million in this year’s budget in “bridge funding…to prevent agency closures.”
While some have since found other insurers, costs have surged, said Adrienne Shilton, senior vice president of public policy and strategy at the California Alliance of Child and Family Services. In a May survey by the organization, premiums were up by an average of $163,484 over a year.
“Premiums are skyrocketing — like in one case, going from $300,000 a year to a million [dollars],” Shilton said.
She said even with government assistance, foster family agencies will still need to pay more out of their pockets to cover the increased premiums. She said the state and county funding will only help agencies in the short-term.
“We need to actually do some reforms if we want to keep these programs going, because it's not sustainable,” Shilton said.
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