She is a woman of vision. In fact, she is living her vision. Against all odds, she started up an insurance company, based on her master's thesis, during one of the most difficult markets the industry has ever seen. Today, Nonprofits Insurance Alliance Group is a major and well-respected player in the nonprofit, social services sector.

That testimonial comes from Robert L. Miller, senior vice president of Brown & Brown Insurance Services in Allentown, Pennsylvania. He is talking about Pamela Davis, founder and chief executive officer of Nonprofits Insurance Alliance Group, which consists of four companies: Nonprofits Insurance Alliance of California (NIAC); Alliance of Nonprofits for Insurance, Risk Retention Group (ANI-RRG); National Alliance for Nonprofits for Insurance (NANI), a captive reinsurer; and Alliance Member Services (AMS), the management company that supports the other three.

NIAC provides liability insurance to nearly 6,000 nonprofits in California and writes in excess of $40 million in premium. ANI-RRG provides the same coverages to nonprofits in 23 states plus Washington, D.C., and writes more than $15 million in premium.

The difficult market to which Miller refers was, of course, the mid-1980s when insurers, after years of cash flow underwriting, began to retrench in the face of impending losses. Almost the entire insurance industry was digging in its heels, and coverages for many lines became either unaffordable or unavailable.

During this time, Davis, having returned to school at the age of 30, was working toward her master's degree at the University of California at Berkeley, majoring in public policy. "There was tremendous insurance instability in the nonprofit, social services sector, and it seemed to me that insurers were dictating what social services organizations could operate in California," Davis says. "The state had just passed a law allowing nonprofits to create a risk pool and I recognized that, if there was going to be any stability in the market, nonprofits would have to do just that. I wrote my thesis on that subject, and then the California Community Foundation gave me a platform when they published 5,000 copies. That's when I began looking for the backing to actually start up a company."

After she had received several small grants from various foundations, Davis's first major capital commitment came from the Ford Foundation in the form of a $500,000 loan. Other foundations came on board, and after a two-year effort Davis had $1.3 million in low-interest subordinated loans to work with. She realizes now that this was a thinly capitalized start and was more cautious when it came time to start the second company in the Group. However, she is proud to say that all loans were repaid with interest.

In 1989, NIAC was up and running. "It took two years of development," Davis says. "We had a rocky start at the beginning. There was an earthquake in Santa Cruz, and for a while we were without electricity and telephone service. But we hobbled along. Small local brokers across California cared deeply about the nonprofits market and took a chance with us. Many of those original brokers remain with us today."

Of the 5,500 charitable nonprofit organizations that are members of NIAC, 29% are in community service, 26% in arts and education, 12% are in mental health and health-related developmental disabilities, 11% represent shelters, 8% are in neighborhood improvement and social action, another 8% are in animal care and the environment, and 4% in philanthropy and volunteering. The company writes broad form general liability, social service professional liability, commercial auto liability and physical damage, non-owned and hired auto liability, improper sexual conduct, directors and officers liability, and umbrella. Property is provided through their MGA operation.

Expansion plan

Ten years after the establishment of NIAC, Davis wanted to expand the company's operations, but by law it could operate only in California. In 1999, she started up Alliance of Nonprofits for Insurance, Risk Retention Group (ANI-RRG) with $10 million in grants from the David and Lucile Packard Foundation and the Bill & Melinda Gates Foundation. Like NIAC, ANI-RRG is a 501(c)(3) nonprofit, serving more than 2,000 other nonprofits in 23 states and the District of Columbia. The states are Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, and Washington.

"A key strength of our organizations is our singular commitment to the nonprofit sector and our membership in it," Davis says. "We broadly serve the nonprofit sector, including nonprofits and brokers of all sizes, by providing appropriate insurance at prices that are adequate and fair, and that can be maintained over the long term. Our prices reflect our best assessment of the lowest sustainable price for the individual risk involved, but not necessarily the lowest price during a soft market. We believe that providing the nonprofit sector with a reliable, long-term solution takes precedence over shortterm market pressures."