_ UK Charity Insurance _
If you’ve been renewing your charity's insurance over and over for the last few years, a review is most likely well overdue.
However, chances are you’re no insurance expert, so how can you do it justice without the specific knowledge?
Here are 3 simple things you can check that will ensure you’re giving your insurance arrangements due consideration and providing sufficient challenge where necessary.
#1 - the ADVICE check
Start by asking yourself “Do we know what we’re covered for?”. If you don’t instinctively know, that could suggest that there’s a gap in the advice you’re receiving from your insurance provider. Shouldn’t you at least be able to answer that from a weather-eye point of view, even if you’re not arranging the cover yourself?
Too frequently, these uncertainties arise from a lack of engagement by providers. Yet you’re paying them to take care of this for you and relying on them implicitly.
Proper insurance advice is just as vital as that sought from a lawyer or accountant. So it’s important that your broker spends time to fully assess the activities your charity carries out and where you might be vulnerable.
They should communicate their findings to you and demonstrate that their proposed solution addresses those risks. If they’re not driving that discussion, maybe take the lead and press them to account for their efforts.
You may have purchased cover online where no advice was offered – you simply entered details and up came the price. Termed a ‘non-advised sale’, the onus is on you to decide whether the cover is suitable for your needs. If you’re not an insurance expert, how can you know?
A review is a good time for you to gain an understanding of your cover, how it applies in practice and should inspire confidence in the advice you’re receiving.
#2 - the PRICE check
Don’t just look at the cost of the cover - check whether you’re benefiting from value-adds such as prompt, efficient service; ongoing support; and the essential advice we’ve already covered.
Determine whether your provider is adding value to the relationship or merely acting as a conduit between you and the insurer, taking their cut.
Sound advice and fit-for-purpose cover needn’t cost the earth but the consequences of getting it wrong could be game-changing for your charity. Whatever you pay, if it’s for the wrong cover it’s a waste of money. Pay the right amount for the right result.
Is your provider searching the market for you periodically to compare prices or do they assume you’ll renew at whatever cost? That will be evidenced by an annual invoice and no dialogue.
The most appropriate level of challenge is simply to ask why they have made the recommendation they have and the rationale for the pricing, particularly if there’s an increase.
#3 - the THIN ICE check
This is the most important of the 3 checks. It will determine your survival following a claim and, therefore, warrants some attention – “Are we going to be OK if something goes wrong?”.
Where do you start? It might sound obvious, but it’s crucial for you to have a discussion with insurers around your basic legal structure and who’s doing what and in whose name.
Maybe joint ventures appear to limit your liability in theory but how will that work in practice if, for example, negligence is proved?
Charities sometimes assume they’re protected by the insurances of others (eg. at a venue). This is a minefield and you should never assume – your insurance provider should make a measured professional assessment of your contracts and activities.
A review creates the space and time to realign your cover with your aims and activities, to avoid undue exposure to risk. Your activities may have developed since your last review or the risk landscape may have changed. Your cover won’t automatically keep pace.
Charities are often complex and diverse, with exposures to legal liability and other losses that are not always obvious. Making sure that’s matched with appropriate protection requires a considered approach from a qualified specialist - perhaps even tailoring a bespoke solution.
In the end it’s for you to decide whether you’ll put certain covers in place, but we would counsel you to do so from a position of strength, through informed choice.
Excerpt from a more comprehensive blog post on the UK Charity Insurance website.
You can find out more about charity risk management in practice at the FSI's Skills Conference on the 25th March where UK Charity Insurance will deliver live Q&A session.