# Charity Logistics challenges insurance industry

- Link: https://fundraising.co.uk/2003/07/28/charity-logistics-challenges-insurance-industry/
- Published: 2003-07-28T23:00:00+01:00
- Author: Howard Lake

Charity Logistics has invited the Association of British Insurers (ABI) to substantiate
its claim that ABI members, providing cover for charities, are “losing money hand
over fist from this kind of work.”
Charity Logistics, which recently published a
survey on insurance products for charities, has asked the ABI to provide verifiable
evidence that reveals the true claims to premium ratio for charity insurance.

The results from Charity Logistics’ recent survey, ‘Risk Management Club for the
VCS Sector: Feasibility’, would seem to indicate that for every £1 paid in premiums
by charities, only 20p is paid back in claims. Insurance experts have told Charity
Logistics that a payback of 50p to 60p, as is usual in the public and private sectors,
represents good profitable business.

“Far from being a drain on the insurance industry, evidence seems to suggest that
charities are helping to generate windfall profits for some insurers or subsidise
other claimants,” said George Cook, Chief Executive of Charity Logistics. “The insurance
industry appears to classify organisations together by type of activity and turnover,
rather than separating them out by sector. Thus, it seems to have no clear picture
of how charities are performing compared with the commercial sector. So, for example,
a charity providing residential care is assessed as the same risk as commercial 
and public sector care homes. This fails to take into account the often higher standards
within charitable organisations (and thus lower risk) and such charities seem to
suffer from higher than reasonable premiums as a result.”

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“This survey was based on a broad, representative group of charities that was analysed
in detail by type and size, with all known claims being compared with premiums paid.
Yet the insurance industry questions the self-evident results and Charity Logistics
has written to the ABI inviting them to provide verifiable evidence to support its
claim. Even with long-tail liabilities factored in, charities appear to be a very
profitable market.”

Cook added: “meanwhile, we are pressing ahead with the idea of developing an insurance
mutual and have begun the consultation process already. Charities that took part
in the survey have been contacted and we welcome expressions of interest from other
organisations.”

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