Charity Logistics challenges insurance industry
Howard Lake | 28 July 2003 | News
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.
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“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.”
“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.”
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.