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Voluntary sector organisations and charities are being ripped off by insurance companies, new research suggests, writes Ruth Winchester.

A survey by Z/Yen on behalf of support organisation Charity Logistics found that for every pound paid by charities and voluntary sector organisations in premiums, just 20 pence was paid back in the form of claims. In most other sectors the rate is around 50-60 pence back from every £1.

Charity Logistics chief executive George Cook said charities seemed to be among insurers' most profitable business and added:“We have to ask if charities aren’t, in fact, subsidising some of these companies.”

Nick Aldridge, policy officer for the Association of Chief Executives of Voluntary Organisations, said that most charities and voluntary organisations had been hit by an average premium rise of 30 per cent for the year 2003/2004. He called on insurers to recognise the low risk that most charities pose and reduce premiums accordingly.

But he also highlighted examples of sharp practice by charity insurers. “We know of cases where premiums have increased by 100, 200 or even 300 per cent in a year, and this is simple profiteering. Alongside that we know of cases where charities are given hardly any notice of a steep increase, leaving them unable to shop around. This sort of bad practice has got to stop.”

The report, 'Risk Management Club for the VCS Sector: feasibility' will be published in full later this year. A spokesperson for the Charity Commission said: "We will be reading the report with interest, and would be happy to contribute to any discussions concerning the feasability of creating an insurance mutual as a way to help charities get a better deal.”

see www.charitylogistics.org.
Home office working group on insurance for charities