The government should consider setting up its own insurance scheme
to help small voluntary organisations facing huge increases in
insurance premiums, says independent research posted on the Home
Office's website.
Another option for the government, says the report, would be to
abolish insurance premium tax - the tax on general insurance
premiums - to help the voluntary and community sector (VCS) meet
the spiralling cost of insurance. Some premiums have increased in
recent years by between 30 and 100 per cent.
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The Home Office's active community unit set up an insurance cover
working group (ICWG) in 2002 to investigate the insurance problems
faced by voluntary organisations.
The report, written by independent consultants, states: "These
problems have created nothing short of distress for VCS managers
and volunteer organisers throughout the country. The motivation of
volunteers is being severely undermined and all of this is
compromising government's targets for strengthening and expanding
the VCS and volunteering activity.
"...All those we interviewed and many who responded to the ICWG
consultation paper, stress the need for something to be done now
before people withdraw their time from, and commitment to, the
VCS."
The effects of the 11 September terrorist attack in the US along
with new claims and categories such as "no win, no fee" have pushed
the insurance industry into a state of "turmoil". The Home Office
insurance scheme suggestion would work as a last resort for very
small organisations without any other cover, and the organisers of
one-off events.
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Sophie Chapman, a policy and campaigns assistant for the Charity
Finance Directors Group, welcomed the report but said that the
trustees were still considering what impact the recommendation to
set up a Home Office insurance scheme would have.
"It is good that it makes recommendations for all sides. There are
some things that we certainly support such as the government giving
resources and not just the abolition of insurance premium tax," she
added.
The report also recommends the government becoming more involved in
resourcing the sector to absorb the costs, and to ring fence the
use of insurance premium tax for an emergency funding pool or
indemnity fund to support small organisations or those working in
particularly risky areas such as youth work or care work.
The ICWG will reconvene later in the autumn to review progress and
discuss possible solutions further.
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Research into Insurance Cover for the VCS from:
www.homeoffice.gov.uk/comrace/active/icwg/index.html
