Charities ripped off by insurance companies

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.
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