Public Liability Insurance - Hikes Hit NFPs
6 February 2002 at 12:02 pm
Businesses large and small are feeling the effects of massive increases to their Public Liability Insurance – some have shut their doors as a consequence. And now many Not for Profit organisations are struggling to find the funds to insure their many and varied activities.
Even the humble jumble sale is under threat. Some small organisations have advised their volunteers and fundraisers to stop street stalls and white elephant sales until a solution or the money is found.
At the top end of the charity market large event management is threatened because the organisations just can’t afford the Public Liability Insurance or the insurer just wont cover the event!
A Queensland Council of Social Service Insurance Survey Report in July 2001 indicated a 30-40% increase in premiums with some increasing over 500%. See www.qcoss.org.au
The Victorian Government reported that the public liability insurance for the Melbourne Fringe Festival increased from $9,000 in 2000 to $63,000 in 2001.
The Australian Parachute Federation’s premiums have risen to $1.1 million in 2001 from $127,000 in 1999. The Queensland Women’s Amateur Sport’s Council insurance premium rose from $900 to $9,000 in 2001.
The Victorian Employers Chamber of Commerce and Industry (VECCI) says anecdotal reports of the insurance plight on Not for Profits is growing with premiums for Public Liability Insurance doubling and in some cases jumping by ten times the current rate.
VECCI’s Chief Executive Officer, Neil Coulson says the insurance industry is claiming that a series of situations and conditions have all contributed to the increases in Public Liability Insurance.
Coulson says the industry claims that PL as an insurance product has been unprofitable for many years. Litigation is on the increase, the effect world wide of September 11 and the recent NSW bushfires have all added to an increase in premiums.
Coulson says that as a result there are only 3 or 4 players in the Public Liability Insurance market place willing to take on this kind of ‘risk’ insurance.
He says it has reached a situation for example where one manufacturing company has been refused re-insurance after 20 years without a claim!
In the adventure tourism industry he sites the closure of 45 companies because of the cost of PL insurance.
VECCI says that business and the community would, as a first instance, enjoy a bit more transparency from the Insurance Industry by demonstrating the incidence and type of claims involved in recent ‘risk’ insurance.
Neil Coulson says this would assist business and community groups understand the nature of ‘risk’ and give them the opportunity to develop better ‘risk management’ strategies and therefore become more insurable.
VECCI wants State and Federal Governments to meet with industry to discuss the current conditions, understand the causes and allow a bipartisan approach to assist organisations in obtaining appropriately priced insurance.
Coulson says there are three areas that could help resolve some of the insurance difficulties.
He says one solution may be a system of ‘pooling’ where a substantial number of companies come together to provide a ‘pool’ of insurable companies and offset the cost of claims.
Another is to examine ‘risk litigation programs’ that would allow organisations and companies to demonstrate their bona fide’s as good ‘risk managers.
As well he says support for the Federal Minister’s recent consideration of capping Common Law claims which would help to take the ‘risk aversion’ away from Public Liability Insurance.
VECCI is carrying out a survey of its 8000 members to gauge the extent of the insurance increases and shed more light on the level of re-insurance, the level of increases and the level of ‘non-offered’ insurance.
Neil Coulson warns that the current situation is only the tip of the iceberg and the trend will continue as the Building and Construction Industry begins renewing its insurances mid-year.
The Fundraising Institute – Australia believes the current situation puts many smaller Not for Profits in a very difficult situation.
FIA Chief Executive Officer, Wayne Clarke says the impact of the increases on Public Liability Insurance on small organisations (particularly sporting groups) is that they are considering extra fundraising to pay for the insurance hikes.
Clarke says the FIA believes this is inappropriate because fundraising is meant to allow these groups to take on new initiatives and is not really intended to pay recurrent costs such as insurance.
He says anecdotal evidence shows that many small Not for Profit sporting groups for example were pay just a few hundred dollars for Public Liability Insurance and now that figure has jumped to $4000.
He says he doesn’t believe these groups can sell enough chocolate bars to make up the shortfall!
How has your organisation or your Not for Profit partner navigated the current PL insurance hikes? Tell us your point of view and join our on-line Forum at probonoaustralia.com.au. (Click on ‘Forum’ in the site menu across the top of the Home Page)