Five years ago, the National Council for Voluntary Organisations took the decision to enter the charity insurance market.
The charity umbrella body founded Case Insurance in partnership with the law firm Bates Wells & Braithwaite and the Charities Aid Foundation. It was an unusual move for the NCVO, but one that Chris Taylor, its enterprise development manager, believes was justified. "Charities had been lumped in with the commercial sector in terms of their risk and premiums," he says. "But if you separated the charity sector out, their claims ratios were lower, so there were opportunities to actually reduce premiums for charities if they were treated as a separate market."
Taylor says there were particular aspects of charity insurance that many insurers didn't seem to understand, such as trustee indemnity. As a result, they were charging charities too much for their insurance. "When it has been to visit charities, Case has found that they are charged excessive premiums for cover," he says. "It's almost a case of them being mis-sold the level of cover that they need. But that's often because the insurer hasn't taken the time to fully understand what the charity is doing."
Case, which is an abbreviation of 'charities and social enterprises', now has more than 1,300 charities and social enterprises on its books and continues to grow.
The NCVO and other founding partners receive a share of the profits from Case, but Taylor says this isn't the main motivation for encouraging its members to sign up to the scheme. "Case is about understanding the sector and our members," he says. "We're involved because it helps our members."
The NCVO is not alone in promoting the products of a certain insurer to its members. The local infrastructure body Navca recommends Tennyson Insurance to its members - 400 organisations, mainly at local level.
Bill Freeman, director of development at Navca, says it has no direct financial stake in Tennyson, but merely recommends it as a preferred provider. "We've worked with Tennyson over a number of years and helped it to understand who our members are and what needs they have," he says. "And it has been able to develop the products and services to meet the needs of smaller charities and voluntary organisations."
Freeman says that by endorsing a particular insurance provider Navca is not only helping to save its members time and effort researching the market, but also offering them a level of reassurance about the organisation. "What we try to achieve with any of our relationships with businesses is that you can trust these people and that their services are designed with you in mind," he says.
He cites the case of Charity Business - the back-office support firm that went into administration last month, leaving its charity clients without their valuable data - as an example of what can go wrong if you select the wrong provider.
Clubs for Young People, a membership organisation for voluntary sector youth clubs, also offers insurance to its 3,000 members. Helen Marshall, chief executive of CYP, says it started offering a basic level of cover about 10 years ago so that members did not need to think about their insurance. Last year, however, it re-tendered and the insurance contract was awarded to the US firm Lockton Companies LLP.
In return for promoting the insurance, CYP receives a percentage of the gross premium. This year, about 500 of its members have taken up the insurance.
"What Lockton has managed to do is put together a package of insurance that doesn't have any exclusion on the type of sports or activities that our clubs do," says Marshall. "It also provides a level of trustee liability insurance."
Marshall believes it's possible to get cheaper insurance, but says: "I'm confident that the package we're offering has a good breadth of cover."
The umbrella bodies believe that the insurance providers they endorse offer a good level of cover for charities at a fair price, but they cannot guarantee that the insurance offered is necessarily the best or the cheapest on the market. Simon Hickman, managing director of Access Insurance, a specialist charity broker, believes this is the weakness of such deals. He advises charities to shop around before agreeing to take out insurance recommended by an umbrella body.
"There is a much wider variety of insurance providers for charities than there was five years ago," he says. "Case and Tennyson are largely limited to insurance through their preferred underwriters. If you go to an independent broker, by contrast, you can have access to both of those markets - and much more. That way, you can often get the best deal."