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The changing nature of the voluntary sector is causing charities to reassess their risks.

Malcolm Tarling, media relations officer, Association of British
Malcolm Tarling, media relations officer, Association of British

Charity staff are more likely to be motivated to get out of bed in the mornings by the prospect of helping people than by mundane matters such as insurance.

Insurance is never likely to set the pulse racing, but Malcolm Tarling, media relations officer for the Association of British Insurers, says the voluntary sector is going to have to think more seriously about it in the months ahead as it continues to grow and provide more public services.

Tarling has been with the ABI, the trade body for the insurance industry, for 26 years, and the voluntary sector has changed considerably in that time. But the emergence of the contract culture and the government's vision of voluntary organisations providing more services as part of the big society could lead to the most profound changes for years.

Charities that respond to the challenge could be exposed to new and greater forms of risk. "If a charity widens its areas of activity, that could have significant implications for insurance," says Tarling. "It would almost certainly need to reassess its risks."

Tarling says the insurance industry is still working out how to respond to the big society, but he believes voluntary organisations can expect to see the introduction of new products tailored to their specific needs. "We have been talking to our members about what role they could play," he says.

Working in new areas, taking on staff from the public sector and greater reliance on volunteers all carry elements of risk.

While the market calculates the impact of these risks on the cost of insurance, charities will already have been affected by the rising cost of motor insurance, says Tarling. Many will have noticed their premiums increasing by up to 30 per cent this year, mainly because of the growing number of uninsured drivers.

"Four per cent of drivers are uninsured; it costs the industry £50m a year," he says. He also believes that fraud and the "disproportionate costs of settling personal injury claims" by motorists are contributing to the rise in motor premiums.

The cost of liability insurance, especially public liability insurance, is another big consideration for charities, says Tarling. An increase in claims has led to premiums going up in recent years and made it more important for charities to ensure they have adequate protection against claims arising from injuries or damage to people or property.

Another constant cause of concern for charities and small businesses is health and safety, says Tarling. Employers' liability insurance has been compulsory for more than 40 years to protect organisations against claims from employees, yet many charities still don't know how to get the best deal.

"Charities that can demonstrate they have taken steps to keep down the risk of claims being made against them can benefit from lower premiums," he says. "It's worth talking to your insurers because they can help you to manage that risk."

If the big society, motor insurance, liability insurance and health and safety are the main insurance issues facing charities, what will be next on the agenda?

Tarling says it currently takes too long to settle claims and reform of the legal system is needed to speed things up. "The current system is too slow, too costly," he says. "That's to the detriment of charities and anyone else who makes a claim."

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