1 The Insurance Act
The Insurance Act came into force in August 2016. It has been brought in to modernise insurance law and ensure insurance contracts are balanced for customers and insurers. One of the aims is to make policy wordings fairer and clearer for all parties. It is also about helping you understand the information that you need to provide when purchasing an insurance policy.
The biggest change you will see will be in the amount and type of information you might now need to provide. If you are already using a specialist charity insurer such as Ecclesiastical, the impact might be less noticeable because the level of understanding of the risks associated with your organisation is likely to be far greater than with a general insurer.
Top Tip: You might need to consult other people in the organisation to help you gather the required information. Start your renewal process early to make sure you have enough time.
2 The increasing threat of cyber risks
Charities are increasingly facing a risk of cyber security and data breaches. Many charities depend on technology and social media to interact with partner organisations, customers, donors or the public in general. Not only does this expose them to the risk of loss or damage to their technology assets, but also to the risk of crime, damaged reputation, potential cost of disruption to their operation or loss of income and third-party claims.
Top Tip: Talk to your IT specialist and broker about cyber risks when you are renewing your policy to ensure you have the right risk management and cover in place.
3 Effective communications around fraud handling
Trustees have a responsibility to reduce the risk of fraud. In a recent survey carried out by Ecclesiastical and Third Sector* almost a third of respondents said that they had experienced fraud committed by a charity employee, boss or trustee during their career. The impact fraud can have is significant, particularly on smaller organisations. It can damage the reputation of the charity and affect future fundraising.
The way an organisation communicates during this time can make a huge difference to its reputation. Having a good communications strategy and plan already in place in the event of having to deal with fraud is very important.
Top Tip: Effective communication is important; make sure communication is part of your crisis-management planning. If your organisation doesn’t have these skills in-house, seek professional communications support.
4 Being prepared – business continuity planning
Increased pressures on finances, regulatory changes, the reduction in grants and donations alongside the changes in how charities are being run have moved business continuity further up the list of priorities. The impact of an event that disrupts a charity’s ability to function is significant, particularly for smaller organisations, so managing risk and reducing exposure are vital. Ecclesiastical currently insures more than 40,000 charitable organisations. As a specialist insurer, we have a good understanding of the risks associated with the sector and a team of in-house risk-management experts who can help charity clients build a comprehensive risk-management plan.
Top Tip: Take advantage of the expertise on offer. Talk to your insurer about getting help with risk management and business continuity planning.
* Third Sector Insight (Charity trustees and risk management: Planning for the unforeseen, March 2016)