Insurance hikes threaten sector

Voluntary organisations could be forced to close because of insurance hikes of up to 350 per cent, NCVO has warned.

Results from the representative body's insurance consultation reveal that 100 per cent increases in premiums are now common and for many charities the figure is even worse.

No part of the sector is left untouched with large household names and small community groups equally affected.

The figures confirm that widely reported insurance problems at charities such as BTCV and the Coram Family are being replicated throughout the sector as the insurance industry attempts to compensate for losses from 11 September and flood claims.

NCVO chief executive Stuart Etherington warned: "Many well run voluntary organisations, both large and small, are facing the very real possibility of closure due to spiralling insurance costs, despite good claims records and low levels of risk."

The consultation found that charities often have no choice but to pass on costs to beneficiaries. The Scout Association, for example, has had to increase subscriptions and Girlguiding UK has been forced to cut expenditure.

The problem is not restricted to rising premiums. Many charities have found their cover withdrawn or not renewed at short notice. Share Community, which provides training to disabled people, was given one-and-a-half-days' notice of its insurers refusal to renew the organisation's cover.

According to NCVO policy officer Ben Cooper, the impact of the sector's insurance problems could undermine government plans to see charities carry out more public services. "Charities could cut back on services and if the Government wants the sector to get more involved in public services, it will have to look at this," said Cooper.

The Active Community Unit is co-operating with other government departments and NCVO to find solutions. "We want a dialogue with the Government and the insurance industry but there are no easy answers," said Cooper.

A spokesman for the Association of British Insurers (ABI) blamed the rising cost of claims. "We are living in an environment where the risk of being sued for damages is greater than ever. The average personal injury claim has gone up by 20 per cent every year since 1997."

The ABI wants a full-scale government review of compensation payments to reduce the level of claims.

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