In these times of reduced government funding, falling donations and poor investment returns, risk consultant Peter Heap has a rare spark of good news for charities: there are still good insurance deals to be found.
"The charity insurance market is still soft," says Heap, a specialist consultant whose company, Ark Risk Consulting, helps charities assess the risks they face. "There are still a lot of companies competing for business, so it's easier to get a good deal."
This is unlikely to change, he says, unless the market changes or the number of insurers falls sharply. For the moment, a charity that is willing to shop around has several options to choose from.
Nonetheless, Heap says, there are a lot of technical issues that charities struggle to deal with. "A lot of charities fail to link their risk management processes to their insurance buying," he says.
"In a lot of charities, someone carries out a detailed risk management assessment, then someone else buys insurance. As a result, the insurance doesn't reflect the risks the charity runs."
He often audits charity insurance packages, and finds risks and the insurance do not correlate.
The key thing, he says, is to find a broker who understands your charity's needs. "My preference is always to have a sector-experienced broker," he says. "Unless you're an insurance professional, you're unlikely to understand competing offers from insurance companies, so you need a broker's help.
"But make sure they understand what it is you do. Make sure that they have a book of clients who are similar to you, and that they can translate what you do to the insurer.
"Make sure your insurer understands, too, and is satisfied that your cover is adequate for your needs."
Heap says it's particularly important to make sure that the charity's insurance meets its unique needs. For example, a children's charity will face very different risks from those of an international development charity. "Charities will have very different risks, depending on how they're funded and what activities they carry out," he says.
Among specific types of cover that cause charities concern is trustee indemnity insurance, which provides cover for trustees in instances where they can be held responsible if something goes wrong.
"Some charities still struggle to understand what it is and why they should buy it," says Heap. "My own view is that it's worth buying. It's not an expensive cover for what you get."
Some charities are also unsure about whether they need professional indemnity insurance, which covers instances of providing bad advice or negligence. "This is a cover designed for solicitors and accountants," Heap says. "It's clear what they need. A lot of charities provide advice to the public, and a lot of public sector contracts require you have it. It can often be rolled in with trustee indemnity and fraud."
He also advises charities to think about their volunteer insurance needs. "There's a growing body of human resources legislation," Heap says. "It's getting so that you have to treat volunteers almost like employees."
He says that charities should make sure that they are not paying more than once for the same cover, and that they are not leaving any gaps in their cover. "The key is to understand your own organisation and its needs, and to make sure others understand you too," he says.