Meet : Sophie Earland, a Charity Account Executive at Scrutton Bland, working with all areas of the third sector to assist with risk management and insurance.
I understand that it can take several months to get a group of trustees together and finalise what services they will be offering but the insurance should be spoken about earlier on in discussions. One can have the cover in place but not yet paid for it until the day actual services start.
You ensure charities and nonprofit organizations, what personally drew you to this field?
I enjoy getting asked this question. This sector includes local organisations such as football clubs and those helping vulnerable adults. With the coronavirus, we had organisations working with food banks, local groups working with vulnerable people, and the differences they made were just incredible. I am also on a committee of my own: a not-for-profit local football team and I do that in my spare time (weekends and evenings). I was working in insurance, and I saw the good work being done in this sector. About three years ago I decided to focus on this sector to see where I could help. So, if I can take the stress away; help with risk management for new startups and organisations, and give insurance-related advice, it makes my job worthwhile.
What kinds of insurance are mandatory for businesses, social enterprises, etc. in the United Kingdom?
Just like businesses, charities do carry numerous risks. In certain situations, they probably carry more risks. The insurance needed will depend on the charity itself; what activities they are involved in, how they are run, and who is involved in the charity. In some cases, you are required by law to have insurance cover to protect you against those risks. At the minimum, you would need employees ‘liability even if you just have one employee.
Charities often have a couple of volunteers. Even when it is not a legal requirement, and it is not mandatory we would still recommend other covers just to protect the charities’ money, reputation, and property. Depending on who the charity is working with, they may also say that the organization needs certain insurance limits. We find a lot now in the UK that local authorities like the council will say that the organizations who work with them need a minimum of £10 million public liability insurance to continue to work on a contract for them.
So essentially who charities can do business with is dependent on the kind of insurance they have?
Yes completely, it is strange to find that public liability is not mandatory insurance because it really should be. For instance, if a volunteer was to damage property whilst working and undertaking activities for the charity you want to make sure everyone is covered quickly. You are protecting the people that are most important to the functioning of the charity.
Are there any differences in mandatory insurance between businesses, charities, non-profits, or community interest companies?
This question can completely vary, there is no one size fits all depending on if they’re a CIC or an incorporated charity. Instead, I would always recommend a complete bespoke review regardless of what area they fall under. Whether they are an incorporated charity or a volunteer-led local community group, the cover can include public liability, employers’ liability, and trustee indemnity. In some cases, charities may need professional indemnity if they are offering any training and advice.
For example, if you have a cancer support charity and do counseling to people that have cancer then that counseling is classed as advice so therefore, they will need professional indemnity. I would never recommend a package policy.
At what key points in a non-profit’s development should they consider getting insured?
Pretty much from the onset. Once the organisation has decided on the activities and services it will be offering. I understand that it can take several months to get a group of trustees together and finalise what services they will be offering but the insurance should be spoken about earlier on in discussions. One can have the cover in place but not yet paid for it until the day actual services start. Activities can change early on and throughout the insurance policy period depending on the kind of funding the charity might get or the contracts that they have. We would always advise our clients to contact us to make sure the details remain within their objectives and to check that no activities are being altered.
How would you describe the attitude start-ups and nonprofits have toward insurance?
From my experience, the attitude that start-ups can have is just uncertainty. Most start-ups do not know where to start. They might want to help a group of people with the services they have in mind, but they are just not sure where to start. Of course, start-ups can go to the Charity Commission, but the Commission only provides limited information. Start-ups have got to find out a lot of information by themselves. It can be extremely complex for start-ups. They might receive little or no financial support whatsoever but a lot of the start-ups which we speak to understand what is important and want to protect their trustees, volunteers, employees, and assets. Usually, when start-ups call, we provide not only insurance-related advice but often provide risk management and help start-ups if they do not know where to start with a safeguarding policy and loan work policy which is very important in that sector.
What kind of information is required when assessing a nonprofit’s insurance needs?
We always recommend an informal chat; it is just a laid-back talk with someone involved in the non-profit. We would ask about the organisation just to try and get an accurate picture of what they would need and what activities they would be doing. Initial questions can include the name, the title of the organisation, and an estimation of the income for activities if they do know it, volunteer and employee details, and premises information. We will ask about risk management: if they have DBS checks in place; is it updated annually; have they got a safeguarding policy in place? We try to get all the kinds of aspects of what they need, we would always also ask for complete transparency just to make sure that we are covering all areas.
What are some key misconceptions about the insurance industry as it pertains to non-profits, CICs, social enterprises, etc.?
There will always be misconceptions around insurance, and I think that will always be the case when you have different people in organisations with different mindsets. Organisations have had previous experience with insurance, and I think you can have various types of attitudes. Some people realise it is a necessary expense; people that have had a previous big claim or even a small claim before. Some people have been paying throughout the years and have never had a claim, so they have never had to see the impact of insurance. I think you can have various attitudes towards insurance and what that means to a person. Insurance does provide complete certainty to organisations. We try to get rid of the misconception that insurance will not pay out if you need it. This is not the case. If you are completely transparent with insurers, and they understand your risk then you will always have that protection in place. We provide transparency as well and provide what you must have insurance-wise.
This is a repost of an interview conducted in April 2021. Thanks to Sophie and Scrutton Bland for agreeing to the interview and for the useful information. You can check them out at the link below.