Wednesday, December 8, 2010

Why delegating an "insurance" person could be a HUGE mistake.

Does your organization have an appointed person who handles the insurance? Is this designated person an officer of the organization or simply someone whose quasi-business background made them the de-facto insurance expert?

So many times we come across organization who have one person who handles the insurance. They become the spokesperson/liaison/expert in all matters insurance. While for the most part it is highly beneficial for one individual to take these reigns, it presents some challenges on both sides.

First and foremost, assigning one person to handle insurance can often pigeon-hole that individual into a sense of complacency. What happens at renewal time when this person is either a) not available, b) on vacation, c) too busy d)  all of the above? If your broker needs to reach someone at the organization the absence of this person makes it difficult and sometimes detrimental to get a policy renewed. As Directors and Officers liability policies are on a claims made basis, it is imperative to not have any lapses in coverage. If the broker is finally able to get a hold of someone, they often face delays because the individual handling the insurance has neglected to inform the rest of the board about the facts pertinent to the renewal.

From the Organization's perspective, while having one individual assigned to the insurance makes sense, it is up to the responsibility of all board members to know the details of insurance including policy terms, limits, expiry dates, what is covered and what isn't covered. This way if there is any issues with the individual or individuals handling the insurance someone can pick up the ball and run with it.

Simply put  - it's good business and its even better risk management. What if the person handling the insurance gets let go? What if they are the subject of a potential lawsuit? Who should the broker talk to in their absence? All of these are important questions to keep in mind when developing a risk management plan, if that plan involved insurance.

Here are some steps your NPO can take to mitigate any potential gaps in coverage when dealing with your insurance.
1. Assign one person to LEAD the insurance aspect
2. Assign two individuals to act as support or backup for this individual.
3. Provide all contact information to your broker
4. Continuously review who is best suited to handle the insurance. Rotating the individual involved will prevent fatigue and give risk management experience to all board members
5. Make insurance a topic for each and every board meeting. This way everyone can't forget about it.
6. Involve your broker in your operations as much as possible so that he or she truly knows the nature of your risk.

By following these simple steps you will become a better risk manager and your NPO can get back to what it does best - serve the community.

Friday, November 26, 2010

Are you asking the right questions?

To brutally paraphrase Mark Twain, its better to have people think your dumb, than to speak and remove all doubt. While this altruism is somewhat accurate, it does have its flaws.

Our reluctance to ask specific questions regarding insurance particularily for non-profits can often times mean the difference between truly understanding insurance issues and just "thinking" you understand. The former can result in a great relationship with your broker, the latter can and does often result in coverage issues. Assuming you know everything about insurance may put both yourself and your Non-Profit in a compromising position. The answer - ASK THE RIGHT QUESTIONS.

Funny enough, the right question cannot be defined. The right question, quite simply, is the question that you don't know the answer to. What is the definition of "x". What is excluded under the policy? These are two questions that Non-Profit leaders often think they know the answer to, but do not. The truth of the matter is, that not even your insurance broker knows ALL of the answers to ALL of your questions. His or ver value is their ability to seek out and find the right answers so you can get back to doing what you do best - serving your constituents.

Tuesday, November 23, 2010

Not For Profit doesn't mean Not at Risk....

Why aren't the most succeptible groups in our country -  those small community organizations whose charitable endeavours help build the fabric of our communities, given special consideration under the law? Should everyone be created equally? The truth is we aren't. Despite how good and well intentioned we all are, the bottom line is that contracts govern our society.

Have you ever tried to set up a display booth in a mall these days? You have to give away your first born to set up a spot. Not only that, you have to have at least $2mm in liability? That ain't cheap!!! As a  small non-profit how do you get the word out to the community without going broke to do so. Its a HUGE Catch 22.

The truth is, contracts, both between your non-profit and the property manager and the property manager and the landlord are the single most important barrier between your organization and your next member.

That ain't right.