Friday, October 21, 2011

Why is insurance so boring?

When I first became a broker, part of my "training" involved reading and comparing insurance policies. What a riveting task that was!! One thing that I learned quickly was that insurance is extremely boring. No one really cares to know the difference between an Named Insured and an Additional Named Insured do they?

So it lead me to believe that if I, an insurance broker found insurance boring, then the general public must be frightened of the thought of having to think about insurance. Really though, it makes sense. Insurance is not something you can buy at the store and put on your coffee table to look at. Half of the terms are hard to understand and the other half are seemingly pointless.

Does the fact that insurance is boring make is any less important? Sure, you'd rather be doing other things than worry about insurance, but what would your organization do without it? You couldn't work in the office without it. You definitely wouldn't get any government funding without it and you certainly wouldn't be able to provide the types of services your clients find integral, without it.

We exist in a society of contracts. We wake up in the house the bank probably owns a part of and we drive our leased vehicle to an office we rent from a landlord. Insurance, with all of its infinitely boring terms and conditions, allows us to enter into those contracts. The importance then on having a trusted advisor to advise your organization is crucial. When you have someone you rely on to give you the best advise, it makes your job easier. Give your broker the task of handling your boring insurance affairs.

Wednesday, April 6, 2011

Survival means Autonomy

Non-Profits exist in a world full of outside influences. They rely on the goodness of others, they are often funded by government at all levels and their existence is  predicated on the needs of others.  The only way that the industry can thrive and survive is to discover their own autonomy from government - and its often cumbersome regulations. Ideas such as social enterprise and idea sharing are often plagued by regulation and communication barriers.

Don't get me wrong, government plays an important part in this process. The service gap that often exists between government services and those provided by non-profits often time lands on the lap of the later. There needs to be an open and honest dialogue between government and non-profit to clearly cover the gaps in service. The need, however to remain financially autonomous remains squarely on the shoulders of the non-profit.

There is often a stigma in the non-profit world that running a profit is a bad thing. A profit shows donors that things are okay and this may lead to reduced or eliminated funding. Often times a non-profit will be scared off and throw money into unnecessary ventures to make it seem like they are not doing as well as they could or should be. This money could be used to invest in money MAKING ventures, not money TAKING ones.

This is craziness. Non-profits have to operate their business like a business. Period. by controlling how they spend their money, and more importantly how they generate revenues should exist independent of outside interferences such as funding formulas, tax implications, bureaucracies, and who is in power.

Now is the time for NP's to come together to combat emerging threats to their survival. The reliance on government should be important, but not necessary.

Friday, March 25, 2011

Affordable Insurance for All?

The Ontario Government recently released its report outlining their new strategy in dealing with the Non-Profit sector in Ontario. It should come as no surprise that the report's findings indicate a need to strengthen the relationship between government and non-profits. You can read the full report here.

Of the 6 recommendations put forth by the report, 4 could be affected by the advent of truly affordable insurance for non-profits. Managing to control costs remains a huge problem for non-profits. The ability to afford an adequate insurance policy is slowly being eroded in favour of essential costs such as service delivery, office costs, salaries etc. Having a solid insurance protection plan means that non-profits will be able to retain and recruit capable and skilled volunteers to help fill the information gap that exists with select sectors. By creating a group buying program, non-profits could streamline and share information that would help the sector as a whole. Finally, while social innovation may be a key component of a non-profit's strategy, it does come with inherent risks that traditional non-profits simply don't think of.


When I started selling insurance for non-profits i was intrigued by the prospect that no two non-profits were the same. The role of the broker then became extremely important. I've recently discovered that the same challenges that separate each non-profit are the same ones that bring them together.

Affordable insurance is one which both protects  the non-profit, but also provides them with a revenue stream. I know what you're thinking....a revenue stream??????

Collective buying power has its benefits, but it should also reward the members for their good behaviour. If they are pooling their risk, adhering to certain managerial, financial and administrative benchmarks, then why shouldn't they be paid back for their efforts?

Affordable insurance then should be extremely cheap and worth it for all parties. With so many non-profits in Ontario, a joint, collaborative insurance venture is the best way to ensure that the interests of non-profits are truly met. Anything short of that, will always be seen as a contradiction to the spirit of the industry.

I know how this can be done and i encourage you to comment on this post to start the discussion on how we can change the face of insurance for non-profits in this province.


Tuesday, March 8, 2011

Which comes first the D&O or the CGL?

So you and a few friends are serious about starting up a charity or non-profit organization. For the last few years you've been going to some trade shows, raising some money at local malls, and getting the word out about your worthwhile cause.

Eventually every organization will soon be faced with the same challenges. Do you seek a grant from the government? Do you incorporate? Is there a commitment from your board to take things to the next level?

If your answer to any of these is yes, your organization must take the next steps to review the availability of insurance products. If you seek a grant from the government, you need insurance. If you incorporate, your by-laws mandate some level of protection. If your NPO is growing and entering into contracts, you need insurance. Given your organization's limited budget what do you need first?

The knee jerk reaction is to purchase a Commercial General Liability (CGL) policy. Why? Because chances are you are asked by a third party to present them with evidence of a CGL policy in order to contract. Your initial thoughts are - "What happens if someone is injured at our event?" or "what happens if the organization is sued?". These are both legitimate concerns.

But wait. If you are contracting with a third party are you contracting as an individual or as an organization? If you are entering into a contract with a third party, you are making decisions on behalf of your NPO. What if you void any or all of the terms of the agreement? What if it adversely affects the operations of the NPO? For these reasons it is imperative that you protect the NPO by FIRST purchasing a D&O policy.

Here's the conundrum. The chances that a director or officer will be sued is far less then the changes the organization is sued under a CGL policy. Often times a CGL policy can be purchased for an event that would leave the organization unprotected for the remainder of the year. Is that an exposure? Perhaps. What is vitally important is that you work together with your broker to "time" the purchase of each policy. What does this mean?

It means finding the right coverage based on the size and complexity of your organization. Any product that appears to be a one size fits all, will end up being to big (and too expensive) or to small (not enough coverage). No two NPO's are the same. Period. Find a broker who specialized in D&O policies and you will be rewarded with cost savings and proper coverage for you and your board.