Sharing Risk..30 Years Later

I want to begin this entry with a quote from a white paper on the status of liability insurance in the nonprofit sector.

"...it was discovered that there is little that individual nonprofit organizations can do to moderate the impacts of insurance industry cycles. The best solutions for dealing with the crisis are those which involve the collective efforts of many nonprofit organization, and it is those types of solutions towards which much of this paper is devoted. Risk sharing is given special emphasis because of its relatively strong potential for providing both short-term and long-term assistance to the nonprofit sector..."

Taken from Nonprofit Organizations and Liability Insurance: Problems, Options, And Prospects written by Pamela Davis, the report developed into a career manifesto for Ms. Davis. There are three things I really love about this excerpt:

1. It was published in California in 1987. Almost 30 years later and the same trends exist in our industry with respect to nonprofits.

2. It lead to this: https://insurancefornonprofits.org/

3. I think they are doing well financially: https://insurancefornonprofits.org/about/financials/

I actually have had the pleasure of speaking with the Founder of the NIAC, Pamela Davis a few years back. NIAC had received some attention north of the border. She couldn't remember precisely, but believed it to the from the Co-Operators.

She explained to me that they were initially funded with $1,300,000 in capital with 400 nonprofits participating in 1989. As of year end 2014, they have over $83.6 million in revenues. Wow!

I'll end this entry with one final quote from Pam's report.

"Shopping around for a new broker every year may put an organization at a disadvantage....[H]aving a broker that is familiar with an organization's risk history and extent of exposure may reduce the likelihood that (the) organization will be the one to get dropped."

See you next week.

The Need For D&O Insurance

I thought i'd share this article on the types of things that can go wrong when people in the Non-Profit world have disagreements over how the NPO should be run.

While the events that have unfolded are unfortunate it highlights the need to protect board members from suits claiming negligence while acting on behalf of the organization.

It also shines a light on the need for a more complex insurance structure including Commercial General Liability. As claims for defamation could be interpreted to be excluded from a D&O policy, a GL would respond to certain allegations.


TheStar Prank calls, lawsuits and mystery pizzas: Mississauga Humane Society in chaos

On Board Recruitment

I recently met with a large client in advance of their renewal to discuss, among other things, the challenges they are facing in their day-to-day business. What keeps them up at night? What are their pains? And most importantly, how can we the broker help them out? As it turns out, they are having the same issues facing many other non-profits these days - board recruitment and retention.

In the business world, attracting and maintaining good talent remains a core principle of any business. Fact: Generally if you hire good people, retain those people, and treat them right, your business is bound to succeed. So why is it becoming harder and harder to attract and retain good board members?

Is the talent pool thinning out? Is there a societal shift away from the importance of philanthropic participation? Is fatigue setting in? Are we just lazy? Maybe its a combination of all four?

According to a 2013 Stats Can report, not only is the volunteer rate diminishing (47% in 2010 compared to 44% in 2013) but the average annual volunteer hours shrank by 2 from from 156 to 154 in the same time period.1 Furthermore, I would like to turn your attention to the table below which breaks down participation by age gender.

Table 2
Volunteer rate, by sex and age Table summary
This table displays the results of Table 2 Volunteer rate Volunteer rate, 2013, 2010, 2007 and 2004, calculated using percentage units of measure (appearing as column headers).

	Volunteer rate
	2013	2010	2007	2004
	percentage
Total	44	47Note †	46Note †	45Note †
Men (ref.)	42	46Note †	45Note †	44
Women	45Note *	48Note †	47Note †	47Note *Note †
Age
15 to 19	66Note *	66Note *	65Note *	65Note *
20 to 24	42	48Note *	47Note *	43Note *
25 to 34	42Note *	46Note *	40Note *	42Note *
35 to 44 (ref.)	48	54Note †	52Note †	51
45 to 54	45	45Note *	48Note *	47Note *
55 to 64	41Note *	41Note *	40Note *	42Note *
65 to 74	38Note *	40Note *	40Note *	39Note *
75 and over	27Note *	31Note *	29Note *	23Note *Note †
Note * significantly different from reference category (ref.) at p < 0.05 Return to note * referrer Note † significantly different from 2013 at p < 0.05 Return to note † referrer Sources: Statistics Canada, General Social Survey on Giving, Volunteering and Participating, 2013, and the Canada Survey of Giving, Volunteering and Participating, 2004, 2007 and 2010. \ The greatest "swing" in participation from 2010 to 2013 exists in the 35-44 age range. I'll call this the "wheel house". This is age group who ideally would have the greatest impact on participation at a board level. By 35, the volunteer would have approximately 10 years of training and professional experience in their field, and would have a lot to contribute to the board. They would also have the necessary energy and commitment level required to make a significant impact at the board level. While mandatory participation still exists for the younger cohort (i.e. high-school credits for volunteering) of greater concern should be the shrinking participation numbers of those aged 65-75 who would also have a negative impact on the ability to recruit persons to sit on a board. By 65, it is likely the potential board member is retired and likely, highly expericenced and looking to continue their civic duty by volunteering. Or are they?? Based on the numbers above, I'm of the conclusion that the same "competition" that exists in the business world to attract and retain great employees has permeated to the non-profit world. The talent pool is shrinking, the amount of volunteer hours is shrinking, and the "wheel-house" candidates are becoming harder and harder to find. The particupalar client that I was meeting with currently had two vacancies in their board and at the time of our meeting was having difficulty locating a board member with a finance and legal background. One would think that these professionals would be readily available in any city and town in Ontario to participate. No? So how does this impact the broker? How can we help out? I think the answer is simple. While sitting on a board of an active client would constitute a conflict of interest, we do have the ability to assist - maybe the duty to help out. We insure business owners, we have our own network of professionals and we shouldn't be afraid to refer them to non-profits we think could use their assistance. It makes sense for everyone. The non-profit can utilize the expertise of the professional. The professional gets a chance to give back to his or her community and the board becomes more stable. A fully rostered board means more security, stability and more sound decision making. This will lead to fewer "gaps" in knowledge and prevent claims in the long run. I'll check back next week with the Top 5 things your insurance broker isn't tell you.....

On Being Genuine

Three years have passed since my last post! Three years!

Maybe I got busy at work, maybe I became a little complacent.

Nonetheless I wanted to provide everyone with some updated information on my new whereabouts and how it pertains to my work with non-profits. I continue to do some consulting work with David Hartley through his work at www.nonprofithelp.ca, however I recently (well 5 months ago) started my second career working in my hometown. Wow! What a difference. I'm now the Marketing Manager at W.B. White Insurance in Oshawa, Ontario. Shameless plug almost over. I can be reached at 1-905-576-0086.

Do you live and work in the same community? Do you commute to work everyday? I was in the latter group for over 10 years. Each morning I would get in my car and make the hour plus long pilgrimage to work. I would work a full day and then get back in my car and drive the hour plus PLUS getting home. I came to the realization that I wanted - no I needed to live and work in the same community.

So how does this relate to insurance? What is the correlation between living and working in the same community and non-profits? The connection, is to be Genuine.

Genuine is really a strange word to begin with. Say it. Genuine. Most people want to associate it with ingenuity. Not the same. Ingenuity and Insurance are polar opposites. We're talking about the ability to come off as being Genuine. I think of The Genuine Article. In our industry were all trying to make a name for ourselves. We all strive to be better brokers, get bigger clients and have a greater impact in our community. But what if you don't work and live in the same community?

In five months I've gone from working with a large multi-national broker to a small local broker. Wow, what a refreshing change. All of the insecurities and apprehension of making this change was eliminated in the first couple weeks when I saw just how genuine the broker-client relationship was at the local level. I've been brokering for almost 10 years, and wow was I impressed. When you are simply "managing" a bunch of clients your genuinness (is that a word?) is suppressed by your day to day workflows. Yuck.

For the non-profit, being genuine is at the core of their insurance buying decision. Non-profits want to associate with individuals and companies who are like-minded. I've consulted with many non-profits who made their buying decision on my actions and attributes well before any market, coverage or terms were presented to them.

The moral of the blog. Be Genuine. Don't be afraid to buy with your heart. Get to know your broker and your broker you will easily see whether he or she is genuine, or simply using you or your NPO as a means to and end.

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.

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.

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.

WHAT DOES AFFORDABLE INSURANCE LOOK LIKE?

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.

Derek