Selecting an insurance adviser for your charity
Insurance broker reviews are usually conducted because they are driven by corporate governance responsibilities, industry practice or to ensure that your charity is paying the most competitive premiums. Or it could be because the service provided by your current broker may be unacceptable or they are no longer suitable.
It is important to establish the reasons for conducting a review of an insurance programme and/or a broker, as the conclusions reached could lead to a better review process and hopefully enable your charity to appoint the most appropriate broker for your needs. Whatever the reasons for the review, there are certain steps that could be followed to make the whole process easier and less stressful for all the parties involved.
Review criteria
If your charity is looking to reduce premiums and indirect costs, such as uninsured losses, and the overall focus is on cost not service then you should choose a costed review. With this type of review you will receive binding quotations and the process is more closely aligned to the actual renewal of your current insurance programme. The decision to review can also be made closer to your renewal date but shouldn’t be less than 10 weeks prior.
The final presentations by your shortlisted brokers should be conducted in the fourth week prior to your renewal date and the appointment should be made in the third week, allowing enough time for the broker to ensure cover is in place.
Alternatively if you are looking for a broker which understands your charity, and is able and willing to align the insurance programme to your key risk exposures, minimise uninsured losses, offer risk management audits/consulting facilities, staff training, claims management and your review can start at least 14 weeks before your renewal date, then your organisation might like to consider a conceptual review.
The advantage of a conceptual review is that the focus is on the broker’s ability to understand your organisation and ensure you are properly protected. Upon appointment it will negotiate with the insurance market on your behalf.
Having one broker approaching the market on your behalf will protect your standing amongst insurers and avoid any mixed messages.
The process
Once you have made the decision as to which type of review you are going to conduct, and you have established a timetable that allows the process to be completed in timely fashion without any undue pressures, you can start the process.
INFORMATION PACK.To enable the participating brokers to conduct their review it will be necessary for you to compile an information pack. Compiling all the information might involve other parts of your charity so make sure you do this in advance of the next step.
The pack should include as a minimum:
• An up to date register of insurances, and copies of up to date policies, if available.
• The latest annual report and accounts.
• Any literature from the charity that is available to the public.
• Any risk management documentation, such as risk registers and business continuity plans.
• Organisational structure, including contact information for the different functions carried out within the charity.
• A timetable of the review process.
• Claims information for the last three (or ideally five) years.
CHOOSING A BROKER TO PARTICIPATE IN THE REVIEW. Many brokers will be keen to compete for your insurance business, but not all will be suitable.
Here are some guidelines that might help you decide which one to choose:
It is advisable to only select brokers which can fulfil your review criteria in terms of scope of services. It is better to choose a broker which can demonstrate experience of managing the insurances for charities of your size and complexity, rather than a broker which specialises in, say, household insurance.
If possible, try to avoid selecting brokers of a similar size or profile. The broking market is highly competitive, and there will be little to choose from if they are in the same guise.
Smaller brokers are generally more customer focused and often employ individuals with broad skill sets, whilst larger brokers have in-house facilities, but can be less customer focused and have greater staff turnover. Similarly, "niche" brokers may offer greater experience in the charity sector, but can lack the lateral thinking of a broker with a broad range of clients.
Select no more than five brokers and ideally no less than three. Some brokers will view competing with too many other brokers as nothing more than a "beauty parade", and may decide not to participate. Also, if there are only a few insurers which have the capability to insure your charity, try to apportion different insurers to each broker, e.g. when asking for examples of cover and pricing.
Recommendations always work well, so ask other charities of a similar size and needs which broker they use, and why.
INVITING YOUR CHOSEN BROKERS. The format of your invitation can be either formal (written) or informal (verbal). To aid the process you may like to ask the invitees to address the charity's specific areas of concern, though the report should not restrict itself to the issues you raise.
You might like to ask for:
• Comments on risk issues identified and how your current insurance programme is aligned with those risks.
• How the broker intends to help your charity manage its risks effectively.
• Any proposed improvements to the current insurance programme.
• Relevant expertise in your sector.
• Details of the broker's proposed team, including CVs and referee details.
• Details of risk and claims management facilities.
• Information on the broker's company history, customer service processes, and how the broker's efficiencies could benefit you.
• Proposed fee and service level agreements.
The invitation should also include who to contact in the charity, your timescales, the format in which you wish to receive the report, and the number of copies required.
In addition it should be made clear that the review is being conducted at the participating brokers’ cost, and acceptance of the invitation is acceptance of this condition.
MEETING THE PARTICIPATING BROKERS. The objectives of the meeting are for you to gain a first impression of the participants and for the brokers to ask you about the organisation. At this meeting it should be the broker who asks most of the questions. Your opportunity to ask questions will come when you receive their proposals or at the presentation stage.
CHOOSING THE RIGHT BROKER. Having considered the proposals, you may or may not choose to select a short-list of brokers, and invite them to prepare a presentation. The presentation should include the service team proposed by the broker, and should focus on perhaps two or three key areas only (either of your choice or the broker's).
Ideally, the presentations should be short, maybe 20 minutes plus questions afterwards, and conducted on the same day, to allow a fair and objective comparison. To ensure a "level playing field", you may wish to set out explicit terms for the presentation. For example, no PowerPoint presentations or no more than three attendees, etc.
Once the presentations have been completed you should be in a position to appoint or re-appoint your broker. To help you with the final decision you might like to rate them on things such as: the knowledge of your charity and its purposes/beneficiaries/clients, understanding your needs, the ability to design a programme that responds to those needs, their willingness to be held accountable, technical expertise, claims support and so on.
Good result
Choosing the most suitable broker can be a daunting task but following this process should make it easier and less stressful. However, working with a broker which has a detailed knowledge of the way your charity operates, taking into account your objectives, mission and strategy, the nature of your activities, applicable legislative and regulatory requirements, and identifying lessons learned from any past events will lead to robust insurance and risk management which would help avoid a crisis becoming a reputational disaster.
Correct insurance cover for a charity goes a long way to helping things move along quickly in the right direction should the worst happen.
