How Insurance Professionals Can Be Valuable Advisors to Non-Profit Organizations
Operating a non-profit social service business has always been a challenging balance between meeting constituent needs, funding the organization, and managing operations. At no time has this been more challenging than now, given the current business, social and economic climate.
For the managers of these organizations, funding for services will go to those who provide valued, high quality services to their community. Managing the delivery of services, and the risks associated with these services, are important indicators of quality for these organizations.
A number of stakeholders have an interest in the ongoing success of the organization including the general public, recipients of the services, boards of directors, employees, volunteers, and funding sources. These stakeholders may include individuals, corporations, or federal, state, and local governments. All parties will have some level of interest in managing the risks associated with the delivery of services.
All social service operations face risks similar to any business, in addition to unique risks associated with their operations. Depending on their specific business operations, they will be purchasers of property insurance, general liability, directors and officers liability (D&O), employment practices liability insurance (EPLI), crime, fiduciary liability, auto, workers’ compensation, special event, and in many cases umbrella or excess liability coverage. Many will have professional liability exposures to be considered and insured.
“Insurance professionals become welcome and valuable advisors to non-profits in much the same way as their legal counsel, accountants, and other business advisors,” notes Jim Henry, team leader at Markel Corp.
“Insurance professionals need to work closely with their non-profit social service customers to guide them through the risk management process. The best advisors are knowledgeable of the services delivered and the roles of staff, volunteers, and contracted service providers.” Henry adds, “They also understand the budgetary issues these organizations face and advise expertly on exposures related to current, new or discontinued services.”
In the non-profit setting, an insurance advisor may help to organize and support a formal risk management and safety committee. This committee can be composed of staff and board members with the sole purpose of formally reviewing insurable and uninsurable exposures, insurance programs, loss control and history, and safety procedures. The organization should oversee a strategic risk management plan to address losses that are most likely to occur and be significant in terms of financial or reputational impact.
Large non-profit organizations may designate a staff risk manager to identify, analyze, and manage exposures to loss. These risk managers work with insurance advisors to minimize losses over time by transferring risk through insurance, building self-insurance plans, and establishing risk management, safety, and loss control programs. The result is an environment of quality and satisfaction for both clients and employees.
Trusted insurance advisors must provide more support than just transferring risks through the negotiation and placement of insurance policies. To bring full value to their non-profit clients, the independent insurance advisor must fill a role similar to that of the staff risk manager in the larger organizations. It’s here that agents can play a significant role.
An organization’s management must be committed to implementing and enforcing risk management strategies for them to be effective. Areas of exposure include, but are not limited to: protection of property, auto loss exposures, slip, trip and fall hazards, employment practices, sexual abuse, and management liability exposures. Risk management strategies that manage losses over time can help an organization’s efforts to control their budgets.
Protection of Property
Protection of property often addresses fire safety strategies such as installation and maintenance of smoke detectors, utilization of appropriate fire suppression systems, and adherence to manufacturer guidelines for space heater usage.
Strategies protecting property from losses associated with burglary and vandalism also need to be encouraged. Crime Prevention Through Environmental Design (CPTED) is a tool that may help control exposures for premises and increase safety for employees, volunteers and clients. CPTED can help reduce vandalism and burglary by making facility changes that increase the likelihood of deterring or exposing an intruder. The program’s success depends on how well a business integrates and maintains surveillance, property site management, and protective equipment to make access to the grounds and buildings difficult for intruders. For help in setting up a CPTED program, contact your local law enforcement agency or planning commission.
Auto Loss Exposures
Common auto accident losses involve a driver’s failure to yield the right-of-way, rear-end collisions, and property damage caused by improper backing of vans and buses.
The National Highway Transportation Safety Administration found that nearly 80 percent of crashes, and 65 percent of near-crashes, involved some form of driver inattention within three seconds before the incident. Administrative policies must hold employees accountable for safe driving behaviors.
Obtain motor vehicle records and criminal background checks on all drivers before allowing them to drive. Reinforce safe driving practices through ongoing training and skill evaluation. To eliminate distractions behind the wheel, prohibit eating and cell phone usage while the vehicle is in motion. Require drivers to travel 5 mph below the posted speed limit, so they can respond to hazards.
Safe driving programs should encourage drivers to reduce backing accidents by checking behind the vehicle to evaluate conditions, especially when operating 15-passenger vans and buses. If an organization transports children, it is imperative that a policy is enforced to ensure that no child is left behind and child passenger restraint procedures are followed.
Slip, Trip and Fall Hazards
Slips, trips and falls often involve tripping and falling over obstacles in walking paths, slipping on wet floor or icy surfaces, and falling from elevated playground structures.
Strategies to prevent accidents from occurring include:
- Frequently inspecting walkways, parking lots, and bathrooms for hazards.
- Maintaining and documenting a vigorous sweep schedule. State liability laws may require records to be retained for four years or more. Organizations should consult their attorney or insurance company for recommendations. Routinely inspect pedestrian walkways, common areas and bathrooms for spilled liquids, tripping hazards and debris.
- Establishing procedures for restoring the area to a safe environment.
- Utilizing absorbent, nonskid mats at entryways and water fountains to reduce water hazards.
- Redirecting gutter downspouts to channel water away from walkways.
- Installing a minimum of 12 inches of protective ground cover, such as wood and rubberized mulch, or sand and pea gravel, around outdoor play equipment. Unitary materials satisfying ASTM 1292 standards may also be used. Organizations should consult with a certified professional in playground safety.
- Mats, safety tiles, and carpet used for fall protection indoors must also satisfy the ASTM 1292 standards.
Employment Practices and Sexual Abuse
Avoiding abuse allegations is critical. In addition to adverse financial impacts associated with litigation and personnel downtime, allegations can also damage an institution’s reputation. Organizations must aggressively implement proactive strategies to reduce the potential for abuse by:
- Maintaining unobstructed observation of clients.
- Avoiding one-on-one interactions between adults and children.
- Completing criminal and reference checks, and conducting face-to-face interviews with anyone who might be involved with children, and physically or emotionally challenged clients.
- Communicating a “no tolerance” policy with employees and holding them accountable. “No tolerance” policies address activities that can result in physical and sexual abuse, and prohibit adults from engaging in inappropriate relationships with children under the age of 18.
- Reporting all allegations for investigation, as required by law.
Professional and Management Liability Exposures
Thomas K. Smith, vice president of Marketing at Markel states, “As a trusted advisor, an important area to analyze is the delivery of professional services by employees and contracted professionals. To adequately protect the organization, employees and volunteers, you must understand the delivery of services, the contractual obligations, and the insurance risks of all parties.” He concludes, “Know what needs to be insured, and what contractors need to provide for protection of their own professional acts, errors or omissions.”
Non-profit social service groups play a critical role in the social fabric of our country. Volunteers donate millions of hours annually to provide governance and services to our communities. It is your role, as a trusted insurance advisor, to protect the assets of these organizations by contributing your expertise in identifying, analyzing and planning for potential physical, financial and reputational losses. The last step, as an advisor, is recommending the right insurance program to meet the unique needs of social service organizations.
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