Unlike business organizations, nonprofit organizations
can not increase rates or prices to cover soaring insurance
costs. The Edmonton Chamber of Voluntary Organizations funded, and then released in 2004, a study on insurance and nonprofit organizations. The study was prepared by Wendy
Doughty and Jim Kingle of Emerging Directions Consulting.
The following is the EVCO Executive Summary of the study:
Liability & Risk Management
Edmonton Chamber of Voluntary Organizations (ECVO)
Insurance Liability Study
During 2003, the Voluntary Sector Forum (VSF), a leadership
body comprised of 22 members from across the Canadian voluntary
sector, identified liability/risk management as one of three
national issues on which it wished to focus attention and
resources. The reason for the VSF's focus on liability/risk
management as a national issue is that "the viability of the
voluntary sector is challenged by skyrocketing insurance
premiums, an increasing inability to obtain coverage, and a
climate of fear of serving in an increasing litigious and risk
averse climate." (Voluntary Sector Forum, 2003).
As part of this response, the Voluntary Sector Forum
organized regional sessions across Canada between December 2003
and March 2004 to discuss liability and risk management. The
purpose of these sessions was to bring together a range of
voluntary sector organizations in the community to discuss the
impact of the current insurance environment on their operations.
The resulting report from these regional sessions will form the
basis for targeted consultations with insurers, governments, and
the voluntary sector as to what can be done to improve the
insurance environment in which voluntary sector organizations
The first of these regional sessions was held in Edmonton on
Wednesday, December 3, 2003 with twenty-six voluntary
organizations in attendance. Following this session, the
Edmonton Chamber of Voluntary Organizations (ECVO) was provided
funding by the Muttart Foundation and the Edmonton Community
Foundation to further research the impact of the current
insurance environment on voluntary organizations in the Edmonton
A limited review of the literature on liability and risk
management in the voluntary sector was undertaken. Resources
were identified through the Resource Centre for Voluntary
Organizations at Grant MacEwan College and a literature search
conducted by Edmonton Public Library staff. Key findings from
these resources were:
- The current challenges facing voluntary sector
organizations are not an isolated event but part of a cycle
experienced by the insurance industry over time.
- The current hard insurance market has adversely affected
voluntary organizations nationally and internationally.
- The voluntary sector is not alone in facing high
- Examples identified in other jurisdictions suggest that
there are approaches that can alleviate the impact of a hard
insurance market. These include non-profit liability
insurance pools, self-insurance and government funded
The Edmonton Chamber of Voluntary Organizations (ECVO)
undertook this research to obtain responses from a varied
selection of Edmonton voluntary sector organizations to the
following key questions:
- Does your organization have access to the types of
insurance it requires to operate effectively?
- Is the cost of this insurance becoming prohibitive for
- What impact is the issue of insurance having on your
organization's operations, governance and service delivery?
This research study used two data collection methods -
surveys and interviews. A survey developed for the Voluntary
Sector Forum national study was reviewed and modified. This
survey was sent by e-mail or fax to 102 senior level management
or administrative staff in selected Edmonton organizations.
Responses were received from 47 of these organizations (a 46%
response rate). Personal or telephone interviews were conducted
to gather data to construct seven vignettes describing insurance
challenges facing individual organizations.
A mixed method approach was used for data analysis.
Qualitative data was placed in categories where possible.
Comments from respondents were presented as recorded on surveys.
Comments from interviewees were presented verbatim.
Some highlights of the research study findings were:
- Variables related to organizational size (number of
staff, number of volunteers, organization's budget) were not
found to be significant variables in determining insurance
liability circumstances of individual organizations.
- All respondent organizations carried
Comprehensive/General Liability insurance with 89% of these
organizations carrying Directors and Officers insurance.
- The majority of respondent organizations (85%) purchased
insurance through a local broker or agent.
- The most commonly provided rational for increases in
insurance premiums over the past three years was the
September 11, 2001 terrorist attacks on the United States.
- Edmonton and area voluntary organizations that responded
to the insurance survey overall reported having access to
most types of insurance they require to operate effectively.
- The cost of insurance is increasingly becoming
prohibitive for Edmonton voluntary organizations that
responded to the insurance liability survey. Forty-four
respondent organizations (94%) reported an increase in
insurance premiums over the past three years. Only eight
survey respondents (17%) indicated they had experienced
increases in insurance claims during the past three years.
- A majority of the Edmonton voluntary organizations that
responded to the survey indicated that neither increased
insurance premiums nor any reduction in availability of
insurance had affected the ability of their organization to
offer programs, resources, and/or services. Twenty-eight
respondent voluntary organizations (60%) reported that their
programs, resources, and/or services had not been affected
by increased insurance premiums. It is important to note
however, many of these respondent organizations explained
they had less to spend on programs, resulting in the need to
reallocate resources within their organizations and/or
secure additional resources. Thirty-nine respondent
voluntary organizations (83%) did not believe that reduced
availability of insurance had affected the ability of their
organizations to offer programs, resources, and/or services
during the past three years.
Areas for Further Research
The following subjects are suggested as possible areas for
- A comprehensive review of the lessons and experiences of
American nonprofit insurance entities such as the
Nonprofits' Insurance Alliance of California, Nonprofits'
United and the Alliance of Non-Profits for Insurance - Risk
Retention Group with consideration of how these approaches
might be adapted to the Canadian context.
- The future requirements for voluntary sector
organizations to hold Professional Liability and Crime and
Sexual Abuse insurance including factors such as
accessibility and the financial impact of paying for such
- Further research about the potential benefits and costs
savings that voluntary sector organizations could achieve
through implementing risk management strategies and
To read the entire study, please visit the
of Voluntary Organizations' (ECVO) website.