Faith-Based Nonprofits and Insurance Limits
By: Peter A. Persuitti
We are witnessing unrelenting pursuit by stakeholders and victims, seeking reparation for alleged wrongdoing done by a nonprofit, its staff, volunteers or board members. Some of the revelations come after years of latency from past actions; others are triggered by a fast-moving social media frenzy that changes our perspective in a heartbeat.
At Gallagher, we are fortunate to work with more than 24,000 nonprofits and charities around the world. We also have a third party administrator in Gallagher Bassett, which manages the claims of our self-insured clients and we lead in the formation of captives and underwriting programs like Charity First.
While this gives us a broad base from which to benchmark, I caution you to think strategically about these issues – beyond insurance limits or coverage terms.
There's the big question – "what are we to do as a nonprofit board and executive team in terms of protecting our reputation, our assets, our board members' personal assets and our sustainability?"
This strategic issue might be more effectively addressed initially through a business continuity exercise rather than a simple study of what others buy for excess limits. We raise them for your consideration as examples.
Each day, nonprofits are being asked to take on the compounding challenges of society and this is a great opportunity. However, we need to measure again the mission and the risk-reward analysis. Risk management becomes a vital part of the operation.
LIMITS AS TARGETS
In today's world of transparency and accountability, along with the plethora of easily accessed information on any topic, there is no excuse for not knowing the risks – you must be prepared.
You evaluate the risks, you mitigate where you can with insurance, risk management and operational best practices, and you make informed decisions every day. You can't prevent the black swan and the fortuitous occurrences, but you can always be prepared by pursuing business continuity evaluations and making duty of care your top priority.
At the end of the day, negligence's biggest enemy is reasonable precaution – then worries about appropriate limits may subside.
Peter A. Persuitti is managing director, Religious Practice, for Arthur J. Gallagher & Co., a global insurance brokerage, risk management and consulting services firm, www.ajg.com.