Are community groups getting ripped off on public liability insurance?

March 25

THERE was no evidence to justify community groups being slugged with massive public liability insurance rises, the first nationwide survey of non-profit groups' insurance problems has found.

Preliminary results of the survey of 700 organisations by ourcommunity.com.au, a national resource for community groups found a massive disparity in the amount of money paid in insurance and the minimal amount paid out in claims.

An overwhelming 96 per cent of the groups who took part in the survey had not had a claim on their public liability insurance in the past five years. Of those groups who did have a claim on their insurance, the total money paid out by insurers represented just 3.5 per cent of the total premiums paid over one year.

The survey found the average claim was for $8,875 with only two groups reporting they had claims for more than $50,000.

Community groups from across Australia took part in the survey which will remain open at www.ourcommunity.com.au till the end of the month.

The CEO of ourcommunity.com.au, Dr Rhonda Galbally, AO, said that based on the survey's preliminary results, it seemed virtually impossible for the Insurance industry to justify the continuing sky-rocketing premiums for community groups.

"All we have heard about from the insurance industry is about how community groups are high risk and how more people are making claims against community groups but the response to the survey just doesn't bear that out," Dr Galbally said.

"The industry has never provided a breakdown of the claims against community groups and you now have to ask whether the community sector - the sector that provides the social fabric of our nation - is paying for the sins of others."

"Insurers keep putting up the prices, they keep talking about needing caps on claims but the survey would suggest there's no need for the inflated premiums and no need for legislation to cap claims."

Dr Galbally said there was an urgent need to extend to others states the pooled community insurance scheme developed by the Municipal Association of Victoria in conjunction with the Victorian State Government, ourcommunity.com.au, and leading insurance broker Jardine Lloyd Thompson (JLT).

Dr Galbally also called on the Federal Government to introduce an independent Insurance Ombudsman who can investigate cases where groups have struck problems for little or no reason.

Other preliminary findings were:

85% of community groups throughout Australia have experienced an increase in the cost of public liability insurance over the last year.
13% say of the groups say that the increase is one that they cannot afford.
45% of groups surveyed had a turnover of less than $10,000, indicating any significant increases would impact heavily on these groups. The median premium paid by community groups was $798.
82 per cent or non-profit groups had been in operation for more than five years with 70 per cent in existence for more than 10 years.
70 per cent of the groups covered had public liability insurance of between $5m and $20m.
17.5 per cent of groups did not have insurance coverage at the time of filling in the survey.
62 per cent of the groups had between one and 20 volunteer workers.

Dr Galbally said it was increasingly frustrating for groups who either have to pay heavily inflated prices or can't get insurance despite having a low-claim or no-claims history."

Dr Galbally said if the figure of 13 per cent of groups who could not afford to pay the rises was mirrored across the entire 700,000-strong sector then it could mean up to 91,000 groups would either operate without insurance or disappear completely.

The pooled insurance scheme which had come about through a Victorian Government initiative was also being considered by other states as was the need for an ongoing education campaign to help educate all community groups on managing risk through proposed education and training programs.

Dr Galbally said community groups were still filling in the online survey and could now register their interest in a pooled insurance scheme at www.ourcommunity.com.au.

Ourcommunity.com.au has developed the "Community Insurance Centre" where news, Help Sheets, Training and Insurance Policies for community groups will eventually be able to secured - our insurance role is help Community groups manage risk and secure insurance.

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