Insurance conundrum a big issue for voluntary organisations

Volunteer bodies are feeling the pinch. Demands never go down, time and funding never go up, and insurance costs are on the up for them.

As this paper reported last week, Deirdre Garvey, chief executive of The Wheel, the umbrella organisation for voluntary bodies, said in advance of the National Charity Summit that “something impacting people in charities would be the really high levels of cost of insurance”. 

What makes this surprising is that the law was changed nearly a decade ago to protect volunteers and voluntary organisations in a way that should have reduced the cost of insurance. And that raises some worrying questions in the wider field.

The Civil Law (Miscellaneous Provisions) Act 2011 was, as the name suggests, a piecemeal act tidying up a lot of different areas of civil law. 

One was in relation to voluntary organisations, acting on the recommendations of the Law Reform Commission in a 2009 paper on civil liability of Good Samaritans and volunteers. 

This paper looked at ways to encourage volunteerism, and to try to afford reasonable protection to people volunteering against risks of things going wrong.

The result was Section 4 of the 2011 Act, which changed the Civil Liability Act 1961. 

How it changed it for volunteers (unpaid people carrying out voluntary work for a voluntary organisation), and voluntary organisations (any body carrying out work for charitable, sporting or recreational purposes), was that it raised the bar for suing them to a higher standard.

Since 2011, under the new S.51E of the 1961 Act, volunteers are not personally liable for any act done carrying out voluntary work. 

There are exceptions; it doesn’t apply to motoring accidents, and the protection can be lost if the volunteer is not just negligent but grossly negligent, or acts in bad faith, or acts outside the scope of the voluntary organisation or knowingly (or ought to have known) acts contrary to instructions of the voluntary organisation.

But, outside these reasonable exceptions, the volunteer is not liable, and so the voluntary body does not have to cover a risk of claims against them unless outside these exceptions. 

That means the legal risk exposure of the voluntary body is much less — and so should be the price insurers charge to cover that legal claims risk.

Even the voluntary organisations get extra protection: S.51G (2), inserted by the 2011 Act, says that in relation to any act done by or on behalf of a voluntary body, “when determining whether the volunteer organisation owed a duty of care to the plaintiff or any other person, a court shall consider whether it would be just and reasonable to find that the organisation owed such a duty having regard to the social utility of the activities concerned”.

“Shall” is mandatory. The Courts must take into account the social utility of voluntary bodies. 

Any Court must be happy that a voluntary body should be held liable even though it might carry out hugely useful work. 

This is no small thing; the Courts have refused to find a slippy hill path liable because of the social utility of getting people out walking. 

One can easily see how, for example, a sporting body running children’s sport — a voluntary organisation — would be likely to be found not liable given how much the Courts have stressed the social importance of this.

As the law stands, voluntary bodies have increased protection at law from claims, volunteers have very considerably increased protection. 

That means it cannot be the risk of legal claims driving insurance costs for volunteer bodies insuring themselves and their volunteers, because the law specifically protects them from that, reducing or even eliminating that risk.

Therefore if it is not that, but insurance premiums are still going up for these bodies, there cannot be a link between claims and insurance costs. 

So, one can then fairly ask: if it’s not claims, what is driving those costs up and where is that extra money going?

In and of itself, this is disconcerting; it may be more even more so as a marker than it is on its own. 

Here we have a case where the law was changed to reduce exposure to liability claims; the risk of these claims fell by reason of that change in the law. 

The price of insuring those lower risks should, if the premium is related to risk insured, have fallen as well; legal claims cannot make insurance more expensive when the law reduces or even stops such claims.

Instead, as Ms Garvey said, the price seems to have gone up at the same time as the risk has fallen. 

In other words, despite changing the law in a way that should have made insurance cheaper by reducing exposure, the cost has gone up.

Not only did changing the law not lead to a fall in costs, there does not seem to be a link between what insurers charge and the real risk of claims.

And it is this that is so worrying. 

If changing the law did not make a difference to the prices demanded of charities, why have we any reason to think that promises from insurers that changes in other areas will lead to reduced premiums will be followed through in those areas, either?

In the Oireachtas debates on the 2011 Act, Senator Jillian van Turnhout said: “The problem is that the insurance companies will urge organisations to settle before it goes to court, thereby not allowing the courts to intervene as is proposed in this Bill.

“This results in an increase in insurance costs for the voluntary organisations. I can provide examples of where this has happened.”

One might ask if we have another example now.

Tim O’Connor BL is a practising barrister at the Irish Bar

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