The Importance of International Property Insurance for NGOs

While insurance is usually not top-of-mind for the leaders of an international non-governmental organization (NGO) or non-profit entity, when performing critical operations in foreign countries—especially those lands that are considered high-risk—having insurance safeguards can be the difference between helping thousands or providing no help at all.

After all, failing to consider the need for insurance can greatly hinder the humanitarian work an organization is trying to do if something goes wrong.

Any organization that owns a building obviously needs to have property insurance to protect the building, equipment and possessions. Without the right insurance, one catastrophic event could mean the end of a business.

What about organizations that don’t own a building, such as the majority of NGOs? You might think that because you don’t own the property in which you work that you don’t need property insurance. But you’d be wrong. Property losses are the biggest source of overseas losses for almost one in two NGOs according to The Summer/ Fall 2016 Edition of the Clements Worldwide Risk Index. Additionally, one in four NGOs faced political violence in the last year, which poses a risk to offices and belongings.

Risks that a NGO needs to think about include damage to buildings, equipment failures and business interruption, which could result in the loss of donations or other income needed to successful run the group effectively. Additionally they need to consider loss of items they would typically provide to beneficiaries including food, medicine, tents, lanterns, mosquito nets, etc.  Clements Worldwide offers property insurance that will cover all of these potential losses.

Violence and attacks – a new challenge for property

NGOs constantly deal with the threat of being attacked.   The threats in conflict zones is well-documented but during election seasons and throughout the year, peaceful protests can also quickly turn into civil commotion or looting with damaging effects on property.  Additionally, attacks against property and looting is sometimes done to make a political statement.

Earlier this year, more than 300 Polish NGOs signed an open letter to Prime Minister Beata Szydło asking that she do something about the verbal abuse and violent attacks NGOs and their representatives face.

Those incidents included an incident in March where attackers broke windows in the office of Lambda Association, a group that promotes LGBT rights. This was the second attack of 2016 on the group, as in February, anti-gay graffiti was written on the organization’s office doors. Another group, Campaign Against Homophobia also dealt with an attempted attack when three men tried to force their way into the offices, but fled before police arrived.

In early September, an NGO building in Kabul, Afghanistan, was attacked via a car bombing. An attacker was killed in the bombing, and three other attackers and one civilian were killed during a counter-attack. The building was home to the offices of Pamlarana, or Care International, an organization that fights poverty.

Dishonest employees also exist in the NGO market

Sometimes NGO staff members can be the thieves. In January, seven volunteers working for NGOs were arrested in Greece after stealing life vests in Lesbos. The workers claimed they wanted the vests to help make mattresses for refuges, but police charged the workers wanted to use the vests for a photo shoot to use with a fundraising campaign.

NGOs also have to protect themselves from in-house crimes. After an April earthquake in Kathmand, two representatives of the NGO The Buddhist Janadhikar Manch were arrested for embezzlement of funds collected for earthquake relief from hundreds of international donors.

Customized coverage for NGOs

Clements Worldwide has been working with some of the largest NGOs for decades and based on this collaboration have created unique binder solutions not available anywhere else in the market, underwritten by Lloyd’s of London.

One differentiating element is the focus on cash and crime.  Many NGOs work in cash economies and need to keep large amounts of cash on hand to pay vendors or beneficiaries.  Clements Worldwide’s clients have shared examples where safes with these funds have been stolen from NGO offices, but sadly also examples where staff have embezzled these funds.  Most local property policies will not cover cash because of the challenges with verification, but Clements has written a policy and developed procedures for covering this asset. 

Another critical elements is protection for the items stored for distribution to beneficiaries.  Food and supplies make NGOs targets for theft because those goods are valuable on the black market. Because many of these items are distributed via government grants, replacement of stolen items can be even more complicated.

When trying to find insurance coverage for humanitarian aid inventory, however, Clements would often find the cost prohibitive for its clients. This was driven by the high-risk environment of the countries in which aid organizations operate and the extensive nature of the coverage that was required to accommodate for theft and looting, strikes, civil unrest, war and terrorism in addition to fires and natural disaster. Therefore, this year Clements announced a new property policy available to protect these items.  

Additionally coverage for spoilage for these food items is critical.  With the unpredictable nature of power in some markets, NGOs can lose whole stockis of refridgerated food or medicine.  A property policy for NGO needs to cover this possibility. 

One other item to consider is exclusions or sub-limits for catastrophic perils such as earthquakes, typhoons, mudslides, etc.  Many of the largest NGO losses over the past years have been a result of these natural disasters which may be excluded in some policies or carry very low sub-limits.  Not surprisingly, some NGOs are uneducated about these exclusions in their policies until it is too late. 

Finally, Clements Worldwide has its own claims department for its proprietary products so can act as a critical advocate.  In developing markets it is often hard to get the verification some insurers, both international and local, may require to pay out a claim.  Clements Worldwide has a history of working with its NGO partners to be there when needed and ensure claims get paid. 

Surviving a Loss

Disturbingly, even a stable country can confront civil commotion somewhat unexpectedly, particularly around elections.  Risk Managers at NGOs need to remain educated on the changing political and socio-economic environments where they operate.  Read about elections in 2016 that pose risks for country stability: Political Risks in Election Hotspots – Places to Watch Out For in 2016.  Additionally, find out the Key Types of Political Violence Businesses Should Monitor.  Terrorist attacks are not the only scenario you face in developing markets. 

Call us today at +1.202.872.0060 or 800.872.0067 or e-mail request@clements.com to discuss how we can tailor our policy to meet the size and scope of your organization. 

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