For nonprofit childcare providers, the overriding trend today is tight state budgets and reduced revenues.

One way providers are trying to adjust to this new reality has significant implications for their insurance programs: relying on volunteers to do the work that paid employees used to do, says William Henry, executive director of Volunteers Insurance Services Association Inc. (VIS), a part of CIMA Cos. of Woodbridge, Va. VIS covers some 5,000 nonprofits through partnerships with 240 agents and brokers nationwide.

Driven in part by this trend of nonprofits turning more and more to unpaid helping hands, VIS has created a “volunteer-liability policy” to cover the volunteers of nonprofit childcare centers as a shield for the organization's general-liability (GL) policy.

If a nonprofit center does have a claim, “in all likelihood, they don't want to put their GL policy at risk,” Henry says. “Unless the organization itself is named in a lawsuit, our volunteer-liability policy will provide primary coverage to the volunteer being charged with injury or property damage. It's a way to separate the risk that volunteers represent.”

The policy also includes endorsements that most commercial GL policies for volunteers do not: travel between the volunteer's home and place of assignment at $1.72 per volunteer per year; and sexual abuse and molestation cover with a $1 million limit and no deductible.

The Hanover Insurance Group in Worcester, Mass. also has created a special offering for policyholders with exposures that require abuse and molestation cover and defensive-driving cover. Hanover also created certification programs to help human-services agencies educate and train their workers and volunteers.

For its part on the training and informational front, VIS tells its producers to caution clients about the hazards of childcare they may not be aware of, such as quick-moving children. In a report released this year, “Volunteer Accidents: What Happens, and How to Prevent It,” Henry recalls a volunteer who fell and broke her shoulder tripping over a child who was getting settled in on the floor for story time.

Henry says producers should ask their childcare clients: “Does your training program caution volunteers that they might need to use more care just walking around than they would need to use in their own homes?”

Business Savvy: Essential

Nationwide, private funding is replacing a certain percentage of slashed public funding for nonprofits, says Jack Roche, Hanover's president of business insurance. This is bringing about an effort to raise the level of business expertise among the management of childcare agencies; larger nonprofit organizations are already bringing in leaders with a solid corporate, for-profit background, he says.

“Private-funding outcome metrics are a lot different,” Roche says. “There's a different level of accountability and business sophistication. It puts pressure on folks who don't have that level of management.”

As a result of these changes, the insurance industry's role to simply provide a generic insurance product and information relevant to childcare exposures is no longer adequate to service the industry. What nonprofit clients want instead are customized risk-management solutions, which Hanover creates through agency partnerships with segment specialists.

“We have to understand the pressures that are coming to the organizations and help them manage their business differently than before. It's a real major shift,” Roche says. “If we can solve some of the regulation and funding pressures in an efficient manner, we can help overall so they don't get overwhelmed,” he says.

“The changes we're seeing really are ultimately going to require a different approach in serving this sector,” adds JoAnne Artesani, assistant vice president of human services for Hanover.

The changeover from being a “people first” nonprofit agency or provider to a bottom-line-focused nonprofit organization under the new economy is a “pivotal” moment in the human-services sector that requires extra efforts, Artesani says.

Special Reports /

Increasing Reliance On Volunteers Complicates Insurance For Childcare

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