In an increasingly complex risk landscape, UK charities face a host of insurance challenges that could jeopardise their ability to deliver vital services. From volunteer liability and safeguarding concerns to cyber threats and regulatory compliance, the sector’s risk profile is evolving - and not always in predictable ways. As insurers recalibrate their appetite for certain exposures and underwriters demand greater transparency, charities must take a more proactive stance in managing risk.
As Wendy Cotton (pictured), head of care underwriting at Markel, points out, online fraud is on the rise. “Charities are not immune to cyber risks, and we are finding that they are increasingly being targeted online by those seeking to extort money or steal data,” she said. “Claims for data loss or cyber extortion can be problematic… so this is an important area of coverage.”
A recent For Purpose Law Group survey found that in 2024, “42% of charities reported fraud or attempted fraud.” A separate survey revealed, “56% stated that cyber-related fraud, including phishing, was their biggest concern.” A 2024 GOV.UK report found that “the average cost of the most disruptive cyberattack or breach experienced by charities in the past 12 months was estimated at £1,850.”
Expanding on the specific ways charities are impacted by cyberattacks, Cotton said: “Increasingly, cyberattacks targeting sensitive data also pose a problem. With limited resources, charities can be particularly vulnerable to the financial and reputational costs of claims.”
There are plenty of insurance considerations for charitable organisations. “As a minimum, charities should have public liability, employers’ liability, and property insurance in place…” explained Cotton.
“In today’s environment, covers such as cyber insurance, professional liability, and trustees liability are also important. We often see charities lacking protection for advice-based services or for governance risks involving trustees.”
Highlighting the importance of liability coverage, in relation to cyber risks and professional services, Cotton explained. “Cyber risks can go uninsured, even though many charities now hold sensitive data on employees, service users, and third parties,” she said. “Professional liability cover is another key area, particularly for charities providing professional services such as advice, guidance, or counselling. Without it, they could be exposed to claims of negligence that aren't covered by public liability insurance. Trustee liability insurance also helps to protect trustees and senior staff from allegations in relation to their governance or financial management.”
Cotton also stressed the importance of business interruption coverage. “It’s easy for charities to de-prioritise the need for business interruption insurance if attempting to reduce insurance costs. A fire, flood, or cyberattack could halt operations, disrupting critical services and income streams. Business interruption cover helps bridge that gap, keeping the charity afloat while it recovers from the loss.”
According to Cotton, there are a host of risks that often go unacknowledged: “Exposure relating to volunteers can be overlooked. Charities often don’t realise that volunteers can create liability in a similar way to employees even without the same contractual protections in place.
“Including volunteers under the employer’s liability section of a policy in the first instance ensures they and the charity are properly protected, but consideration should be given to other cover sections should the volunteer be offering care, support or advice to third parties in the course of their duties,” she added.
Cotton also believes reputation is a huge risk that can have a lasting impact. “Allegations of abuse or misconduct - whether substantiated or not - can escalate and impact fundraising, recruitment and public trust. Having the right protocols and insurance in place can help charities manage any ongoing issues caused by such events.”
A report from GOV.UK revealed that the Charity Commission for England and Wales “received 561 whistleblowing disclosures between April 1, 2023 and March 31, 2024.”
Strong risk management practices can significantly reduce the frequency and severity of claim. Brokers can work with insurers who provide specialist support for charities, such as safeguarding training or support should a charity need help with regulatory or governance matters.
“Effective risk management helps to protect a charity’s beneficiaries, staff, and volunteers, and it can make a difference to insurance costs over time,” Cotton noted. “Brokers can add value by connecting charities to sector-specific resources like health and safety support, safeguarding expertise, and crisis management advice.”
Some of the ways brokers can help mitigate risk include:
Ultimately, brokers need to be well-versed around each charity’s activities: “Every charity is different, and insurance must reflect the specific activities, risks and structures,” Cotton said. “Brokers working with charities need to consider factors like reliance on volunteers, fundraising events, donations and operational set-ups. A tailored policy ensures all activities are properly covered and that the people they engage with are protected from harm.”
She also noted the need to consult with specialist underwriters. “If a charity’s activity is likely to vary in nature over time, brokers should work with specialist underwriters to create flexible cover that adapts as the charity grows or changes. Understanding the charity's governance, funding sources and approach to risk is important when designing an insurance solution. A tailored approach ultimately provides better value and peace of mind.”
