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Initiatives thaw 'big chill' in volunteerism.

by Tom johnson Back in 1988, in response to the quagmire of legal liability problems that confronted many volunteer organizations, George Bush made a campaign pledge to "remove the chill from volunteering." Making good on that promise, the White House recently announced three presidential initiatives that would protect volunteers from unwarranted exposure to legal liability and make insurance more available and affordable to them. The initiatives call for developing a national volunteer risk management center, adopting a model state statute and amending the Liability Risk Retention Act of 1986.

According to Charles Tremper, executive director of Nonprofits' Risk Management & Insurance Institute in Washington, DC, a working group was appointed by the president last year to "mull over the issue." Although the group's subsequent initiatives address important liability concerns for volunteers, Mr. Tremper says, "Right now, volunteers aren't feeling the vulnerability they felt a few years ago." However, he adds that with the onset of another hard market, problems that afflicted volunteers in the mid-1980s could return.

"In one sense the president's timing is awful, but in another sense it's great," Mr. Tremper says. "The service ethos of risk management has always been to preplan for a crisis, so it is fitting that the initiatives come out now, before another hard market occurs."

As it relates to the initiatives, the term volunteer" includes direct service providers, directors and officers of volunteer organizations and certain state and local government officials. Volunteers typically engage in activities such as mentoring troubled youth, tutoring illiterates, feeding the hungry, coaching Little League teams, fighting fires and serving on town councils.

Cutbacks in Volunteerism

According to a White House report, fear of tort liability has resulted in cutbacks in such volunteerism and recruitment difficulties. Indeed, the specter of lawsuits and the high cost of insurance have led several schools to reduce extracurricular activities that rely on volunteer support, including sports activities and field trips.

The report also cites that the "ripple effect" of just one lawsuit can seriously hamper many volunteers' willingness to serve. For example, according to Mr. Tremper, a child molestation suit brought against the Boy Scouts of America in 1989 went uncontested, but still ended with parent/teacher associations dropping sponsorship "en masse" of the troop involved in the suit. Although volunteers seldom pay judgments, the fear of lawsuits, which place an individual's bank account and home at risk, is a big impediment to volunteerism, according to the report.

Also, unlike for-profit firms, volunteer groups usually cannot pass on increased insurance costs that stem from such incidents to the beneficiaries of their services. As a result, funds that would otherwise be funneled into programming are diverted to paying larger premiums.

Risk Management Center

To overcome such obstacles, the president's first initiative calls for the support of a privately funded, non-government-controlled center to address volunteer concerns about tort law liability. The center would act as a national clearinghouse for related information, analyze and propose ways to address insurance needs and assist non-profits in reducing their liability exposure. In addition, the center would act as an advocate for non-profits in negotiating with the insurance industry and educating Congress and state governments about the need for reform. Last, the center would establish insurance programs and risk retention or purchasing groups to reduce costs and increase insurance availability.

Nationwide Protection According to Mr. Tremper, all states have adopted laws that offer volunteers varying degrees of protection, but the model state statute provision in the second initiative is more comprehensive. Indeed, it would afford nationwide protection to volunteers working with 501 (c) organizations and governmental entities that use volunteers in performing official functions. Further, the statute would continue to permit recovery against such organizations to th-. extent permitted by state law. Such a statute would strike a balance between the need to protect community service volunteers from personal liability and the need to provide a source of recovery for those who are genuinely harmed by such activities.

Amendments to the risk retention act proposed in the third initiative would assure that risk retention and purchasing groups are controlled by their members. They would also specifically regulate the provision of insurance to purchasing groups and strengthen notice and reporting requirements for risk retention and purchasing groups and purchasing group insurers.
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Title Annotation:due to fears of tort liability
Author:Johnson, Tom
Publication:Risk Management
Date:Feb 1, 1991
Previous Article:Advisory committee examines fronting issue.
Next Article:Dingell prepares to toughen insurance regulation.

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