Let’s look at Church self-insurance

by Letters Editor · January 8, 2015

From Guy McGregor and Heinrich Leichner, Cape Town

Is the Church making the most out of its resources? Are there ways that the Church could use its substantial assets to free up cash to help the poor?

Man pulls away debris after severe weather damages Missouri Church. (CNS photo/Jerry Naunheim Jr., St. Louis Review)

We believe there is a way that is commonly used by large organisations. The procedure envisaged would be for the Church to �self-insure� rather than pay money over to middlemen such as insurance companies.

This is the process where rather than paying premiums to an insurance company to insure motor vehicles and buildings and their contents, the Church instead sets money aside to do this task for itself internally.

Experience of other parishes in Namibia and corporations that we have worked for, such as BP, indicate that large organisations with significant economies of scale and assets are better off saving on paying premiums, cutting out the middleman (short-term insurer) and using their financial muscle to set off this risk with their own resources. Insurance companies have large overheads which they must pay which the Church would save from paying.

A diocese, for instance, could set money aside each year to cover any potential losses and then pay for any damages out of this fund.

Its vicar for property already administers maintenance and other property/asset issues, so that this could become an extension of that work.

There would be no administration of premium collections, negotiations with insurers and underwriters. Self-insurance would be an internal matter and the Church would earn interest on the money in the fund.

The larger the number of parishes that the fund covers, the bigger the fund would be, and consequently the greater the claims that it could cover. And more interest is earned, which could be used for worthy initiatives such as helping the poor.