Charities urged to maintain cover as risks and demand increase

Geopolitical risks such as the war in Iran have impacted the UK economy, formenting a surge in the formation of UK charities and, with it, a growing complexity of risk for this specialist line.

The UK charity sector has continued to expand in the first two months of the year, with almost 1,000 new charities formed over January and February 2026 as domestic and international needs increased.

As of 10 March 2026, the Charity Commission said there were 184,972 charities employing 1.23 million people in the UK. And, with combined assets of £141.1m, as well as long-term investments worth £191.5m in the UK, that figure is only set to increase as charities take an increasing share of the social burden.

From one-employee operations to multinational, multimillion pound organisations, the demand for insurance coverage for charities has been met by new sector entrants and increased competition between the traditional incumbents.

Beyond a simple increase in the number of charities, the range of activities they carry out has also widened – from operating foodbanks to sending staff to conflict and disaster zones.

For insurers operating in this sector, this broad spectrum of operations creates the need for bespoke solutions.

Will Paskins, head of digital, schools and partnerships at Zurich Municipal, told Insurance Times: “Charities of different sizes demand a different model. We have a direct option for those smaller charities and we work in partnership with a wide range of intermediaries for those charities that prefer to place their business via a broker.”

The charity insurance market is currently incredibly competitive, with pricing impacted by the softening market cycle. But the unique nature of the market requires specific coverage not included in standard busiess products.

Paskins added: “Charities comes with specific risks. A standard business product will have no cover for volunteer workers or for trustee indemnity, for instance. Charities will also look to stage specific events, which can often come with risks, and there are also the risks that come with international travel.

”There is a greater complexity of risk and new need to ensure that premiums remain competitive, but at a level that is sustainable. We remain committed to the market and new charities need to be confident that, if there is a claim, the insurer will be there to meet it.”

Cyber exposures

While charities require specific insurance products, they are also as susceptible to new risks – like cyber attacks – as other businesses.

Wendy Cotton, head of care underwriting at Markel UK, said cyber risks were becoming a major issue for charities, with cyber threat actors showing little to no regard for the negative impact on charities and the causes they serve.

She explained: “The Cyber Security Breaches Survey 2025, published 10 April 2025, found that 30% of UK charities reported a cyber security breach or attack in the past 12 months.

“Such an attack can create serious operational risk, especially for organisations built on public trust and funded by donations.”

Charities can actually end up more exposed to cyber attacks, Cotton added, as they must contend with various factors that don’t affect more traditional larger organisations as regularly.

She explained: ”Many charities have teams that are often lean, while volunteers frequently come and go. Technology is typically older and criminals do not need to outsmart a well-resourced IT department. All they need is one weak password, a clever email or a system that has not been updated.”

Paskins added: “Charities need to support volunteers on a range of risks around cyber and social media and there are challenges around ensuring staff welfare. They need to deliver risk management and training.”

Revenue pressure

As charities proliferate and face into new risks that they are often less prepared to contend with, these organisations also must contend with a wider economic environment that places their revenues under pressure. 

A spokesman from broker Howden told Insurance Times: “A broad range of challenges over the last few years has affected the whole economy, but organisations operating in the third sector have faced a particularly distinct and demanding set of circumstances.

“Falling donations, driven by the pandemic and society’s move away from cash, have collided with rising costs on multiple fronts. Staff salaries have increased, as have the costs associated with offering wider benefits packages to attract and retain talent in an increasingly competitive market.

“At the same time, the cost of delivering services has continued to climb. All of this has converged to create an exceptionally challenging revenue landscape – and that is before we take into account the sharp increase in demand for services. This reflects a broader picture seen across sectors that deliver significant social value.”

This pressure on revenue also, unsurprisingly, brings with it the desire to reduce costs – with insurance in the crosshairs for many organisations.

“Having the right broker in place, and, crucially, selecting that broker before they approach insurers for pricing, can make a significant difference,” Howden added.

“Early, informed engagement helps ensure the charity’s current activities and risk profile are properly understood, avoiding unnecessary cost and complexity further down the line.”

Sector advice

So, despite the complications that charities are tackling, what is the insurance sector’s best advice for the third sector?

On the key risks to watch out for, Howden said: “Beyond traditional risk considerations, organisations also need to understand the focus of their staff and, critically, their volunteers’ mental health and how an organisation can support people in the workplace.

”Mental health has become a key area of concern and charities are increasingly considering how best to support those working within their organisation. From employee assistance helplines through to fully tailored employee assistance programmes, a range of solutions are available and can play an important role in supporting individuals and strengthening the wider organisation.”

Paskins said clarity was key for charities seeking to balance risk cover with premium costs.

“If charities can present clear risk profiles it enables the delivery of sustainable cover which is tailored to their needs. It is not a one-size-fits-all approach.”

Cotton added: “Insurance helps when an incident occurs. For charities, the value is often less about a cash payout and more about having a route to timely specialist help, including out of hours.

”Being able to contact an insurer’s specialist helpline as soon as an incident occurs or is discovered and activate early intervention and support from experts is critical to reducing the impact of an incident.”