Insurance discussion - prior to board decision

Thanks for opening this up, Renee.

I think it's really important that the board decides one way or the other. So far, we haven't taken out any insurance, and the likelihood of us needing it is quite low. But this is a really good quote/proposal and if we were to take out insurance, I think this is the right kind.

Thanks @Renee M - A great idea to get into the nitty gritty pre meeting and I have attached the two other documents here including the AIG key document.

Potential use cases:

1. Poor conference planning resulting in large loss for the conference.

   1. Our current funds should cover at least one year of a exceedingly poor conference completely. I would need to check the AKL financials but can I assume all out goings were well below $80k in the worse case scenario that Mt Wellington becomes less dormant the night before the conference and we have to refund sponsorship, sales and pay for everything else?

2. Global downturn, pandemic, change of conditions

   1. As we have less than $10k pa in mandated operating costs (ASIC etc.), the organisation can hibernate without significant risk

3. Australian Tax Office/ASIC reckoning

   1. I don't believe we are at significant risk to a change in the tax regime or additional costs

4. Financial mismanagement by the board / banking insolvency

   1. Whilst I highly disagree with this statement, this appears that over the next three years would be the highest risk which is once again, absolutely minimal, including the folding of banks which have our term deposits.

Reading the quotation wording added to the AIG, we appear to have little recourse if we are investigated. Investigated is a very open term and probably would not fall our way if push came to shove.

Insolvency Exclusion 2020

Notwithstanding anything to the contrary in the Policy (including but not limited to any discovery or run-off provisions), the Insurer shall not be liable under any Policy Section to make any payment for Loss or Direct Financial Loss in connection with any Claim, Investigation or other matter made or commenced against any Insured:

• (A) alleging, arising out of, based upon, attributable to, or in any way involving, directly or indirectly: (i) any act, error or omission by any Insured, or other matter that is the subject of an Investigation, which is alleged to have led to or caused, directly or indirectly, wholly or in part, an Insured Entity being unable to pay any or all of its debts as and when they fall due; or (ii) an Insured Entity having sustained a financial loss due, directly or indirectly, wholly or in part, to any act, error or omission by any Insured, or other matter that is the subject of an Investigation, but only if such Claim, Investigation or other matter is made or commences after: (a) the Insured Entity has had an administrator, controller, receiver, receiver and manager, liquidator or any other external insolvency officeholder appointed to it; or (b) the time at which the Insured Entity is determined to have become insolvent (whichever is earlier); or

• B) that is brought by or on the behalf of any: i. liquidator, administrator or receiver of any Insured Entity; or ii. crediter or debt holder of any Insured Entity alleging, arising out of, based upon, attributable to, or in any way involving, directly or indirectly, an Insured Entity being unable to pay any or all of its debts as and when they fall due.

Summary:

Without reading the AIG document in full, I see that the only true case of requiring this insurance currently is negated by the above and our current cash reserves. If we went for the global conference, employed staff more than on a casual basis or started running regular gatherings, had less cash reserves or provided training, then I would certainly consider this more pertinent. I am more than open for persuasion (and ambivalent) though and think this is a question each new board should ask at the start of their term.

Sorry for the long diatribe

I'm also interested to explore the possible scenarios where this insurance is targeted. Reading the quote, the things that jump out at me are:

• Employment issues, eg an employee sues OO

• Accounting costs if we are audited

• Liability for errors in management like we don't file our paperwork properly

I don't think it covers losing money by running a conference badly but I could be wrong.

I note the "retention" (sort of like a deductible) is $2500 for most categories and $50000(!) for the employment category of cover, with a max of 500,000 across all categories. I wonder if this is sufficient.

One more thought, I wonder if as conference organisers, we should be thinking about public liability insurance instead/as well?

Yeah, I think we'd need a different type of insurance to cover us making a loss on an event, and I expect it would be expensive.

We haven't been asked to provide public liability insurance by any of our event venues, and I expect they'll carry it, but it is a good idea to understand that risk.

Based on what it is today and discussions we had last year - we dont need this insurance, I dont think there is a scenario where we need one as we dont employ anyone

I also don't think this insurance is going to cover any of our current liabilities. The annual conference is covered by the venue's insurance, and sponsorship refund will be annoying but not bankrupting.

If there is an employee in the future (not just a contractor) then we will need insurance, but I don't think we do now.

ok I think we could be ready to vote on this, either here or at the next meeting. Feels like we are all (or almost?) on the same page to park the insurance idea for the future, if ever needed.

Have we considered self-insuring by depositing a set amount annually in a term deposit up to a set amount that is limited to what it can be utilised for?