Brokers must be "candid" with clients about sexual misconduct coverage

Brokers must be "candid" with clients about sexual misconduct coverage | Insurance Business America

Brokers must be "candid" with clients about sexual misconduct coverage

It’s an unfortunate reality that all public-facing organizations today, whether for-profit or non-profit, could one day find themselves facing a sexual misconduct allegation. Such accusations, which have been given mass media attention with the recent #MeToo resurgence, can result in the total demise of an organization whether the allegation turns out to be true or not. Thus, it’s an exposure that has the complete attention of risk managers around the world.

Charity First Insurance Services, Inc. is a program manager for non-profit and social service organizations. It offers all lines of coverage, including general liability, inland marine, crime, commercial auto, workers’ compensation, and specialty coverages such as sexual abuse and molestation. So far, the firm has not seen much of an impact as far as an increase in claims or incidents as a result of the Me Too movement, but it’s something they’re paying close attention to, according to Maureen Dyson (pictured), area executive vice president of Charity First.

“The heightened awareness of situations and incidents that can lead to an abuse or molestation claim has led to a better understanding of the need for this coverage and we’re seeing more discussion around it,” said Dyson. “Non-profits are better informed about the risk and are interested in understanding and implementing risk control practices that will help mitigate or prevent such claims.”

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For non-profit organizations that are able and willing to take proactive measures to control and minimize their abuse / molestation exposure, insurance coverage is readily available, explained Dyson. They can also take basic preventative measures such as background checks, regular employee and volunteer training, and enforcing rules that prevent one-on-one isolated contact with vulnerable persons.

“Wherever you have a collective number of vulnerable persons (such as children), unfortunately, there are going to be those that seek out such situations in order to prey upon this vulnerability,” Dyson told Insurance Business. “Non-profits also tend to put a lot of faith and trust in their employees and volunteers – they’re doing good and positive things for their community and expect that those working for them have similar motives.

“Fortunately, actual incidents are pretty rare amongst non-profit entities, but, when they do occur, they can be very costly. It’s important for a non-profit to understand and protect themselves against such risk. They can do much to help mitigate any potential for abuse and molestation claims within their organization. Carriers are looking to insure those non-profits that are taking these exposures seriously and doing their best to implement practices which help mitigate claims.”

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As awareness of situations and incidents that can lead to an abuse or molestation claim continues to grow, one trend Dyson has noticed at Charity First is that organizations are seeking higher limits. In previous years, an aggregate limit of $1 million was fairly common for non-profits, she said, whereas today many are seeking limits as high as $3 million, $5 million, or more, with coverage being requested into the umbrella policy layers.

Insurance brokers play a key role in protecting non-profit organizations against this risk. Dyson commented: “Brokers should be prepared to have a candid conversation with their client on the non-profit’s exposure to sexual abuse or molestation risks. They should become familiar with risk management procedures that are shown to be effective in prevention of such incidents and make sure their clients also understand the value of reporting any incident that could end up resulting in an abuse or molestation claim.”