Hiring practices in spotlight for nonprofits as abuse and molestation claims rise

Agent shares tips to help clients mitigate the risk

Hiring practices in spotlight for nonprofits as abuse and molestation claims rise

Non-Profits & Charities

By Gia Snape

Nonprofits today are navigating an increasingly precarious landscape when it comes to managing risks associated with abuse and molestation claims. For many organizations, maintaining adequate insurance has become a pressing challenge as carriers pull back capacity or cap limits on coverage.

At least one broker has flagged an uptick in not only the frequency of nonprofit claims related to abuse and molestation but also in the staggering size of payouts.

"Nonprofits are particularly vulnerable to these types of claims," said Matt Engle (pictured), commercial lines producer at the Insurance Office of America. "It’s a sensitive topic and a tough situation for any organization, especially if an alleged incident hits the public airwaves."

Reinsurers, who back insurance carriers, are now reluctant to offer capacity due to the sheer size of these claims, often amounting to millions of dollars. As a result, they’ve reduced coverage availability and increased costs, even for lower limits.

Where once nonprofits could secure $10 million to $15 million in coverage limits, it’s now challenging to get more than $5 million, Engle said. Even securing these reduced limits requires organizations to demonstrate strict protocols for hiring, training, and monitoring employees and volunteers.

Abuse and molestation exposures – what’s at stake for non-profits?

The impact of abuse and molestation allegations extends far beyond financial strain. According to Engle, the reputational damage caused by allegations or claims can devastate a nonprofit, particularly those serving vulnerable populations.

“If such claims become public, they can severely damage the nonprofit’s reputation. Adding to the difficulty, lawsuits are now revisiting incidents from years past, further straining both the organizations and their insurers,” Engle said. “Defending these claims has become increasingly costly, especially as almost every claim now involves legal representation, often escalating to class-action lawsuits.”

In such a climate, organizations are left with no choice but to double down on their efforts to mitigate risks. One key area of focus is hiring practices.

“Over the years, I’ve seen how critical it is to establish comprehensive hiring and training protocols,” Engle told Insurance Business. “At IOA, we use a risk score approach covering pre-hire, post-hire, pre-claim, and post-claim processes. Before extending an offer, we guide clients on conducting in-depth background checks and using tailored interview questions to identify potential red flags.”

Tips for non-profit clients on background checks and employee screenings

Engle shared several best practices for conducting thorough background checks and screening processes for nonprofit employees and volunteers:

  1. Use third-party resources and systems for deeper background checks. Services like Ministry Safe can provide more comprehensive screening beyond basic checks.
  2. Go as deep as possible with the background checks, including different levels of investigation depending on the role and access the employee or volunteer will have.
  3. Conduct motor vehicle record (MVR) checks in addition to criminal background checks, especially for roles that involve driving or transportation.
  4. Implement an ongoing screening process, not just a one-time check. Require volunteers to undergo background checks and training each time they renew their volunteer status.
  5. Establish clear policies and agreements that all employees and volunteers must sign, acknowledging the background check requirements and agreeing to adhere to abuse prevention training and protocols.
  6. Continuously monitor and review the screening processes to ensure they remain up-to-date and effective in identifying potential risks.

“It’s about creating a culture – one where safety and accountability are ingrained at every level of the organization,” Engle said. “That culture, backed by rigorous processes and continuous oversight, is the best defense against potential claims.”

What are your thoughts on non-profits’ risk of abuse and molestation claims? Please share a comment below.

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