BOKRIM Thinking

Ten ways to get the broadest sexual abuse insurance coverage for the lowest premium

There are many reasons why, over the last three years, sexual abuse insurance has become far harder to obtain, costs much more, and covers much less than it used to.  For example:

  • Adult-on-child sexual abuse has doubled in the last ten years, and child-on-child sexual abuse has increased five times.
  • All the costs of failing to prevent sexual abuse have risen sharply.  For insurers, the costs that matter most are financial; ten years ago, a large sexual abuse-related settlement was $250,000, whereas today, it is $25,000,000.
  • Suspended, extended, and eliminated statutes of limitation for civil claims relating to sexual abuse have transformed the risk insurers have to manage, costing $billions in claims insurers weren’t expecting. 

There are now far fewer insurers willing to offer sexual abuse insurance.  As a result, to obtain adequate insurance for sexual abuse for a reasonable cost, organizations must present themselves in the best possible way to prospective insurers.

These are the top ten ways organizations can make the most impact on the quality of the coverage they can obtain and how much they have to pay for it.  

If you think these approaches are too complex for your organization, we have seen organizations as small as one owner, two part-time volunteers, and fifteen children implement all ten of these ideas.  Further, some insurers will offer up to a 25% premium discount for organizations that demonstrate their use of these practices. 

1. Explain your sexual abuse risk management principles and how you translate them into practice

To set the scene for all the following information, you should start by outlining your overarching approach to sexual abuse.  

Ideally, you will be able to explain how you are using risk management best practices to prevent sexual abuse.  It is the research-proven most effective way to prevent adverse events like sexual abuse.

It also helps if you can:

  • outline the different roles the different parts of your organization play in managing sexual abuse, from the owner or Board down;
  • demonstrate how publicly you express your commitment to sexual abuse prevention and child safety and in what terms; and
  • show how you engage with all your stakeholders to understand and address their concerns and identify and meet their expectations.

2. Accurately convey how much sexual abuse risk you have

Your insurers need a good idea of how much risk they are taking on.  They also need to be able to assess whether your sexual abuse risk management system is consistent with the level of risk you pose to them.

Examples of the information required include:

  • how many minors and vulnerable adults do you work with;
  • what ages and genders are they;
  • what work do you do with them;
  • what activities are involved in how you work with them; and
  • what kinds of relationships do you have with them?

3. Show you have comprehensive prevention controls

Traditionally, insurers have only required applicants to confirm they implement the four main controls most youth-serving organizations must use; criminal background checks, SAM-related training, policies about 1-to-1 interactions, and mandatory reporting.  But because these controls aren’t preventing sexual abuse from rising and they don’t protect your organization or your insurers when they defend you, they are no longer enough if you want to obtain the broadest and lowest cost insurance.

Examples of the ideal information to provide include:

  • how have you customized your intake process to optimize it for sexual abuse;
  • how is everyone expected to behave, and how do you let them know; and
  • how do you deal with the physical security you probably cannot change and have to live with?

4. Explain how you ensure your controls keep working as intended

Controls in organizations that influence behavior don’t just happen.  They need monitoring to verify they are happening, performing as needed, and are adapted if performance slips from what’s expected.

Examples of the ideal information to provide include:

  • how do you ensure the intake process is completed for all roles, and how do you deal with exceptions:
  • what triggers a response to a breach in behavior requirements or expectations, and how are breaches dealt with; and
  • who monitors physical security, and how do you deal with lapses in security?

5. Describe how you plan to respond to sexual abuse if it happens

How organizations deal with the first 48 hours after sexual abuse is first suspected will make an enormous difference to the outcomes for victims, your organization, and the people working for you.  For insurers, the difference can be between no claim and, for example, protracted litigation and a high seven or even eight-figure settlement.

So, to get the most from your insurance and to minimize the consequences of abuse for everyone, you should have a sexual abuse incident response plan.

The details of your plan that you should share with your insurer include the following:

  • what triggers a response;
  • who leads the response;
  • how they are trained or access expertise in incident response and crisis management;
  • what outside expertise do you ensure is available;
  • how do you record incident responses;
  • how do you monitor responses for consistency with your values; and
  • how do you ensure learning and adaptation occur when needed?

Note that some insurers offer sexual abuse incident response services, so you should also show if and/or how your plan and the insurer’s services will be coordinated.

6. Show what support your sexual abuse insurer can expect from you, to help them defend you - and therefore themselves - in the event of a claim

Sexual abuse insurance policies confer the right or duty on an insurer to defend you if a claim is made against you involving sexual abuse.  An insurer can only defend you as well as you equip them to do so.  The better the insurer believes they will be able to defend you, the lower the claim and claim handling costs should be, so the lower your premium should be.

There is a range of possible ways to help make yourself more defensible.

At one end of the spectrum, we have seen rarely opened ring binders with policies and procedures for dealing with sexual abuse and spreadsheets showing that criminal background checks and SAM-related training have been performed.  This approach, though it shows an organization has followed its required rules, provides limited legal defensibility because plaintiffs’ attorneys have had twenty years to find ways to accuse organizations of negligence if they fail to prevent sexual abuse.

So, ideally, you need to think about how you produce evidence that you have managed sexual abuse risk comprehensively and conscientiously.  For example, can you produce detailed records covering an extended period, showing the following:

  • an intake process customized for sexual abuse has been applied to every role filled;
  • annual appraisals for everyone associated with the organization have incorporated sexual abuse-related behaviors;
  • physical security has been monitored from a sexual abuse perspective, and behaviors adjusted when needed;
  • everyone in or related to the organization is aware of and has been held accountable for behavior requirements and expectations, with records of all breaches and resulting sanctions and actions;
  • how all prior sexual abuse-related incidents were responded to, what sanctions, if necessary, were applied, what lessons were learned, and how controls and activities were adjusted accordingly; and
  • readily understandable evidence that the system incorporating all the above was regularly reviewed, that change was considered and addressed, and that the system was continuously improved?

If you can provide this level of detail, the defense attorney appointed or paid for by your insurer has a much better chance of successfully defending you from allegations of negligence and reducing the financial cost of failing to prevent sexual abuse.  Providing this information should therefore reduce your sexual abuse insurance cost.  Delivering these outcomes will also reduce the disruption caused by the litigation to your organization or the lives of the people working for it.  At least as important, this information will also minimize the reputation damage sexual abuse allegations cause.

7. Demonstrate you have a plan to address change

Change is inevitable, of course.  It may be, for example, in your organization, your sexual abuse risk, risk management best practices, or in the environments all those and other “things” operate in.

So you should share how you plan to monitor for, identify, consider, and, if necessary, adapt to change.

8. Show you keep your system up-to-date

Systems are kept on track with feedback loops.  You will need to show how you use feedback loops to keep your system on track to achieve the objectives you set for it.

You should therefore show how you:

  • monitor the performance of each of intake, security, behaviors, response, and change management; and
  • ensure learning and adaptation occur when needed.

9. Explain how you continuously improve your sexual abuse risk management

The best practice is to improve a risk management system continuously.

If you have a continuous improvement strategy, you should aim to show how you;

  • implement it;
  • ensure internal information is developed and analyzed such that you can use it for improvement; and
  • access external information to ensure you keep well-informed about emerging best practices – for example, in controls, risk management activities, and incident response.

10. Show how past sexual abuse incidents have been addressed

If you have had sexual abuse incidents – or even claims – you should show how the incidents progressed, considering all you have indicated about how you manage sexual abuse risk and respond to incidents. 

If the system you have now resulted from a past incident or incidents, you should show what you learned from the prior incident(s) and how your current approaches accommodate what you learned.

Until we find better ways to prevent sexual abuse and protect organizations, including insurers, from the consequences of failing to prevent sexual abuse, sexual abuse insurance will get harder to buy, become more expensive, and cover less.  Using the risk management best practices outlined above will help in that process.

Further, though it will depend on the insurer, organizations that use all ten of the suggestions above will, all other things being equal, obtain the broadest sexual abuse insurance coverage for the lowest cost.  Even if you cannot implement all of these, any one of them should make a positive difference.

Our Ten-Step Guide shows how you can implement all of these suggestions.

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Tim Jaggs, BOKRIM Founder

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