Author: Candace D Collins JD
Healthcare sexual abuse and molestation claim costs are ballooning. For perspective, a handful of cases paid out over the last four years exceed $3.6B.1 The sheer size of all payouts is reshaping the availability of insurance coverage, and healthcare organizations are under pressure to strengthen their prevention and response efforts.
Spotlight on abuse and molestation claims
Sexual abuse and molestation (SAM) claims certainly aren't a new concern for healthcare organizations. Cultural shifts like the #MeToo movement, a 2015 Atlanta Journal Constitution investigative journalism series on physician sex abuse2 and legislation that expanded the window of time for survivors to file lawsuits keep the topic at the forefront of leadership conversation. What we're currently experiencing is a combination of continued cultural shifts, an increase in societal awareness of how trauma delays reportingand an overall erosion of public trust against the very organizations tasked with their health and safety.
While we can't pinpoint the exact frequency of sexual abuse in healthcare, we do know that across all industries the frequency and severity of SAM claims are rising. Research indicates the average payout jumped 79.2% since 2000,3 with the largest SAM settlement in US history nearing $5 billion.4
Medical malpractice claims are trending upward and SAM claims outpace the average cost of claims for healthcare organizations. The average SAM payout is $59 million.1 Higher SAM payouts are often associated with multiple survivors or missteps in the organization's response to a report of abuse. For context, the value of a SAM claim may increase as much as 61% when the resolution occurs more than 10 years after the alleged incident.3
Insurance market response to abuse and molestation claims
Insurance and reinsurance carriers are taking note of these trends as they reevaluate their appetite for SAM claims, sharpen their terms and conditions and secure risk management resources. The resulting market includes a mix of legacy carriers, new carriers and new abuse liability products. Healthcare buyers face complex decisions on the liability package versus the standalone SAM form, limits of liability versus SAM sublimits, claims made versus occurrence triggers, aggregates and retentions, availability and price per layer, plus a host of other unique terms and conditions.
Some buyers are reevaluating the traditional marketplace altogether, seeking alternative risk financing solutions. Recent SAM-related bankruptcies and reorganizations may trigger a financial review for existing healthcare captives:4
