Placing You First Insurance Podcast by CRC Group
The Placing You First Podcast spans a diverse spectrum of insurance industry issues to keep you and your clients informed.
Placing You First Insurance Podcast by CRC Group
Navigating the Rise in Sexual Abuse Claims
Sexual abuse and molestation claims have skyrocketed in recent years, creating significant financial and reputational risks for organizations across various sectors. The numbers are staggering – $651 million in settlements in 2023 alone, with each settlement exceeding $1 million. What's driving this dramatic increase, and how can organizations protect themselves?
Michelle Levine, SVP with CRC San Francisco, pulls back the curtain on this critical issue. The traditional assumption that general liability policies provide adequate coverage no longer holds true. Insurance carriers have responded to increasing litigation by cutting limits, non-renewing policies, or explicitly excluding sexual abuse coverage. This shifting landscape necessitates specialized solutions and a stronger risk management approach. While schools and religious institutions represent approximately 70% of claims, the exposure extends to any organization with third-party contact – from wellness centers to gyms to service providers of all kinds. The most effective protection combines comprehensive insurance coverage with proactive risk management – proper hiring practices, consistent training, and creating a culture where concerns can be raised and addressed immediately.
Don't wait for a claim to discover your organization's vulnerability. Reach out to your CRC specialty broker today to ensure you have the coverage and risk management tools needed to protect your mission, your finances, and most importantly, the people you serve.
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Welcome back to the Placing you First podcast. I'm Amanda Knight, joined by Scott Gordon, and today we're discussing a critically important and sobering topic the rise in sexual abuse and molestation claims and what that can mean for schools, nonprofits, wellness organizations and beyond.
Scott Gordon:Yeah, that's right, and our guest today is Michelle Levine, senior VP at CRC Group's San Francisco office and a specialist in finding the right coverage for complex, high-risk accounts.
Amanda Knight:This is the Placing you First podcast from CRC Group. This podcast features news and insights from a vast knowledge base of more than 5,500 associates who write more than $30 billion in premium annually. Plus, we give you the latest information on what's happening at CRC.
Scott Gordon:This this this is the Placing you First podcast.
Amanda Knight:And now the hosts of the podcast, Amanda Knight and Scott Gordon.
Scott Gordon:Michelle, thank you for joining us today.
Michelle Levine:Thank you both so much for having me.
Amanda Knight:Michelle. You worked with me on the written article that corresponds with this podcast topic, and some of the statistics that we reviewed when we were putting that together were pretty eye-opening. For example, just in 2023 alone, there was $651 million in sexual abuse and molestation claim settlements. Why are we seeing such a sharp increase? And if I'm remembering right, those settlements were all over a million dollars, so why are we seeing such a sharp increase in both frequency and severity of these?
Michelle Levine:claims.
Michelle Levine:That is an excellent question, amanda, and to address that, we need to go back a little little bit, and this is not something that we were seeing or even talking about 10 years ago, and it's getting so much more airtime as these situations are being reported more and more, and this is very closely correlated with the me too movement in 2017, with Weinstein and also the Larry Nassar case drew a lot of attention to this as well, and we weren't seeing claims previously and therefore we weren't seeing these settlements because it wasn't being reported as the survivors and victims didn't generally feel like it was an environment that was hospitable or conducive or really a safe space in which they could come forward, and that's been one of the largest differences that more survivors are coming forward, and there's been so much media attention and a lot of these things that there are also more sympathetic juries and all of this, which is driving a lot of that.
Michelle Levine:And it's also important to remember that it's not just these high profile cases that we think of. There are claims that are affecting the balance sheets of smaller companies all the time, and any company with a third party exposure should really be considering purchasing this coverage. And one last aspect of that that's contributing to it is they have changed the legislation and have expanded the timeline retroactively so that it's allowing more people to come forward, which is again contributing to both the frequency and severity that we're seeing represented in those statistics you mentioned.
Scott Gordon:Now, historically, many clients assume general liability would be enough, but why is this no longer the case?
Amanda Knight:Is it just the fact that there are more claims and they cost more? These are excellent questions.
Michelle Levine:Excellent points. It's a myriad of factors again on this, and GL policies do tend to have insufficient sublimits or outright exclusions at this point and there used to be explicit coverage or they were silent, and that's not to say that they aren't silent and they aren't still covering some of this. But with the increase in litigation and also the reputational damage that's being done with a lot of these cases, it's requiring a stronger risk strategy and that's where many companies come in that can provide services like this and help with the training and the management when a situation like this arises. And this is still an evolving coverage, as we discussed, you know, even 10 years ago this wasn't nearly as relevant as it is today and because of that there's a considerable exposure for many classes of industry. And then with that, in the last few years, the GL carriers have been also cutting limits, non-renewing altogether or carving out coverage, which is really where a wholesale partner can help, providing a standalone option as a solution to that.
Amanda Knight:So if I'm a retail agent and I'm thinking about my list of clients who is most at risk when it comes to these kinds of exposures and claims? I know we often think of schools, but this really, I mean it seems to extend far beyond that right. What other industries, what other areas do we tend to see some of these claims come out of?
Michelle Levine:So the categories that you mentioned are really the most frequent and tend to be the most severe with schools, religious institutions it's something close to 70% of claims are as a result of that um and but. That said, it isn't just those entities, it's really anybody who has a third party exposure, and with that I would say that it can be gyms, it can be massage places, it can be really anywhere, and because of that, I would say that it's really important to encourage clients to feel comfortable talking about this, because it feels a little uncomfortable to talk about, right? So it's something that the more we're talking about this, we can actually really help with the risk management as well, because a lot of this can be prevented with proper hiring and with cultivating an environment where people are able to come forward, because a lot of this can be resolved much faster and with a much better outcome for all parties if it's addressed immediately and taken seriously.
Scott Gordon:And now, with that growing scope in mind and the difficulty, of you know, discussing it, how should retail agents approach this topic with their clients?
Michelle Levine:They should approach this from a risk management perspective, and the best advice that we can give them is to take the warning sign seriously and respond as quickly as possible and enlist the help of experts as well, because you're paying for a service and you need that service, which is going to help with the media perception and also with managing this process, is going to help with the media perception and also with managing this process, and I would say that be selling this to all of your clients, because it is a very costly, a very costly outcome, and you want to be able to avoid that so that your business can keep doing the good work that you're intending for it too.
Amanda Knight:So let's talk statutes then. Are there changes? I mean, you've mentioned that this is evolving. This is something that we didn't see a little over a decade ago. So what changes are happening that agents should be aware of? I know there have been some recent changes, maybe out in California, maybe some other states. Can you give us kind of a quick primer on what's happening right now as far as changes around these kind of claims?
Michelle Levine:To address your first comment, the California AB 2777 law was a law that was signed into effect by California Governor Newsom in September of 2022. And it's more commonly known as the Sexual Abuse and Cover-Up Accountability Act, and that law essentially extends the statute of limitations on crimes associated with rape, sexual abuse, sexual harassment or associated violence with those which occurred on or after January 1st 2009. So what that law also did is it provided an additional provision, which is something we referenced earlier, that creates a one-year revival window and that allows a victim or plaintiff to bring a claim against individuals and or entities for the associated sexual crimes, which is involved in a type of special type of cover up, and so with that it just it expanded it so much that so many claims have been forthcoming, and California can tend to be a pioneer of these sorts of things. So other states are doing respective things, and that's why it's important to be looking at the local. You know statutes and limitations on each state.
Scott Gordon:So, before we wrap up here, though, what's your general advice to, say, brokers and agents who are handling sexual abuse and molestation exposures today?
Michelle Levine:Buy more insurance? That really it sounds so simple. Buy more insurance? That really it sounds so simple, but it really they yeah, just buy insurance so that you're adequately covered for this, because you're not just buying the defense and indemnification part of it, you're really purchasing it for these services which can help in the training to mitigate these circumstances from even occurring to begin with, which is the most ideal for everyone. So that is really why we just say address that and have honest conversations so that you have that open communication and you're able to help with it.
Amanda Knight:If you read the article that goes with the podcast, if you kind of dive in this is all over the internet, right it seems like every time you turn around there's another big claim, you know a heartbreaking claim, and that a lot of that could maybe be prevented if we do our best to pay attention and take the right risk management steps. And insurance is absolutely part of any strong, robust risk management plan. So thanks for sharing that with us, michelle. Of course, yeah.
Michelle Levine:And one more point is, along with insurance obviously, being a strategic part of that hiring and not having negligent hiring and consistent training. It's not just that people are going through the perfunctory protocols, it's that they're actually committed to it and it's that commitment when we see that from companies and they carry that in their culture and it really does affect the outcome. So a lot of this, like we talked about, is avoidable and we want that for everyone. We don't want our hearts to be broken and for people to endure this. So it's definitely, you know, all of us being committed to this and helping perpetuate that can really make a positive impact.
Amanda Knight:Absolutely Okay, scott. I think it's time.
Scott Gordon:We've reached the end of our podcast and you know what that means. It is time for a little, something we call rapid fire, and you just answer the questions off the top of your head. Michelle. There's no right or wrong. Question number one what's a skill you've always wanted to learn, but haven't yet?
Michelle Levine:I have a tie, so it seems like maybe I'm already giving a wrong answer. Jiu-jitsu and chess, I mean, but not together.
Amanda Knight:Oh wow, I mean, if they were together.
Scott Gordon:I was going to say Maybe together I was going to go there.
Amanda Knight:I mean I like that they're opposite into the spectrum. One's really hard for your brain.
Michelle Levine:One's really hard for your body, so good choice.
Amanda Knight:It's about balance so good choice.
Scott Gordon:Both involve a lot of losing before you get good um.
Michelle Levine:Question number two are you an early bird or a night owl? Night owl, really, the morning is not for me. I'm an early bird what about you, scott?
Amanda Knight:what are you like? Let me hold on, I'm gonna guess. Scott, I think you're a night owl agreed.
Scott Gordon:Believe it or not, I don't really sleep, so I'm both both so you're a vampire. I am ill vampiro, as we call them in the old country. Yes, okay, question number three, our final question. It's summertime, so you know lots of people are out and about and, uh, taking vacations. We're dying to know what is the best vacation you've ever taken.
Michelle Levine:A few years ago, my partner Andrew and I went to Copenhagen and Berlin and it was absolutely magical. I cannot recommend it enough. Those cities are just incredible.
Amanda Knight:Sounds like it, so you heard it here first. Folks, Not only did you get excellent insights into current exposures, but you also got a travel tip. You're welcome, folks. Not only did you get excellent insights into current exposures, but you also got a travel tip. You're welcome everyone. So thanks, michelle. That was incredibly informative and eye-opening. If you're a retail agent with questions about these kind of risks, we encourage you to reach out to your CRC specialty broker. Don't forget to subscribe for more specialist insights on placing you first and we'll see you next time.
