For independent agencies with clients in human services industries, such as health care, education and nonprofit organizations, it is especially important to navigate the insurance hard market's tighter underwriting guidelines, reduced limits of liability, increased deductibles and higher policy premiums due to the social impact they have on communities. 

Health care is a sector particularly impacted by the hard market, with organizations struggling to attain adequate insurance protection, especially sexual misconduct liability insurance.

Ensure your health care clients understand why the market is hardening by making them aware of the factors that contribute to the changes in the market, such as continued claim activity, social inflation, third-party litigation financing and the increased cost of litigation all contribute to the hard market conditions.

Meanwhile, several states have recently removed barriers to reporting abuse. Only five states maintain a criminal statute of limitations on claims of abuse, 19 states have eliminated statutes of limitations on civil claims, and 30 states have enacted laws allowing victims more flexibility to revive claims of sexual abuse.

From 2016 to 2020, the tort system's direct economic costs grew 6% every year, exceeding both the inflation rate and gross domestic product (GDP), according to the Institute for Legal Reform.

Additionally, medical malpractice claims exceeding $1 million continue to grow in frequency, according to The Doctors Company's “Medical Malpractice Claims-Made Social Inflation and Loss Development Report."

An increase in third-party litigation financing—the practice of investors funding lawsuits in exchange for a portion of the settlement and return on the investment—can discourage prompt and reasonable settlements. This practice also reduces an attorney's accountability to good faith standards and produces more lawsuits.

As a result of these factors, insurance carriers are now reducing their financial risk for abuse exposures. This means medical professional liability underwriters may need more underwriting information to quote limits above $100,000. Additional measures may include issuing nonrenewals, taking into account jurisdictional challenges, carefully considering policies covering young patients, excluding all trafficking allegations, and adding a per-victim or perpetrator deductible.

Agents should be prepared to include written explanations of client operations and the measures taken to prevent sexual misconduct. It may be as simple as having a conversation with the health care organization's operations manager or providing a questionnaire they can complete. This will give the agent a better understanding of the true exposure to risk and equip them to advocate on the client's behalf to the carrier.

Risk Management Strategies for Health Care Providers

The legal environment and claim trends add financial exposure for both health care providers and insurance carriers. Agents can educate health care clients on how to protect themselves from sexual misconduct before claims arise. 

If health care clients are not already implementing strategies to help mitigate some of their sexual misconduct risk, agents should suggest risk management actions, such as: 

• Use chaperones to reassure patients of a procedure's professional nature. The chaperone provides a witness to support the practitioner's actions.
• Perform examinations for minors in the presence of a parent, guardian or chaperone.
• Educate the patient about the exam and its necessity before the patient's appointment.
• Document the exam's medical necessity, the education provided to the patient and the chaperone's presence and identity.
• Educate staff on proper patient interactions, professional boundaries and how to report misconduct.
• Ensure familiarity with the state's reporting obligations related to sexual misconduct and include the requirements in the company's policies and procedures.

Agencies should also consider hosting a workshop or webinar and inviting an expert to discuss the topic so clients are aware of the risks and can mitigate them as much as possible. 

Sam Brown is vice president, human services group, at Rancho Mesa Insurance Services Inc. in San Diego, California.