Navigating the Complex Landscape of Child Sexual Abuse Claims: A Guide for Underwriters

Understanding the Legal Landscape and Its Impact on Underwriting

As of 2019, seventeen states and Washington, D.C. have enacted laws that either abolish or extend statutes of limitations for victims of child sexual abuse to sue or seek criminal charges against their abusers. This shift in legal framework has significant implications for underwriters handling commercial 'child custodial care' risks, which include schools, churches, sports organizations, camps, day care centers, and other activities involving minors. A recent A.M. Best report likens child sexual abuse claims to asbestos liability due to their potential to affect decades-old insurance policies and the unpredictability of settlement amounts.

Strategies for Underwriters to Mitigate Risks

Carey Quigley, a Gen Re treaty account underwriter, suggests that underwriters should take several steps to review guidelines and policy forms. Firstly, building a hazard scale can help assess the degree of risk, with longer activities like boarding schools presenting higher risks compared to local groups and gatherings. Secondly, reviewing insurance forms is crucial, especially for general commercial writers who may have small policyholders like local dance schools or churches. These insurers often use Sexual Abuse and Molestation (SAM) endorsements, which should be carefully crafted to ensure comprehensive coverage.

Monitoring Court Decisions and Staying Informed

Quigley emphasizes the importance of monitoring court decisions to understand how policy language is interpreted. Additionally, checking forms filed by other insurers can provide insights into how they address stacking issues. For instance, the SAM endorsement should include language that moves all coverage into the policy when the abuse first began, treats all abuse by a single perpetrator as a single claim, and provides coverage on a claims-made basis. Deciding exclusions carefully is also vital; underwriters must determine whether exclusions will extend to all types of physical abuse or only sexual abuse.

In conclusion, underwriters should stay abreast of legal developments and court interpretations to ensure their policies adequately protect against child sexual abuse claims. Regularly reviewing and updating policy forms and endorsements can help mitigate risks and provide comprehensive coverage for policyholders.