Sexual abuse, molestation risk evolves into more industries, methods

CHICAGO — A broadening list of exposures, some due to the proliferation of artificial intelligence used for malicious purposes and the elimination of statutes of limitations in some states, along with nuclear verdicts, has led to significant changes in the sexual abuse and molestation insurance market.

Few industries are immune, as exposures exist even in the noblest settings: corporate volunteer work, for example, according to Christina Herald, Chicago-based focus group leader of crime & fidelity and U.S. safeguard for Beazley Group Ltd., who spoke Tuesday at the Risk & Insurance Management Society Inc.’s Riskworld annual conference. She called the issue a “minefield” for organizations to navigate and said the risk is “accelerating.”

“Do you work with third parties? Do you have one-on-one interactions with clients? It could be youth, could be elderly, or it could be adults. Do you have training in place? …Most importantly, what is your plan of action if you get the call that there’s an allegation or a claim against you?,” she said.

Just as the settings have changes, so have the methods: “We just had our first claim in (AI) where a substitute teacher was taking images of children and turning them into pornographic images and selling them.”

The issue forced organizations to enhance risk management with background checks, reporting processes, and other mitigation strategies.

In the case of the substitute teacher, Ms. Herald said the incident has led to more questions for clients: “Think about the images that you have saved on your computers, whether it’s for company publicity or pictures of students. How is that being stored? How long do you keep those images? Who’s responsible for sharing them?”

She said the issue has called for long underwriting processes: “We are asking a lot of questions,” she said.

As the risk evolves, so has the insurance market, with insurer limits up to $10 million and calling for robust risk management protocols. Still, “you can do everything right in terms of training and controls, but human behavior is complex. It’s irrational. It’s hard to predict. It can wreak absolute havoc on your organization,” she said.