Rancho Mesa's Alyssa Burley and Vice President of the Human Services Group Sam Brown talk about the insurance marketplace for healthcare organizations, specifically for sexual misconduct liability insurance.
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Director/Host: Alyssa Burley
Guest: Sam Brown
Producer/Editor: Jadyn Brandt
Music: "Home" by JHS Pedals, “News Room News” by Spence
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transcript
Alyssa Burley: Welcome back, everyone. My guest is Sam Brown, Vice President of the Human Services Group with Rancho Mesa. Today, we’re going to talk about the insurance marketplace for healthcare organizations, specifically for sexual misconduct liability insurance.
Sam, welcome to the show.
Sam Brown: Thanks. Thanks for having me back into StudioOne™.
AB: Rancho Mesa’s insurance brokers who specialize in healthcare, education and non-profit organizations, like yourself, continue to monitor the hardening insurance marketplace, that’s characterized by tighter underwriting guidelines, reduced limits of liability, increased deductibles, and higher policy premiums.
So why is the healthcare industry impacted by this hardening market?
SB: So healthcare providers and many human service organizations are just seeing an increase in claim frequency as well as settlements are taking longer and more costly to finalize. So all that is making underwriters very uncertain about the future of underwriting because they want to be profitable and around, not just this year, not just in 2025, but in 2030 and beyond. So all those factors are just providing a lot of uncertainty right now in the marketplace.
AB: Okay. So, why is sexual misconduct liability insurance becoming harder to get?
SB: Yeah, it certainly is. And when you do get it, it's becoming costlier. And really, that's just due to claim activity. So we're seeing increased claim activity. We're seeing social inflation, which is the industry term for larger settlements and/or jury decisions, third party litigation financing, and just generally the increased cost of litigation. So these are all creating more claims and costlier claims.
AB: Okay, so what’s causing the increase in claim activity?
SB: So a big thing that we've seen in the last couple years is states removing barriers to reporting allegations of abuse. So only five states maintain a criminal statute of limitations on claims of abuse, okay? 19 states have eliminated statutes of limitations on civil claims of abuse. 30 states have enacted laws allowing victims more flexibility to revive claims of sexual abuse. And according to the Institute of Legal Reform, from 2016 to 2020, the tort systems direct economic costs grew 6% every year, which outpaces inflation, outpaces GDP.
There was a 2023 report titled Medical Malpractice Claims and Social Inflation Loss Development Report that claims exceeding a million dollars continued to grow in frequency. There's also been an increase in third-party litigation financing, which is the practice of investors throwing money at lawsuits, paying for the attorney fees, in return for a portion of the settlement or jury decision.
AB: Alright, so all of those factors have been contributing to this. So, what has been the impact on healthcare providers?
SB: So the impact is really that insurance companies are now reducing their financial risk for abuse exposure. So, they're really bringing limits down, higher deductibles, and may go from the admitted marketplace to the non-admitted marketplace, or what we call surplus lines. So that's going to be your carriers, the most famous one being, say, Lloyds of London. And the underwriters are requesting for additional information to allow them to really determine the risk and the exposure. Certainly when the limits that we're requesting exceed $100,000, which is just about everybody.
AB: Alright, so what are some, or are there any strategies that a healthcare provider can employ to help mitigate this?
SB: Yeah, there are several. And to be honest with you, in my own personal life, I've seen some of these used in medical offices. So it's good to see that they're actually being applied. So a big thing is using chaperones to reassure patients of a procedure's professional nature. That chaperone provides also a witness to support the practitioner's actions. So that's an important one. When it comes to minors, performing examinations for a minor in the presence of a parent, guardian, or chaperone. That seems obvious, but we'll say it anyway. Educating the patient about the exam and its necessity prior to the patient's appointment, no surprises. Documenting the exam's medical necessity, the education provided to the patient, and of course the chaperone's identity. That's a nice step. Certainly maintaining boundaries by establishing proper practitioner -patient relationships. So let's just make sure that that interaction takes place in the office and in the office only
AB: Not at someone's home. Not at somewhere else.
SB: Not over a meal. Not at someone's home. Really just reduce or eliminate any interaction or intentional interaction outside the office.
Then educating staff on proper patient interactions, professional boundaries, and reporting of misconduct. And I would say that when you're educating the staff, document it, right? We all know that safety one is going to allow our clients to document not only the trainings that took place, but who is there with what frequency is required and when the next ones do. And then ensuring familiarity with your state's reporting obligations related to sexual misconduct and include the requirements in your policies and procedures. So really just stay up to date on mandatory reporting requirements.
AB: All right, so those are a lot of really good suggestions that seem pretty obvious, but it's always nice to just put them out there and remind everybody that what they should be doing. So, Sam, if listeners have questions, what's the best way to get in touch with you?
SB: I can be reached at (619) 937-0175 or sbrown@ranchomesa.com.
AB: Alright, well Sam, thanks for joining me in StudioOne™.
SB: Thank you for having me.
