Since the fall of 2017, the #MeToo movement has led to a surge in allegations and claims associated with sexual harassment and assault. From Hollywood to Wall Street to politics, the United States to China, the movement has put a new face on harassment and has opened the door to education and discussions around this issue.
And while the movement began with a spark in Hollywood after allegations against mega producer Harvey Weinstein, who was recently found guilty of sexual assault, went public, claims have come from all over. According to a report from Vox Media, data released by the Equal Employment Opportunity Commission (EEOC) show that even as the overall number of complaints is down since 2017, complaints about harassment have risen by nearly 14 percent.
So, how does this all fit into the business community and how are organizations rethinking the way they approach management liability insurance, such as Directors and Officers insurance?
Underwriting and New Claims
The movement hasn’t necessarily gone away. In fact, a series of new laws have either been passed or proposed in the wake of the initial claims, both federally and state by state. #MeToo has triggered claims related to equal pay as well, adding more work for underwriters in the industry.
Furthermore, other claims, such as those related to race, age, pregnancy, religion, or sexuality, are being filed at a record pace. These are difficult items to protect against and to underwrite to. That’s why maintaining employee handbooks, fostering a better work culture, and working with management liability insurance providers will help to push companies in the right direction.
Looking at Management Liability Insurance and D&O Coverage
With executives and board members under a new microscope, it’s important that companies stay educated on these claims and how new allegations are changing the way D&O insurance is involved.
The myriad of claims coming from the #MeToo movement has changed all aspects of insurance, including D&O insurance coverage. Cases of sexual harassment and discrimination usually involve claims for damages made by victims against the company in question or its agent. Since these claims are usually not aimed at the goal of compensation, the majority of cases will not be covered by D&O policies.
However, a major risk may come up for D&O insurers from internal recourse cases in which companies claim damages from acting board members and executives. For example, cases including breach of organizational or supervisory duties, with regard to payments to injured or affected employees or related fines.
Higher Rates Down the Road
For now, rates for D&O coverage are expected to rise in the wake of these claims. The market was already in a contracting mode in 2017 before the movement hit, but with claims still pouring in, insurers may be right to charge 10-15 percent higher.
What’s more, companies with a high number of claims already in their history may have difficulty finding any coverage at all. Those companies and even those with just a few claims should still look to change their company culture, especially in trying to find the best management liability insurance coverage at the right price.
In the long term, rates may level out following #MeToo, but it’s still important to understand that the D&O insurance world has changed, resulting in higher rates and more strict providers.
About Axis Insurance
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (877) 787-5258 to speak with one of our professionals.
