 Sexual Molestation Risks: Emerging Claims Issuesby Marc L. Abrams
Initially, Mr. Mason provided a detailed and highly informative survey on recent trends, including a discussion on how molestation claims are no longer confined to religious institutions, but are now a recognized exposure for educational institutions (particularly when minors visit campuses through day camps or residential camps), as well as for other businesses serving minors, such as hospitals and other health care providers. This discussion was followed by a survey of various states’ “reviver” laws – in other words, when a state relaxes or lengthens the statute of limitations for sexual molestation claims – as well as a lively discussion on insurance coverage issues, which was led by Ms. Minkoff and Mr. Ellis. As these panelists effectively explained, molestation claims can raise a multitude of insurance coverage issues, including whether the conduct at issue constitutes a bodily injury and whether coverage can be denied based on the insured’s prior knowledge of the improper behavior. Molestation claims also suffer from different approaches to allocation and trigger, and while case law from the environmental sphere may provide some guidance for litigants, molestation claims have their own unique elements, including the existence of victims and perpetrators, episodic conduct that need not be continuous, and harm that is manifested rather than latent. Another interesting point the panelists reinforced was that courts considering molestation coverage issues did not typically strain logic to reach a result in favor of the party seeking coverage, which probably came as a refreshing surprise to many of the clients and practitioners in the room.
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On July 10, 2013, as part of AIRROC’s networking/commutation meetings hosted by Chadbourne & Parke LLP at its New York offices, Edward Ellis (Markel), Alexandra Furth (Liberty Mutual), Richard Mason (Cozen) and Deborah Minkoff (Cozen) presented a panel discussion entitled “Sexual Molestation Risks Impacting Reinsurers.” The panel discussion explored molestation risks from a number of different angles.
While courts throughout the US have been grappling with molestation coverage issues for some time now, reinsurance case law is particularly scarce, as Ms. Furth explained in her edifying discussion of reinsurance issues. Without any guidance from the courts, there continues to be significant grounds for potential disagreement between cedents and reinsurers on molestation claims, particularly given the interplay between applicable retentions and allocation theories, which could offer substantially different recovery outcomes depending on whether the losses are grouped by occurrence-per-perpetrator, occurrence-per-perpetrator-per-year, or per-victim-per-year, as Ms. Furth demonstrated. Beyond these differences, reinsurance contracts may also have different occurrence language than that contained in the underlying coverage, as well as different choice of law provisions. The bottom line is that molestation claims present a number of complex insurance and reinsurance coverage issues, which we may see more of, especially given new sources of litigation involving molestation claims.