Hospitals and medical professionals occupy an important place in society’s hierarchy of trust. Patients disclose intimate details, consent to invasive procedures, and submit themselves, often in their most vulnerable moments, to clinicians whose mission is to heal. When that trust is shattered by sexual abuse or molestation (SAM), repercussions cascade across personal, moral, clinical, legal, and financial dimensions. Survivors confront lifelong trauma; caregivers experience moral injury; communities question institutional culture; regulators turn skeptical; and insurers reassess their appetite for risk.

The magnitude of these consequences is no longer abstract. Cases like the serial assaults by Robert Hadden on patients at Columbia University Irving Medical Center and by former Olympic team doctor Larry Nassar on U.S. athletes have exposed systemic vulnerabilities and triggered financial settlements in the nine- and even 10-figure range.

As survivors are becoming more empowered to come forward and society’s understanding of early warning signs like grooming and other inappropriate behavior is increasing, SAM incidents are now more often reported. As a result, claims are filed more frequently, often years or even decades after an event. These trends have contributed to an increased frequency and severity in SAM claims, two terms that will be discussed in more detail in Milliman’s actuarial perspective.

There are four main types of SAM claims:

• Those previously reported and settled, which may offer insights into settlement values and other matters that could be relevant to similar, unresolved claims
• Currently pending claims
• Incidents that have occurred, or may be ongoing, but have yet to be reported
• Claims that have yet to be incurred, where protecting patients, in addition to preventing and mitigating loss, must be top of mind

Insurers covering these perils have responded with sublimits and exclusions or have withdrawn coverage for hospital SAM claims. For risk managers and hospital boards, the top priority must be ensuring patient safety. But they meanwhile must determine how to protect their institution’s sustainability when conventional insurance backstops are eroding.

To help understand the SAM risk continuum, this white paper presents an integrated framework assembled by three organizations at the forefront of this issue.

• Praesidium, a global leader in abuse-prevention consulting and accreditation, explains why insurers are tightening terms and how hospitals can translate best-practice safeguards into a tangible and sustainable culture of safety coverage parameters.
• Milliman, a premier actuarial firm, shows how credibility-based modeling converts low-frequency, high-severity events into quantitative forecasts that inform retentions, captive funding levels, and investment in mitigation.
• TransRe, a global reinsurance company with deep expertise in medical professional liability, providing capacity and insight to primary insurers, captives, and self-insured entities worldwide.

This paper explores each perspective in depth, then synthesizes the findings into board-ready guidance. The goal is not simply for hospitals to avoid becoming the next headline. It is first and foremost to help protect patients by embedding a culture of safety. It is also to help ensure the financial stability of health systems, so they may continue to care for patients and communities by allocating capital intelligently and maintaining durable access to risk-transfer markets.

To read the full paper, download the PDF.