Beazley, the international, London headquartered specialist insurer, has launched its safeguard product in Australia. The offering is designed to help institutions reduce the risk of physical and sexual abuse and respond effectively when those incidents occur.
“It covers claims made against institutions for wrongful acts allegedly committed by their employees, including volunteers, around sexual molestation,” said London-based Paul Nash (pictured above), Beazley’s employment practices liability and safeguard focus group leader for specialty risks. Nash agreed to provide his personal views on his firm’s offering.
“It also covers allegations of failure to supervise in the event of a claim brought by a third party, for example a child-on-child situation,” he said. “It provides both indemnity and defence.”
Nash said the safeguard offering was launched in Australia in response to a “market need.”
“This will allow institutions to continue the largely good work that they do,” he said.
The “market need” has come from a decade of Royal Commissions investigating sexual abuse and neglect across Australia’s schools, churches and aged care facilities.
“Australian brokers and their Lloyd’s counterparts approached us in the spring [in the northern hemisphere] of last year,” he said. “There were real problems for insureds due to the retraction of capacity, following the Royal Commission and the redress scheme.”
The Royal Commission into Institutional Responses to Child Sexual Abuse tabled a final report after five years of investigations and hearings in December 2017. In response, a National Redress Scheme was created to assist people who have experienced institutional child sexual abuse access counselling, a redress payment and other help.
Nash said this redress scheme’s survivor centric approach “resonates” with Beazley.
“Safeguard has been built the way it has to try and prevent this kind of issue recurring, rather than just cover the costs of managing it,” he said.
Nash said “there is no one root cause” but a lack of training and a lack of staff screening are often the causes of abuse cases at institutions.
“Sometimes the culture has meant that there has been a refusal to believe allegations and here remediation includes giving people a mechanism to report incidents without fear of repercussions,” he added.
He said “market needs” were also behind their first offering of the safeguard product in the United States in 2006.
“The specific catalyst was the demand for insurance within the Catholic Church,” he said. “There was a lack of capacity for this insurance, a situation which is very similar to what we see in Australia today.”
At that time in the US, said Nash, there was one established carrier writing a version of a safeguard product on a monoline basis.
“There were a handful of package carriers that may have included it or remained silent, meaning that there might conceivably have been ‘silent’ coverage,” he explained.
However, said Nash, few brokers tend to accept silent coverage as an option because it can lead to disputes when claims are made.
“So the options for churches, schools and youth clubs were therefore very limited and sometimes non-existent,” he said.
Nash said a “big change” in that product came in 2014.
“We reshaped our offering from being a standard insurance policy into the much more all-encompassing safeguard product, which comes with risk management and crisis response,” he said.
Nash said Beazley added services and enhancements to the policies to help institutions “work through the many fundamental challenges that face institutions who find themselves in this sort of crisis.”
However, Nash said, claims have also taught them a lot.
“So we constantly finesse the portfolio in respect of coverage,” he said.
Nash said there are no major regulatory differences in this area in Australia compared to the US.
“Not really, but the market differs to the US, in that just as there is in the UK, there is more protection afforded to very small employers / insureds, so the coverage needs to be more clearly defined in certain areas,” he said.
In the US, their customers are in education, healthcare, religious institutions, non-profits, transportation – for example school buses – and the leisure industry.
“It ranges from single person operations through to very large universities and school districts,” said Nash. “We expect the same groups to purchase the product in Australia.”
He suggested that the recent and ongoing tide of accusations and investigations into sexual abuse cases at institutions across the world is indicative of the need for the product. He said Beazley’s risk management product could have prevented these abuses from happening in the first place.
Nash said Beazley is willing to work with most institutions, even those with a damning record of abuse.
“Some of this is a cultural shift – acknowledging that there has been a problem and that changes and improvements need to be made,” he said. “If this is in place from the top down, then we can often work with an organisation regardless of their history.”
