Change is Coming in Child Welfare Risk Management

Change is Coming in Child Welfare Risk Management

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As many of you may know, child welfare organizations have struggled for years finding and securing the right options when it comes to insuring their organizations – in particular in the area of abuse. In the past, only a handful of national insurance carriers and a few regional’s carriers have been willing to work with child welfare organizations. We are starting to see some CRITICAL changes on the horizon, putting nonprofits more at risk than before.

Why? It’s becoming increasingly clear the environment is changing, public outcry is larger than ever and grievances are becoming more and more litigious. Three things in particular should give nonprofits pause.

  1. We have recently seen some runaway jury verdicts associated with claims.
  2. We have also seen courts take a very strict position on requirements of the organizations that operate within the foster care/adoption space.
  3. As government/states continue to outsource more service to private organizations, budgets continue to be squeezed; it’s becoming more difficult for agencies to understand the risks involved when making budget-cutting decisions.
Recent Verdicts

Most cases involving abuse within nonprofit organizations are settled and are not public information, so it’s hard to understand the depth of what is currently happening.  But a few, recent, high-profile cases have brought this subject into the limelight.

“Jury awards $45m to estate of suburban Chicago boy” (March, 2018)

$25.3m sexual abuse verdict (Aug, 2018)

$3.25 sexual abuse verdict (Aug, 2018)

These judgements, on top of the highly publicized abuse scandals in USA Gymnastics and Penn State, are driving carriers to redesign coverage options. Nonprofits need to be more diligent than ever in creating and implementing the proper operating policies.


The scope of abuse is often broader than many organizations plan for.  What is considered abuse?

  • Physical
  • Emotional
  • Sexual
  • Neglect
  • Lack of Supervision

Regarding therapeutic foster care and residential treatment agencies, the most common themes associated with losses are:

  • Inadequate or improper placement and supervision
  • Not following SOP or organizational rules
  • Improper or poor training
Insurance Company Focus

These nonprofit best practices may help when it comes to your insurance renewal, providing more protection if a claim where to occur.

  • Background Checks
    •     Staff and New Hires
      •         Recommend every year for staff who primarily work with vulnerable population daily. Every three years for all other staff.
    •     Volunteers
      •         Do you have written guidelines for screening or disqualifying volunteers
    •     Have you audited HR files to make sure this is happening?
  • Strict policies and procedures
    •     Well written/updated policies & procedures
  • Abuse Procedures
    •     When was the last time you updated/reviewed?
    •     How often is training happening?
  • Staff/Volunteer Ratios
  • Behavior Management/Crisis Management Policies
  • Licensure & Accreditations
    •     Number of corrective action plans
  • Safety/Risk Management Committee
    •      Monthly meetings; agenda continuous and on-going; uses trends to develop strategic actions plans
  • Staff Orientation
    •     Full orientation is scheduled and completed within specific time frame, includes job shadowing and mentioning, high level of supervision
  • Staff Competence (beyond academic)
    •     Descriptions clearly outline essential duties and skills necessary to fulfill the requirements; hiring is dependent of job
  • Staff Retention
    •     Performance reviews consider individualized staff development needs; organization committed to training, advancement from within, employee recognition programs
  • Informed Consent
    •     All aspect of care, treatment, and services explained to consumer and parent/guardian noting benefits and drawbacks, sign offs
  • Behavior Management
    •     Verbal de-escalation the rule. “Hold” only used to protect consumers or others; well documented, all staff property trained and refresher training mandated twice per year.
  • Duty to Report
    •     Organization reports to proper authorities and insurance agent/carrier at the same time that they begin their internal investigation.

One role of your broker is to understand your industry, keeping you up-to-date on significant news that impacts your ability to sustain your mission.  Are you getting that kind of help? If not, perhaps it’s time for a second opinion.

By Pat Murphy, President, Commercial Division, The Miller Group







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