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Counting the Cost of Child Sexual Abuse

Researchers, reporters and risk managers are getting a clearer picture of the cost of sexual abuse and molestation claims involving children, and it's not all measured in dollars and cents. What can be done to arrest this growing epidemic? One large urban school district was forced to confront the question.

A recently published study from Johns Hopkins Bloomberg School of Public Health found that the total economic cost of child sexual abuse in the U.S. for 2015 totaled an estimated $9.3 billion. That figure includes costs associated with healthcare, child welfare, special education, violence and crime, suicide and survivor productivity losses.1   That’s $9.3 billion spent in just one year!

Of course, the human toll exacted from child victims of sexual abuse makes any discussion of dollars and cents seem incidental. To those of us who work in the insurance industry and public entity/school communities, that dollar amount is a big number, but not surprising in the least in view of some recent cases:

  • Los Angeles Unified School District spent $300 million on sexual abuse claim settlements from 2012–2016, with millions more paid in subsequent years.2
  • In February of this year Kamehameha Schools in Hawaii settled sexual abuse claims – involving at least 34 students and a school psychiatrist for incidents occurring over more than two decades – for $80 million.3
  • In May of this year, Michigan State University agreed to pay victims of former university physician Larry Nassar $500 million, some of which was set aside for potential future cases.4
  • In June 2018 the Chicago Tribune released a series of articles entitled “Betrayed,” reporting more than 500 cases of sexual assault or abuse of children inside Chicago Public Schools (CPS) between 2008 and 2017. That total financial impact is unknown.5

 Notably, just before the Tribune articles pertaining to CPS were published, the Chicago Board of Education retained representatives from the law firm Schiff Hardin LLP to conduct a comprehensive independent evaluation of policies and procedures for “preventing and responding to sexual misconduct by adults against students” (The scope later expanded to student-on-student sexual misconduct.) In August Schiff Hardin partner Margaret Hickey released a preliminary report with recommendations addressing the many deficiencies identified. Some of those recommendations included:

  • Creating and staffing a Title IX office, including the designation of a trained contact in each school
  • Streamlining background checks for employees, vendors and volunteers (The report noted that CPS did not always perform reference checks on new teachers or other employee hires.)
  • Complying with Erin’s Law (Passed in 35 states, including Illinois, this law requires public schools to implement programs to prevent child sexual abuse.)
  • Training CPS employees, vendors and volunteers on how to identify and prevent sexual misconduct – and reinforce their responsibility for doing so (The investigation found that CPS did not consistently or adequately train employees, vendors, volunteers or others. The report stated, “Most CPS principals described learning CPS’[s] policies and procedures on the job as issues came up, rather than by having thorough training on the front end.”)

For a complete review of the preliminary findings and recommendations, see the report: “Preventing and Responding to Sexual Misconduct against Students in Chicago Public Schools.” 

While we might be tempted to dismiss the scope of the problems identified at CPS based solely on the size and complexity of the district (the nation’s third largest school district, with over 370,000 students), that would be a mistake. There are important lessons to be learned in the wake of the CPS investigation. School districts, along with other entities where minors may be vulnerable, would be well served to review Ms. Hickey’s recommendations and ask the question, “Are we doing all we can to protect the children entrusted to us?” As the report clearly states, “Good intentions are not good enough when it comes to protecting children against sexual misconduct.”

 Insureds and insurers continue to wrestle with the financial impact of sexual abuse claims. The marketplace is showing some evidence of change in the existing terms and conditions for sexual abuse and molestation (SAM) coverage.  We may well see the pace of change accelerate in the months and years ahead, as the public outcry for response and justice grows louder. But the greater cost to our communities will undoubtedly be the emotional and psychological damage done to our youngest, most vulnerable citizens, having consequences that last a lifetime.

And that’s something insurance can’t fix.

Note:  Following the publication of the Tribune’s “Betrayed” series, Chicago Mayor Rahm Emanuel offered an apology to students harmed by the acts, “Look, I think all adults offer apology, I offer my apology. But the question is, what are we going to do now besides words?  What are the deeds to fix this up?  … My point is, if you have a suggestion for how to tighten something up, offer that.6


1. “Preventing and Responding to Sexual Misconduct against Students in Chicago Public Schools:  Preliminary Report,” Margaret A. Hickey, Schiff Hardin LLP, August 16, 2018.

2. “Los Angeles Schools Have Spent Over $300 Million on Sex Abuse Settlements in Just Four Years”by Blake Neff. The Stream, May 28, 2016.

3. Kamehameha Schools Settles Sexual Abuse Lawsuit for $80 Million” by Jenn Boneza, February 16, 2018.

4. “Michigan State to Pay Larry Nassar Victims $500 Million in Settlements”by David Jesse and Gina Kaufman, Detroit Free Press, May 16, 2018.

5. “Betrayed, Chicago Schools Fail to Protect Students From Sexual Abuse and Assault, Leaving Lasting Damage,”by David Jackson, Jennifer Smith Richards, Gary Marx and Juan Perez Jr., Chicago Tribune, Updated: July 27 2018.

6. “Emanuel Apologizes for Sexual Violence to Students at Chicago Public Schools,”by Fran Spielman and Lauren FitzPatrick, Chicago Sun Times, June 5, 2018.


The material contained in this publication has been prepared solely for informational purposes by Genesis Management and Insurance Services Corporation.

Genesis Insurance Company is licensed in the District of Columbia, Puerto Rico and all states. Genesis Insurance Company has its principal business in Stamford, CT and operates under NAIC Number 0031-38962.

© 2018 Genesis Management and Insurance Services Corporation, 120 Long Ridge Road, Stamford, Connecticut 06902


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