Insuring against Sexual Harassment
Larson, Elizabeth, Insight on the News
President Clinton's use of $900,000 in personal-liability insurance to fend off Paula Jones' lawsuit illustrates the pronouncement of legal scholar Mary Ann Glendon that we are A Nation Under Lawyers. Take the case of one of our newest growth industries: sexual-harassment liability insurance. Policies specifically designed to protect companies from sexual-harassment lawsuits were invented in the aftermath of Anita Hill's allegations against Clarence Thomas. They have just received an enormous boost from the details now emerging about the president's own insurance policies.
You don't have to be president to need such coverage though. More and more business owners are purchasing corporate sexual-harassment policies. Premiums for this new type of business-liability insurance range from $1,500 to $25,000 annually, depending upon factors such as turnover rates and whether the company has faced sexual-harassment charges before. Coverage ranges from $250,000 to $25 million and includes court awards and defense costs -- although not always punitive damages.
The first company to introduce liability policies specifically to cover sexual harassment was Lexington Insurance, in March 1992. Chubb Insurance Co. followed suit, but until 1994 the two had the field pretty much to themselves. By mid-1994, other companies got into the game, and sales of the policies by all insurers rose 25 percent. Although company officials won't say how many such policies they have sold, Chubb has said its business has doubled every year; today a dozen companies jockey for their share of clients.
Although most of the Fortune 500 companies do not yet have sexual-harassment insurance, some industry experts predict it will become a standard part of most business-insurance portfolios within three years.
All to the good of the booming sexual-harassment prevention trade. As the number of complaints of sexual harassment filed with the Equal Employment Opportunity Commission continues its steady climb -- from 6,127 in 1990 to 14,420 in 1994 -- U.S. businesses are finding it in their best interests to adopt both offensive and defensive strategies for handling the problem. Insurance will help protect a company once lawsuits are filed, but smart business owners also are taking advantage of the many legal experts out there to help them avoid charges in the first place.
Californians may be proud of being on the cutting edge of this new industry. At this enlightened end of the continent not only do Californians have a plethora of professionals to stem the sexual-harassment tide, but also a law that, in effect, requires every business owner to use them.
Of course, the California regulation on sexual harassment in the work-place doesn't literally say that employers must hire consultants at $400 a visit to aid in the prevention of inappropriate office behavior -- but it might as well. What it does say is that employers, regardless of the size of their company, must notify all employees that sexual harassment is unlawful. The employer must provide examples of what constitutes sexual harassment and clearly explain how harassed employees can get in touch with the appropriate government agencies. As one California lawyer who conducts prevention seminars said, "Employers are required to almost assist employees in their claims against them."
Merely submitting to the letter of this law is not enough. A company dedicated to equal treatment of the sexes needs to get into the spirit of things. Otherwise, when the lawsuits come, the company brass will be accused of not really caring about women. …