Don’t ignore risks of sexual harassment

//November 12, 2018

Don’t ignore risks of sexual harassment

//November 12, 2018

While it is certainly true many workplaces are free of sexual harassment, statistics indicate risk is present and should be transferred to employment practices liability insurance (EPLI) with coverage for sexual harassment and discrimination.

According to a study released by specialty insurer Hiscox, more than 35 percent of employees in the U.S. feel they’ve experienced workplace harassment. Among women, the number rises to 41 percent. Of those individuals who reported the incident to management, 37 percent did not feel it was handled properly. This percentage rises to 49 percent for women.

Just as insureds don’t ignore risks from fire, flood, theft, personal injury, professional liability and cyber intrusion, the potential for sexual harassment charges must be mitigated and transferred to sexual harassment coverage through EPLI.



Proper sexual harassment risk mitigation efforts begin, as they typically do, with education and training. Companies must train their employees to understand and prevent sexual harassment actions. In California, the law requires companies with 50 or more employees to provide two hours of sexual harassment training every two years. 

Education efforts should outline the nature of sexual harassment. Role playing can be helpful. When does a supportive hug become harassment? Is it OK to place your hand on a colleague’s shoulder? What about the colleague’s back? Is it harassment to invite a colleague to the hotel bar for a drink during a business trip? What if the colleague is a subordinate?

The fact is, innocent actions can sometimes appear otherwise to the person on the receiving end. This can be particularly true across generations. Education can help to save the actor from embarrassment, the recipient from discomfort and the firm from a lawsuit.


Education should be joined by explicit documentation outlining your firm’s code of conduct. While each employee must be told what is not permissible when on the job, this information must also be put in writing. Should a manager or employee engage in actions contrary to the code of conduct, documentation will help to mitigate risk to the company.

Documentation should also clearly set out proper channels of communication should an incident occur. In the study released by Hiscox, 40 percent of individuals experiencing harassment did not report it to management or law enforcement. Individuals reporting an incident should feel safe in doing so.

Charges of sexual harassment have become a third rail for companies across America. The reputations of large, well-capitalized firms have been damaged and even shredded. The list includes Bank of America, Ford Motor Company, The Weinstein Company, Uber, Fox News, CBS and NBC.

While reputation management insurance isn’t as common as such long familiar coverages as auto, liability and Workers’ Compensation, it can be an effective way of transferring your company’s risk of reputation loss. Speak with your trusted insurance broker regarding a reputation protection and crisis management policy. This policy will help pay for communication efforts to win back your firm’s good reputation.

There is nothing new about sexual harassment. The amount of news coverage, societal attitudes and the proliferation of reporting vehicles are new. There is also zero tolerance, no margin for error.

According to MarketStance, a research firm that tracks insurance trends, only 3 percent of companies with fewer than 50 employees report carrying coverage for sexual harassment. Since this is a time when companies must be on heightened alert regarding an unexpected event, I believe this number should be much higher. Speak with your professional risk manager and trusted broker, who can help put proper protective actions in place.

Based in Warrington, Kirk Salmon is a sales and relationship manager concentrating on the Lehigh Valley at KMRD Partners Inc., a risk and human capital management consulting and insurance brokerage firm with three offices in southeastern Pennsylvania. He can be reached at [email protected].