Why Is Sexual Abuse Coverage More Expensive in 2025?

In 2025, businesses and organizations seeking sexual abuse coverage are facing a stark reality: higher premiums, lower limits, and more restrictions.  I’ve observed this in multiple geographies throughout the country.

Schools in Maryland and North Carolina.

Daycares in Maryland in Georgia.

Social Services in Maryland and Georgia.

It’s happening to insurance groups and individual customers alike.

But why is this happening? The answer lies in three key legal trends that are reshaping the insurance landscape. Let’s dive in.

1. The Rise of Nuclear Lawsuits

The insurance industry has coined the term nuclear lawsuits to describe cases that result in settlements or judgments far exceeding expectations—typically $10 million or more. I took the time to review all the nuclear verdicts in America from 2025.  50% of those claims fell into 1 of three categories:

1.      Sexual Abuse.

2.      Lack of Care

3.      Vehicle Accidents.

Insurance companies build their pricing models based on past claims data. When a claim that was historically settled for $75,000 suddenly escalates to $4 million, these models fail, and insurers suffer heavy financial losses. As a result, they respond in one of three ways:

• Raising premiums to account for the increased risk.

• Becoming more selective about who qualifies for coverage.

• Reducing coverage limits or exiting the market entirely.

  
  

At its core, insurance is about making calculated bets. If insurers can't predict future risks with confidence, they will either raise prices significantly or refuse to offer coverage at all.

2. The Impact of Third-Party Litigation Funding

Another major trend affecting insurance costs is third-party litigation funding (TPLF). This involves outside companies financing lawsuits in exchange for a share of the settlement. Here’s how it works:

• An individual with a potential lawsuit may lack the financial resources to hire an attorney.

• A litigation funding company steps in, covering legal expenses in return for a percentage of any settlement or award.

• Because these companies have deep pockets, they can aggressively pursue cases, making insurers more likely to face prolonged and costly legal battles.

The increased availability of litigation funding means more lawsuits are being filed and fewer cases are settling quickly, both of which drive up claim costs and, ultimately, insurance premiums.

3. The Role of Judicial Hellholes

The insurance industry also tracks judicial hellholes, a term used to describe court jurisdictions that are particularly unfavorable to insurers and corporations. These courts often issue large settlements and are seen as more sympathetic to plaintiffs.

Some of the most well-known judicial hellholes include:

• Texas

• California

• Atlanta, Georgia

Plaintiff attorneys, especially those backed by litigation funders, are well aware of these jurisdictions. They strategically file lawsuits in these areas to maximize potential payouts, further increasing costs for insurers.

The Bottom Line

When you combine these three trends—nuclear lawsuits, third-party litigation funding, and judicial hellholes—you get an insurance market that is more cautious, more expensive, and more restrictive when it comes to sexual abuse coverage. Insurers are trying to protect themselves from financial losses, and that means businesses and organizations will feel the impact in the form of higher premiums and lower coverage limits.

What Can You Do?

While navigating this new landscape may seem daunting, there are still ways to secure the coverage you need. Working closely with your insurance broker, negotiating with underwriters, and understanding the risk factors that influence pricing can help mitigate the impact.

We’ll cover those strategies in a future post. In the meantime, if this article was helpful, please share it and subscribe for more insights.