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Board Disclosure Obligations and Institutional Concealment of Misconduct
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A healthcare foundation headquartered in Bridgeport, Newfoundland and Labrador, maintained a comprehensive general liability policy from October 1980 through October 1985, with an endorsement extending bodily injury coverage to community outreach workers. The foundation's governance structure included an Insurance Committee comprising 4 lay insurance professionals and 2 of the 3 Board of Administration members.

As early as 1975, senior administrators including a Board member knew of sexual abuse allegations against at least 6 outreach workers. No disclosure was made to the insurer or child welfare authorities. When survivors' claims emerged decades later—eventually numbering in the hundreds—the insurer sought to void the policy for non-disclosure of material facts. The foundation's own expert conceded that a prudent underwriter, if informed, would not have issued the outreach worker endorsement. The question now facing the Board: what disclosure obligations did governance structures create, and what accountability flows from their failure?

Insurer Prejudice and Coverage Consequences for Hundreds of Abuse Claimants

When the first group of former youth program participants filed civil claims in Corner Brook in the late 1980s alleging systematic physical and psychological abuse spanning more than a decade, the liability insurer responsible for coverage during the October 1980 through October 1985 policy period found itself in an impossible position. The insurer had issued successive annual policies to a regional youth services federation headquartered in Corner Brook, an organization that operated residential camps, after-school programs, and mentorship initiatives throughout western Newfoundland and Labrador. What the insurer discovered during claims investigation fundamentally altered its relationship with the insured: the federation's Board of Directors had known as early as 1975 that at least 6 program supervisors engaged in abusive conduct toward children in their care, yet this material risk information never appeared in any renewal application, any risk disclosure questionnaire, or any communication with the insurer during the 5-year period when coverage was being negotiated, issued, and renewed. The Insurance Committee that managed the federation's insurance portfolio comprised 4 lay insurance professionals drawn from the Corner Brook business community alongside 2 of 3 Board of Directors members, a governance structure that made the absence of disclosure particularly damaging when hundreds of claimants eventually came forward seeking compensation for abuse they suffered at the hands of the organization's employees and volunteers.

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