With the #MeToo movement still gaining momentum, more companies are coming to grips with the financial consequences of fighting or settling allegations of sexual abuse, discrimination, harassment and other misconduct, including the effect on their directors and officers liability coverage.

While claims related to such allegations may be explicitly covered under employment practices liability insurance policies, D&O-related lawsuits also are being filed, experts say.

D&O insurance rates are already hardening, although it is difficult to attribute them solely to the #MeToo movement, they say.

Meanwhile, experts say the #MeToo movement may lead to more gender equality litigation filed on women’s behalf (see related story).

Companies, though, are making efforts to address the situation, say observers (see related story).

“By no means do we think it’s reached its peak,” said Cathy Padalino, Washington-based senior vice president in Aon PLC’s financial services group, of the #MeToo movement.

“In many ways, we think it might be a new normal, a new environment in which workplace harassment or other inappropriate workplace behavior is just not going to be tolerated,” she said.

“It’s over a year since the movement really got national media attention, and since then we continue to see ongoing cases, some of them legacy cases from many years ago,” said Ms. Padalino.

The #MeToo movement took off after sexual assault allegations against movie mogul Harvey Weinstein surfaced in October 2017. Since then, the hashtag term has been used on social media and elsewhere to bring attention to sexual assault and harassment in the workplace.

In the D&O context in particular, “I really do think we’ve only started to see (claims) unfolding,” said Sarah Downey, New York-based FINPRO and D&O liability product leader for Marsh USA Inc. “This is just the beginning.”

“This bell cannot be unrung,” said Rob Yellen, New York-based executive vice president of Willis Towers Watson PLC’s FINEX North America practice. “It will continue. While it will ebb and flow, it will also expand beyond” the industries that have been involved so far, he said.

“It’s not even close to over.” Mr. Yellen added: “The reality is, this has opened the door to a new kind of employee activism we haven’t seen before. This is really about (women) taking matters into their own hands” on a collective basis and with the internet’s help.

Observers say D&O-related claims include breach of duty, failure to monitor harassment, allegations of turning a blind eye or enabling harassment, or violating securities law by making misleading statements about workplace misconduct. Experts note securities litigation often follows a stock drop.

Generally speaking, sexual harassment claims in high-profile cases have focused on allegations of an environment or culture that promoted obviously inappropriate relationships among staff members, said Laura F. Coppola, New York-based regional head of financial lines, North America, for Allianz Global Corporate & Specialty SE.

Experts say litigation stemming from the #MeToo movement is part of a more general trend toward “event-driven” securities lawsuits, where plaintiff attorneys react to negative news by filing litigation, a trend that has affected cyber litigation as well.

“When you look at the event-driven litigation, there’s definitely a number of high-profile cases,” said Beth Goldberg, New York-based chief underwriting officer for financial lines for Starr Cos., referring to D&O.

Ms. Goldberg pointed to the U.S. Equal Employment Opportunity Commission’s 2018 year-end statistics, which show an increase in the number of harassment charges filed with the agency.

Experts say particularly significant cases include the putative class action lawsuit filed against Hamilton, Bermuda-based Signet Jewelers Ltd., which charges the company misrepresented the nature of the allegations against it.

The U.S. District Court in New York denied defendants’ motion to dismiss the case, In Re: Signet Jewelers Ltd. Securities Litigation, in a Nov. 26 ruling.

“Clearly, disclosure allegations as exemplified by Signet could be very dangerous,” said Kevin LaCroix, executive vice president of RT ProExec, a division of R-T Specialty LLC, in Beachwood, Ohio.

Observers say another significant case is Shiva Stein et al. v. Philip H. Knight et al and Nike Inc., in which the Beaverton, Oregon-based company is charged with having a systemic “boys’ club” culture that negatively affected its female workers.

“Absolutely as a result of #MeToo, that is the type of case that is popping up and that we’re going to continue to see,” and there will have to be changes at the corporate level “if we want these cases to go away,” said Marie-France Gelot, New York-based senior vice president and insurance claims counsel for Lockton Cos. LLC.

Meanwhile, D&O underwriters are asking questions generated by the #MeToo movement. “It’s making its way to the list of topics to be explored” and is a particular concern in the mergers and acquisitions environment, with acquiring companies concerned about taking on legacy issues, Mr. LaCroix said.

“It’s changing the way that D&O underwriters are doing their underwriting,” said Phil Norton, Chicago-based president of Arthur J. Gallagher & Co.’s professional liability division.

“Nobody’s going to have a hard time getting coverage,” but “the companies that are under duress will pay a lot more. They’re under duress for past policies that were either unfair, discriminatory or downright illegal,” Mr. Norton said.

The #MeToo movement’s effect on rates, though, is difficult to tease out, say experts.

“It’s one of many factors contributing to an increase both in frequency and severity of D&O Claims. #MeToo is one of many event-driven litigation themes that we are seeing drive D&O losses – and there is a need for smart underwriting, for limits management, and for higher D&O pricing in response,” said Nora McGee, Atlanta-based chief underwriting officer for public company management liability for American International Group Inc., in an email.

“It’s hard to isolate just the #MeToo’s impact on the D&O market because this has been a year for sure where so many things have hit the D&O base,” including class action activity and event-based claims, said Mr. Yellen.

“It’s hard to know which of those levers is the one that underwriters are taking into account more than the others, but we are definitely seeing underwriters exercise more discipline and price differentiation” and deploying capital more carefully, and #MeToo “is certainly one of the things driving that,” Mr. Yellen said.

Meanwhile, coverage issues may arise with respect to behavior that happened years ago, said Mr. Yellen. In cases where there is a string of behavior that has lasted years, “You are going to have a real problem, potentially, in terms of what policy might apply.”

Observers note there are often parallel D&O and EPLI, with the D&O suit sometimes following the EPLI litigation.

“The vast majority of the suits are going to remain on the EPLI side and only the select few, possibly the more egregious ones, will transfer into a D&O lawsuit,” said Mr. Norton.

“We’re certainly managing that aggregation risk because the potential is there” for EPLI-related claims, along with cyber claims, said Ms. Coppola. “It’s something we’re incredibly mindful of as we continue to build our book.”