- Chicago, IL
While it appears that the worst of the COVID-19 pandemic has passed, the Employment Practices Liability (EPL) market isn't ready to breathe a sigh of relief. Many are concerned that the threat of claims related to vaccine mandates and employers' work-from-home and return-to-office policies could test this management liability (ML) market
In the first quarter of 2022, more than 600 COVID-19-related workplace litigation cases were filed in the U.S. And of the 2,879 cases filed in 2021, nearly half are still active.*
With that in mind, insurance companies will be taking a cautious approach in 2022.
"Carriers are willing to write EPL business as long as they can offer terms that they're comfortable with," said Dave Tardif, area senior vice president, Risk Placement Services (RPS). "They won't just write business to put it on the books."
During the pandemic, these terms frequently included exclusions for discrimination related to COVID-19. Reflecting the economic uncertainty of the first months of the pandemic, reduction in force and creditor exclusions were frequently added to EPL policies in 2020 and 2021. These exclusions should largely disappear this year, though some underwriters may continue to ask COVID-related questions.
Many managing general agents and insurance companies want a certain profile for an EPL insured, such as a minimum number of employees. Other insurers are more opportunistic and willing to go after business others don't want.
Whether a company is public or private also factors into appetite. EPL insurance is typically sold as part of a ML bundle along with Directors & Officers (D&O) Liability. Many insurers don't want to underwrite public company D&O and so wouldn't consider a submission for other ML coverages.
Geography is another consideration with insurance companies, treading carefully in areas such as New York City, Southern California and the Miami-Dade area in Florida. Many will decline to write coverage in those markets. For organizations in those markets that obtain EPL insurance, it will be at a price 10% to 15% higher than for a similar-profile company in a less litigious location. Insureds should also expect a higher retention than would be offered to a company with the same headcount located elsewhere.
The number of employees going back to the office is expected to pick up throughout 2022. What remains to be seen is whether employees judge as equitable their company's work-from-home and return-to-office policies. Many see these policies as a potential area for discrimination claims.
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