Underlying trends keeping EPL underwriters busy

By Chad Hemenway on April 18, 2018

Unemployment is down and fiscal year-end statistics released by the Equal Employment Opportunity Commission revealed a drop in total charges, but there remain some troubling trends for employment practices liability underwriters.

“Lower unemployment and a decrease in EEOC charges should be good things—and they are—but there are several underlying dynamics that are not so great,” Michael Schraer, Chubb’s employment practices and not-for-profit product manager told Advisen from the RIMS Annual Conference here.

First, the cost to defend cases involving high-wage earners is very high and settlements can likewise be expensive.

“We’re seeing very large claims from single defendants,” Schraer said. “They are well-educated. They understand the legal system.” These claimants typically come from the medical industry, financial services, or technology industry. For example, a doctor may bring a claim following a merger of medical centers.

Secondly, claims with a retaliation component—following an allegation of sexual harassment or a workers compensation absence, for instance—account for more than 40 percent of all EPL claims, said Schraer.

“These are very difficult to get dismissed,” he added. “It doesn’t matter whether the allegation has merit. Policies include a duty to defend so even if the case results in no payout, defense costs alone can be tens of millions of dollars.”

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Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or chemenway@advisen.com.