Underlying trends keeping EPL underwriters busy

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.”