10 Things to Know About Employment Practices Liability Insurance

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The employment practices liability insurance (EPLI) line has been showing the largest price hikes in U.S. commercial insurance. The EPL line’s year-over-year price increases spiked into double digits during the 2013 third quarter. (Towers Watson’s Commercial Lines Insurance Pricing Survey)
The cost of EPLI coverage depends on the type of business insured, the number of employees at the company and various risk factors such as whether the company has been sued over employment practices in the past. (Insurance Information Institute)
The U.S. Equal Employment Opportunity Commission received 99,412 private-sector workplace discrimination charges during 2012, down slightly from the record high of 99,947 set in the previous year. In 2012, EEOC filed 122 lawsuits including 86 individual suits, 26 multiple-victim suits (with fewer than 20 victims) and 10 systemic suits. (U.S. EEOC)
In Chubb’s survey of 450 private companies, 25 percent said they had an EPL-related event in the past three years and 45 percent said they are concerned about a lawsuit for wrongful termination, sexual harassment, discrimination or retaliation. (Chubb’s 2013 Private Company Survey)
Among the 99,412 charges received by EEOC in 2012, retaliation (37,836), race (33,512) and sex discrimination (30,356) which includes allegations of sexual harassment and pregnancy discrimination, were the most frequently filed charges. (U.S. EEOC)
Until recently, EPL insurers had resisted providing any type of coverage for wage and hour claims. Virtually all EPLI policies now include a restrictive exclusion for claims alleging violation of the Fair Labor Standards Act (FSLA) or similar state laws. Some insurers provide sub-limited defense-costs-only coverage (often no more than $250,000) to private companies. (Marsh’s January 2013 report “Risk Spotlight”)
In the 12 months ending March 31, 2012, 7,064 FLSA suits were filed in federal court; the highest for any 12-month period. That represented a nearly 350 percent increase from the same period in 2002. (Seyfarth Shaw LLP)
Even the best-run companies are vulnerable to EPL charges because they engage in normal employment-related activities such as hiring, firing and promoting employees, all of which carry some EPL risk. (Chubb’s 2013 Private Company Survey)
Employees and other plaintiffs won 67 percent of all EPLI litigated cases. (U.S. Department of Labor)
A survey of 450 U.S. for-profit private companies showed only 30 percent purchase EPLI. And among non-buyers, 60 percent mistakenly believe their general liability policy covers EPL-related events. (Chubb’s 2013 Private Company Survey)