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The greater insurance market began to tighten its specialty lines before the coronavirus’s initial spread, disrupting rates, capacity, and carrier inclinations. More specifically, projected rate increases hit 10 percent in the Employment Practices Liability Insurance sector before ballooning to five times as much even for businesses with uncomplicated risk profiles.
With COVID-19 continuing to spread throughout the country, hard markets are only tightening and driving up rates in the process. Carriers across the board are wary of risks surrounding EPLI claims, and underwriters have little to no flexibility to apply credits and no choice but to reduce limits. So, what does that mean for clients in the EPLI market?
Let’s take a look at what is happening to the EPLI market due to the pandemic.
When the pandemic initially hit the U.S., it was hard for many business owners to think of how the virus would impact the potential for EPLI claims. However, it’s important to remember that risk is assessed by weighing the difference between what is possible and likely. A whole lineup of workplace risks that were possible but not likely before the pandemic are now active exposures.
COVID-related workplace risks are rising fast as well as casual workplace risks. For some businesses, the pandemic is creating problems that weren’t in existence before. More specifically, carriers are now reporting a rise in EPLI claims month over month, as employees begin filing incidents of retaliation, wage violations, and harassment. Industry analysts are seeing more potential for employer losses with wage and hour complaints, given the growing numbers of workers who say they feel pressured to work without pay on business continuity plans.
The coronavirus pandemic isn’t the only thing that is impacting the EPLI market. Social justice movements from this past summer have ticked up at a much higher pace. Heightened awareness and sensitivity around race-based discrimination coming out of Black Lives Matter demonstrations is not necessarily a straight line to more claims in the field. Still, analysts point this attention to discrimination in society as having more support behind employees making discriminatory claims against employers.
The main driver of new claims is likely the Supreme Court’s recent ruling, which makes it transparent that sex-based discrimination protections in the Civil Rights Act also includes employees in the LGBTQ+ community. The ruling has significant consequences on employer liability when many companies are running thin in human resources and compliance. For many companies, EPLI is the first line of defense against these claims from employees.
Clients should feel welcome to sit down with their advisor and EPLI underwriter to review their current employment practices liability insurance coverage to see if it contains enough coverage. While there is still some ambiguity surrounding COVID-related claims, having the most up-to-date coverage can help prepare for the road ahead.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed, and place business in specialized markets. For more information about our products, or to become an agent, contact us today at (855) 248-1480.