How AI Is Impacting the EPLI Market

• By: Olivia Overman
• February 2, 2026

The employment practices liability insurance (EPLI) market has continued to face varying social and economic changes over the past few years, reflected in a notable increase in the number of claims against employers. For example, from 2021 to 2024, there was a 9.2% increase—from 61,000 to 88,531—in the number of discriminatory charges filed with the U.S. Equal Employment Opportunity Commission (EEOC).

Specific changes worth noting include disability discrimination charges, which “rose more than 47% from 2021 to 2024, accounting for 38% of total charges filed with the EEOC last year, and age, color and race discrimination claims also increased,” says Chris Williams, employment practices liability product manager, Travelers. “The rise in EEOC charges has been partly driven by an increase in layoffs and firings—the source of most EPLI claims in the overall economy.”

Now, the rise of artificial intelligence (AI) and its growing role in employee recruitment and management is set to reshape the EPLI market through 2026 and beyond.

“Employment practices are changing; AI is combing through job applications and may not be giving full transparency into why certain applicants were rejected, some states—and not others—have implemented pay transparency laws, and diversity, equity and inclusion (DEI) practices have been heavily politicized and can vary by company,” says Mike Maletsky, vice president, technology, errors & omissions and cyber, Hiscox. “Despite these landmark shifts, EPLI pricing has remained relatively steady.”

As more organizations weave automated decision-making into everyday HR processes, questions around accountability and transparency are escalating. These shifts are already prompting carriers and brokers to reassess how they evaluate exposures tied to hiring, performance reviews and workforce reductions.

“AI has a direct impact in the workplace,” says Sandra Tata, specialty liability product manager lead for HSB, part of Munich Re. “With AI, systems are designed to take input and direction from their environment, and based upon the inputs, the AI can solve problems, assess risk, predict an outcome and recommend taking a specific action. Yet, despite the diligent efforts to design a fair algorithm, there will always be some bias and imperfections.”

While it may be too early to draw any definitive conclusions on AI’s impact on the EPLI market, its influence on the workplace has been noteworthy so far. Several companies, including Amazon, HP, Salesforce and Starbucks, have signaled they are replacing human employees with AI. And the layoffs are expected to continue throughout 2026, according to a McKinsey report.

“We are beginning to see some interesting developments,” Williams says. “For instance, we have seen situations where AI has been used to weed through applications and automatically remove applicants over a certain age from consideration, which has led to discrimination claims against the company doing the hiring.”

More than twice the number of companies are planning workforce reductions due to AI than those planning to add jobs, according to McKinsey. “If workers are laid off because their jobs are going to AI, it could lead to claims, which often increase when more people are let go,” Williams says.

For many companies, using AI tools to improve efficiency across all aspects of their operations, including employee recruitment and management, is essential. However, it’s important to ensure strict guidelines are followed throughout such a process.

“AI tools have helped employers weed through hundreds, or even thousands, of applications for open positions to identify their top applicants faster,” Maletsky says. “While conceptually exciting, there are risks that employers must watch out for in excluding applicants based on an AI result. For example, is the AI excluding applicants that are part of a protected class, such as race, religion or gender? This creates a potential exposure for employers.”

In the past year, 69% of legal and HR professionals said their organization experienced claims made by employees alleging discrimination, harassment, retaliation or other employment-related issues, according to a QBE report. The report, based on a survey of 200 legal and HR professionals at organizations with annual revenues between $500 million and $5 billion, also found that 42% of respondents expect the frequency of employment-related claims at their organization to increase over the next year.

“Agents can support their clients who utilize AI by educating them on the importance of having effective policies that direct and manage the use of AI in the workplace,” Tata says. “Also, it’s important to train employees on the use of AI in the workplace to ensure that their proprietary information is not disclosed.”

Additional steps business can take include “informing job applicants on the type of AI used and the information that it will be measuring so there is a clear understanding upfront, and regular audits of the company technologies and systems using AI to ensure that there is no violation of anti-discrimination laws,” Tata says.

Further, agents “can assist companies by making sure they have responsive coverage in place and are aware of, and adhering to, any applicable laws, statutes and regulations,” Williams says.

Olivia Overman is IA content editor.