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How the Changing EPLI Market Brings New and Old Issues to the Forefront

Employers continue to deal with EPLI concerns relating to the impact of COVID-19, as well as increased legislative activity at both the state and federal level.
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how the changing epli market brings new and old issues to the forefront

After a tumultuous two-and-a-half years, the U.S. has come through the worst of the coronavirus pandemic. Yet, while many industries and lines of insurance are seeing signs of recovery, this is not the case for the employment practices liability insurance market, which has hardened as it continues to deal with a higher frequency and severity of claims.

“This year, the trends we're seeing are the old classics but with a COVID-19 twist," says Jennifer Bergstrom, vice president, product head–executive risks, Hiscox. “For many of us, COVID-19 may seem like a fading and not-so-fond memory, but it is still keenly felt in the EPLI market."

While employers are continuing to deal with the EPLI concerns relating to the impact of COVID-19, they are faced with increased legislative activity at both the state and federal level, all leading to an EPLI market that continues to exist on uneven ground.

“We are monitoring COVID-19-specific trends that have had a direct impact on employers," says Sandra Tata, vice president, specialty liability, treaty division, HSB. “Employer vaccine mandates and return to office requirements can all lead to employees filing charges, especially when employers lack formal policies and interactive processes when it comes to accommodation requests."

As employers continue to deal with COVID-19 and its variants, their responses continue to be “divisive in the workplace, with discrimination claims resulting from the implementation of return-to-work, masking and vaccination policies, not to mention retaliation claims stemming from employee complaints about the safety of their work environment," Bergstrom says. “As time goes on, we expect these COVID-19 claims to eventually dissipate, but for now they have a strong foothold in the EPLI space."

From April 2020 through December 2021, the U.S. Equal Employment Opportunity Commission (EEOC) received approximately 6,225 COVID-19-related charges of discrimination under federal civil rights laws and more than 2,700 vaccine-related charges, the latest agency data shows.

Additionally, the EEOC filed its first pandemic-related remote work discrimination lawsuit in September 2021, when a former health and safety manager for ISS Facility Services was terminated for performance-related issues following her request to work from home. The EEOC alleges that she had not been advised that her performance was grounds for termination at any time prior to her termination.

As employers bring employees back to the office, carriers have seen “a flurry of frequency events, more so than severity," says Bryan Dobes, area senior vice president, RPS. “Many of these claims are related to who they brought back versus furloughed or let go. The result was an increase in open claims at renewal, which contributed to rate increases for incumbent carriers."

“As with any employment policy, employers that have a vaccine requirement may also need to respond to allegations that the requirement may have a disparate impact on—or disproportionately excludes— employees based on their race, color, religion, sex or national origin," Tata says. “Employers should keep in mind that because some individuals or demographic groups may face greater barriers to receiving vaccinations compared to others, some employees may be more likely to be negatively impacted by a vaccination requirement."

Meanwhile, emerging trends also continue to impact the EPLI market. “You have medical and recreational marijuana legal in some states and not in others, which is a nightmare for HR managers when they could, for example, have 15 states where marijuana is legal and they have employees in 30 states," says Jordan Kurkowski, senior vice president, management and professional liability broker, Amwins. “How do you put a handbook together and navigate different state laws? This isn't political, it's just a fact of how you manage your HR department and your risk in the EPLI space."

Also, “the evolving workplace continues to heighten exposure for EPLI claims across all companies regardless of size," Tata says. “There are various social justice movements, including gender identity and LGBTQ+ protections, as well as significant focus on diversity, equity and inclusion initiatives that employers need to be proactive in managing within their organizations."

Social movements such as #MeToo and Black Lives Matter continue to play a part in the increase in EPLI claims as they empower employees to come forward and speak up about discrimination and harassment.

“We are really at a fork in the road on where EPLI is going," Kurkowski says. “Where our society is and how these social issues continue to evolve is really where the coverage and the claims follow."

Looking ahead, the use of biometrics such as fingerprints and facial recognition is also an increasing area of concern for the market. “This presents exposure to violations of privacy laws, most notable is the Biometric Information Privacy Act (BIPA) in Illinois," Tata says.

“These types of claims were not intended to be covered in an EPLI policy," Tata adds. “As more insurers are challenged on coverage denials, we are seeing more EPLI policies include specific exclusions for violations of privacy laws." 

Olivia Overman is IA content editor.

Monday, September 19, 2022
Employment Practices
Big I Markets