On January 12, 2021, the United States recorded a record 4,250 deaths due to COVID-19 while the Trump administration announced an accelerated schedule for administering vaccines to fight the disease. For employers already navigating the novel and challenging landscape created by the coronavirus, volatility surrounding the recent elections, a deeply divided nation and a new administration preparing to take office, the time had come to sharpen focus on a too-often overlooked aspect of running a business: Employment Practices Liability (EPL).
That these developments occurred amid a hard market for property and casualty insurance also served to make the imperative of risk management all the greater.
COVID-19 is the latest in a series of society-altering phenomena that have heightened public consciousness of issues related to employment practices, following closely on the heels of the Black Lives Matter and #MeToo movements. As we reach the midway point of the first month of 2021, these are some areas that underscore the importance of a sound employment practices liability insurance program backed by well-conceived and articulated company policies:
- Returning to the workplace
- COVID-19 vaccination
- Hiring and severance
- Race, gender, age and religious discrimination
- Wage and hour enforcement
- Political speech and activity.
How these company policies are crafted and administered can mitigate the challenges employers face in the current property and casualty/executive liability insurance marketplace.
Outlook for 2021
Here’s a summary of the landscape for the healthcare industry as outlined in Alera Group’s Property & Casualty 2021 Market Outlook:
► While national insurers remain in this market, they are focusing heavily on the impact of COVID-19 on workers. Buyers will likely face price hikes and restrictions in coverages and limits.
► Pandemic-related job losses are causing an increase in employment-related claims that will likely continue into 2021, including:
- Discrimination claims, whether for age or ADA-defined disability discrimination.
- Claims arising from employers requiring return-to-work to unsafe conditions.
- Invasion-of-privacy claims due to employers questioning their travel or families’ health circumstances.
► The pandemic-based surge in claims costs was not contemplated in 2020 pricing, so buyers may experience price increases in the range of 10% to 50% as well as a reduction in limits and increased retention requirements, depending on the type of risk.
Terms and coverages will be limited by some carriers for select risks, for example:
- Primary policy limits above $5 million will be more difficult to secure, requiring greater use of the Excess market to meet higher limit needs.
- “Confidential information”-related employment exposures will be excluded from some carriers’ EPLI forms but offered under Cyber Liability policies instead.
- Violations of the Biometric Information Protection Act (BIPA) in the form of biometric screening may be excluded by carriers.
- In an effort to reduce exposure to COVID-19 claims, some carriers have begun to add “Past Acts” exclusions to their policies.
What You Can Do
Protecting your organization with a comprehensive, cost-effective insurance program should be an active process. Here are some steps to include in your business plan for property and casualty coverage:
- Make sure you have employment practices liability insurance in place. Most established businesses have had this coverage in place for years. Any new organization that opens its doors without it is potentially leaving itself open to a very costly claim. Businesses don’t hesitate to insure their building or other assets, but they’re far more likely to experience an employment-related complaint that leads to a lawsuit than they are to suffer a fire to a structure, and general liability insurance typically does not cover employment practices liability.
Remember: You can do everything right in terms of implementing and enforcing strong employment practices policies yet still be sued. Defense-costs coverage alone makes EPL insurance a necessity for your organization.
- Consult with your agent/broker to ensure you have adequate limits and sublimits to cover your exposures. Inadequate limits could fail to protect you from a devastating loss. Having limits in excess of what your organization requires, on the other hand, means failing to contain costs when cost containment may be among your greatest challenges.
- Be prepared to demonstrate to underwriters that your policies and procedures reduce the risk of an employment practices lawsuit. This not only will make you more attractive in the marketplace but may also earn you more favorable rates.
- Register for Alera Group’s January 25 webinar, “COVID-19 Vaccines and More: Practical Guidance for Employers.” As vaccination ramps up nationally, employers are looking for guidance on applicable policies and procedures. In the webinar, you’ll learn about:
- Incorporating updated Families First Coronavirus Response Act (FFCRA) and other guidelines into your policies and practices
- Considerations for developing your policies regarding vaccinations
- Adapting your short- and long-term remote and onsite workforce strategies.
These are dynamic and demanding times. Alera Group is here to help you work through them – Stronger Together.
About the Author
Alan Goodrich, CPCU, AAI
Commercial Insurance Advisor, HMK Insurance
Involved in Commercial Insurance since 1985, Alan continues to build his book of commercial clients by utilizing his extensive risk management experience and knowledge. Over the years, Alan has developed a significant emphasis on the manufacturing industry, including plastics, metal workers, electronics and foods. Other industries he serves include wholesalers, veterinarians and medical/dental organizations. A Salem (WV) University graduate, Alan has successfully earned the Chartered Property Casualty Underwriters (CPCU) and Accredited Advisor in Insurance (AAI) series industry designations.