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Survey Report

Insurance Marketplace Realities 2021 Spring Update – Employment Practices Liability

Talent|Workers Compensation
N/A

April 21, 2021

The EPL market has remained hard, rates, retentions, and COVID-19 claims continue to trend upward.
Rate predictions
  Trend Range
Primary (domestic markets): Increase (Purple triangle pointing up) +20% to +40%
Bermuda markets: Increase (Purple triangle pointing up) +15% to +30% with minimum retentions of $1M

Key takeaway

While we may be seeing a light at the end of the COVID-19 tunnel, the employment practices liability (EPL) market remains hard, with rates, retentions and COVID-19 claims trending upward.

We expect the EPL hard market to continue through 2021.

  • The extent of rate increases will be determined by many factors, particularly industry, loss history and location of employees. California continues to be the most problematic jurisdiction with New Jersey, New York and Florida not far behind.
  • Retentions : Expect continued pressure on primary retentions across the board, especially in California. Expect separate retentions for California claims and for highly compensated employees (particularly in healthcare and financial institutions).
  • Excess : As in other lines, excess EPL markets are following primary increases in addition to looking to correct increased limit factors (ILFs).
  • Capacity : Overall capacity in the EPL market is stable, but it is becoming more limited for the industries that have been stressed (healthcare, retail, hospitality and leisure) as a result of COVID-19 and for first-time EPLI. buyers
  • Underwriting : Expect a significant number of questions related to COVID-19 furloughs, reductions in force, pay, reopening plans and most recently, vaccine plans, as well as closer review of financials for private companies.
  • Coverage : Remains intact, with limited COVID-19 exclusions added on a case-by-case basis. Many carriers continue to add privacy/biometrics exclusions.

COVID-19 employment-related litigation is expected to keep trending upward.

  • More than 2,000 employment-related complaints have been filed thus far, with disability, leave, accommodation claims leading the way, followed by retaliation and discrimination/harassment.
  • California and New Jersey lead the way in number of complaints filed.
  • Hardest hit industries are healthcare, retail and manufacturing.
  • As businesses and offices reopen and vaccine policies are implemented, we expect claim numbers will increase.

Socially driven movements like #MeToo, Pay Equity and Black Lives Matter impact employment practices liability litigation.

  • While #MeToo claims are still coming in, there has been a shift to employee activism, with employees pushing their employers to take stances on social issues.
  • Focus on inclusion, diversity and equity in the wake of the Black Lives Matter movement has led to calls for zero tolerance of racial discrimination and racial inequities in the workplace.
  • These movements collectively and individually may continue to drive the rise in EPL claims.
  • Expect more questions from underwriters about your organization’s inclusion, diversity and equity initiatives.

Increased privacy protections and increased potential for employee privacy violations are other drivers of market conditions.

  • The Illinois Biometric Information Privacy Act (BIPA) has been the subject of many class action claims against organizations with employees in the state of Illinois. Losses for BIPA class action claims are in the millions. Some states (e.g., New York and Maryland) are considering similar legislation to BIPA.
  • Many EPL policies now have an exclusion for BIPA claims, with some having language broad enough to exclude all confidential information claims.
  • As businesses and offices reopen, many employers are collecting more information about employees (as part of symptom checking, contact tracing, temperature checking, COVID-19 testing, vaccine questions, etc.), which may lead to more employee privacy claims and ADA claims.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

Contact

Employment Practices Liability Thought and Product Leader,
FINEX North America

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