Insurance Marketplace Realities 2019 — Employment practices liability

November 6, 2018

Rate predictions

  Trend Range
Overall No change or slightly up Flat to +5%
California Increase +5% to +10%
Media/entertainment Increase +15% to +30%

Key takeaway

Societal shifts are pushing a modernized corporate culture that prioritizes inclusion and diversity. Legislation is increasingly holding companies and their leaders accountable for employee-related issues. Expect sharpened scrutiny of internal policies and procedures regarding harassment and gender-bias claims — and higher retentions for middle market companies and all California-based organizations.

Class action waivers in employment arbitration agreements stand.

  • The Supreme Court held that class action waivers in employment arbitration agreements are valid and enforceable.
  • The decision does not impact state laws allowing collective actions, such as California’s Private Attorneys General Act (PAGA), agency-initiated actions (suits led by the Department of Labor and the Equal Employment Opportunity Commission (EEOC)) or claims by non-employees.
  • Legislation to carve out sexual harassment claims from class action waivers is in the works.

The #MeToo movement shows no signs of slowing down.

  • The EEOC has filed more than 10 lawsuits against various organizations charging them with harassment.
  • Underwriters are taking an extensive look at policies and procedures, training and claim processing, paying close attention to whether higher executives are aware of company values.
  • Workplace culture remains the key driver behind the presence or absence of workplace harassment.

Pay equity is another issue moving to the forefront in the U.S. and abroad, making it a major concern for insurance carriers.

  • California, New York and Massachusetts have led the charge for broadening state equal pay laws, but New Jersey now has the broadest equal pay law in the U.S. More states continue to enact wage disclosure/transparency laws and ban salary history questioning.
  • Globally, many countries have begun enforcing legislation that encourages pay transparency through required pay data reporting.
  • Underwriters are inquiring about pay equity reviews, whether or not required by law.

Capacity remains stable and rising rates may encourage more interest on the part of carriers.

  • Merger and acquisition activity among carriers has had little impact on the EPL marketplace.