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Specialty Lines Markets Employment practices liability insurance By Larry G. France One way to curtail EPLI claims is to prepare and train personnel to better understand the situations that can put your company in jeopardy of facing costly lawsuits. Many EPLI claims are due to lack of written human resources procedures or failure to adhere to the ones that are in place. Ignorance of the type of behavior that is not appropriate also can lead to claims because speech or activities that may have been tolerated in the past are in violation of today’s laws—state and federal. Companies should realize that one individual’s conduct could cost hundreds of thousands of dollars in court. “Employment practices liability insurance is an essential component of a well-constructed insurance portfolio,” says Salvatore Pollaro, senior vice president for management solutions at Zurich. “As the impact of employee litigation grows, corporations are recognizing that even one claim could have catastrophic results to an organization’s bottom line and reputation. Claims of wrongful termination, sexual harassment and discrimination continue to escalate, and even if a claim is ultimately deemed groundless, the damage it may leave on a company’s reputation may be substantial.” Pollaro continues: “Add to this the fact that numerous state and federal laws and regulations govern nearly every aspect of employment practices, from hiring to employee management and promotion to termination. In this environment, EPLI coverage has become less of a discretionary coverage and more of a necessity. Policies typically cover employee claims alleging wrongful employment acts, wrongful termination or treatment, discrimination against any protected class, harassment and common law violations. “Adopting best practices and formalized company employment policies may help forestall employee claims,” states Pollaro. “However, employment practices claims are increasingly viewed as risks that jeopardize corporate assets and therefore need to be insured.” Federal laws that address employment liability include: • Title VII of the Civil Rights Act of 1964 and the Civil Rights Act of 1991, which amended Title VII to include additional recoveries for the claimant and gave claimants the right to a jury trial • The Family Medical Leave Act • The Age Discrimination in Employment Act (ADEA) • The Americans with Disabilities Act (ADA) Although the market for EPLI is generally soft, some classes are not easy to find a home for, with certain medical professions at the top of the list. Kimberly Byrd, executive vice president of Tennant Risk Services Insurance Agency, says, “Health care providers, including physicians’ and dentists’ offices, present a more difficult employment practices liability insurance exposure. Statistically, employment-related claims occur more frequently with health care providers than any other types of business. In addition, health care providers have patient and vendor discrimination and harassment exposures that may be covered within an EPLI policy.” She goes on to describe certain claim scenarios that are unique to the health care arena. For example, Byrd points out, “A claim could arise from a patient alleging that he was refused dental treatment because he was HIV positive, or there could be a claim involving an allegation that a patient was sexually harassed by her doctor. These exposures are not picked up under the provider’s general liability or medical malpractice policies.” Byrd says that “EPLI premiums are extremely reasonable even when third-party discrimination is included. A small doctor or dental office can expect to pay under $2,000 for a million dollars of coverage including the optional third-party coverage.” Although the rates in the EPLI market are mostly level overall, some prime risks are seeing lower rates at renewal. Many suggest, however, that agents should look to use any savings to improve coverage. For example, agents might be able to purchase defense cost coverage outside the overall limit. This could save the client hundreds of thousands of dollars if there is a claim. Chris Ketcham, vice president at Great American Insurance Group’s Executive Liability Division observes: “The smaller employer segment [fewer than 250 employees] is a promising market for unbundled EPLI coverage. Small employers are unaware that defense costs are often the largest component of the total loss amount paid to settle employment practices litigation. When faced with the escalating costs of defense, small employers recognize that the EPLI coverage offers real protection for both legal fees and claim settlement costs. Our unbundled coverage options, such as ‘defense costs only’ for wage and hour claims, offer affordable solutions for many smaller employers.” Ketcham says that the market continues to be soft but “we don’t see rates coming down dramatically although there can be decreases on small, clean risks. More often, we are seeing carriers offer policy enhancements or lower retention options to retain existing accounts or to entice purchasers to move away from a competitor.” Renee Azelby, assistant branch manager at Jimcor Agencies, notes that the soft market in other lines may present an opportunity for agents to offer EPLI to current clients. “Many agents are starting to use EPLI as a cross-selling tool,” she says. “They see their clients saving money on other product classes, and they are now able to re-introduce this much needed coverage which has often been overlooked. With all the wrongful termination lawsuits and media picking on everything, it is on everyone’s mind, and it is an easier sell than it might have been a couple of years ago to the Main Street client, as well as the larger professional firm.” Talking to the client about EPLI “also could save the agent a possible E&O claim later on,” she adds. “The marketplace is competitive and there are new players trying to enter,” says Azelby. But any professional liability coverage is an area that requires special expertise, she continues, so agents should deal only with companies that “specialize in EPLI and know the coverage inside and out. It is also important to work with a market that has longstanding relationships with the carriers that write this type of business.” Upcoming Specialty Lines topics are the Security Industry, including Burglar/Fire Alarm/Safety Equipment Companies, Security Guard Services and Detective Agencies in August; Pay-for-Play in September; and Professional Liability for October. The following have responded to our survey and indicated that they are a market for employment practices liability insurance. Be aware of the states in which the market is available and the target classes for each market. All Risks, Ltd. and All Risks of CA Insurance Services, LLC An MGA/E&S broker that operates in all states with any limits. Will consider all classes with emphasis on high tech/biotech, medical, hospitality, manufacturing, service industry, health care, real estate, lawyers, architects/engineers, and environmental. Can offer D&O, fiduciary, crime, E&O, and professional. All admitted and nonadmitted carriers are rated A- or better. Arrowhead General Insurance Agency, Inc. A program manager that operates in AZ, CO, CT, DE, IA, ID, IL, IN, KS, KY, ME, MO, NC, NE, NY, OH, OR, PA, TN, UT, VA, WA and WV with primary limits of $1 million and umbrella of $10 million. Target classes are tax-supported public entities and special service districts with populations of fewer than 50,000. Will not write power generation in excess of 10% of total revenue. Can offer all lines except workers comp. All carriers are A rated. Atlantic Risk Specialists, Inc. An E&S broker that operates in all states with limits of $5 million-plus. Will consider all classes including distressed, lawyers, PEOs, franchises, and restaurant (third-party coverage available on most classes). Can offer D&O, fiduciary, and crime. All admitted and nonadmitted carriers are rated A- or better. Atlantic Specialty Lines of FL dba as Gary Markel Surplus Lines Brokerage, Inc. An MGA/E&S broker that operates nationwide with limits of up to $5 million. Will consider all classes. Can offer D&O, crime, fiduciary, and professional liability. All carriers are rated A or better. AVRECO Brokerage An E&S broker that operates in all states with limits of up to $25 million. Target classes are manufacturers, health care, and law firms. Can offer D&O and professional liability. The A rated or better carriers are AIG, Zurich, Great American, Evanston, Executive Risk, Lloyd’s, Carolina Casualty, Travelers, ACE, and Arch. BISYS EPLI Program An MGA that operates nationwide with limits of $500,000 - $3 million. Will consider most classes with emphasis on contractors, franchise operations, manufacturing/wholesale, medical groups (including nursing homes), law firms, restaurants, and hotels. Will not write casinos, churches, employee leasing or temporary help agencies, government entities, municipalities, social services, PEOs, schools/colleges, TV/media, or entertainment. Can offer full prior acts coverage, optional third-party and punitive damages coverage. Lloyd’s is the A rated carrier. Blais Excess & Surplus Agency of Texas, Ltd. An E&S broker that operates in all states with limits of $100 million. Will consider all classes. Can offer D&O, E&O, cyber liability, and crime. Various carriers are used to place coverage. Burns & Wilcox Ltd. An MGA that operates in all 50 states plus U.S. territories with limits of $10 million/$10 million (higher limits available upon request). Will consider many classes including professional firms, franchises, contractors, associations, and both large and small companies. Can offer packages with other lines such as D&O and GL. All carriers are rated A+ and A++ depending on the class of business and geographic location. Caitlin-Morgan Insurance Services An MGA/E&S broker that operates in the Midwest, primarily IN, with various limits. Target classes are restaurants/bars, hotels/motels, vacant properties, PC 9 & 10, excess, and liquor liability. Can offer workers comp, excess liability, and excess property. Various carriers are used to place coverage. Continental/Marmorstein & Malone An E&S broker that operates in CT, DE, NJ, NY and PA with limits of $5 million. Will consider all classes. Can offer D&O and professional liability. Carriers are USLI, Houston Casualty, Evanston, Philadelphia, and Lloyd’s. Evolution Insurance Brokers An E&S broker that operates in all states with all limits. Will consider all classes. Can offer monoline liquor, assault and battery, and after 3 a.m. closing. Prime is rated B+. Excel Insurance Service, Inc. An MGA/E&S broker that operates in DE, NJ, NY and PA with limits of up to $10 million. Will consider most classes. Can offer all professional lines and D&O. Various carriers are used to place coverage. Gateway Underwriters Agency An MGA operating in AR, IA, IL, KS, MO and NE with limits of $5 million. Target classes are retail, wholesale, office, manufacturing, as well as home health, lawyers, and auto dealers. USLI, Lloyd’s, Scottsdale, and Houston Casualty are the carriers. Gray-Stone & Co. An E&S broker that operates on an admitted basis in all states except AK, SD and WY and on a surplus lines basis in CA, with limits of $10 million plus. Will consider all classes. Can offer packages, E&O, D&O, fiduciary, liability and workers comp. All carriers are rated A- or better. Great American Insurance Group, Executive Liability Division An insurer that operates on an admitted basis in 43 states plus DC (admitted coverage not available in AK, LA, NY, VA, WA and WY; and no coverage available in CA) with limits of $100,000 - $10 million. Target classes are manufacturers and service companies, employers with up to 1,000 employees (accounts with fewer than 150 employees are targeted). Will not write government entities, staffing firms, law firms, or schools. Can offer third-party liability; defense costs with $100 sub-limit for wage and hour claims; and defense outside the limit option for employers with fewer than 300 employees. Great American is rated A. Gresham & Associates An E&S broker that operates in all states with unlimited limits. Will consider all classes. Can offer D&O, E&O, CGL and umbrella. All carriers are rated A or better. H & W Insurance Services, Inc. An MGA/broker that operates in all states except AK and HI with limits of up to $10 million. Target classes are retail and manufacturing. Can offer D&O. All carriers are rated A- or better. H.R. Keller & Co., Inc. An E&S broker/wholesaler that operates in NY and PA with limits of $5 million. Will consider most classes with a special program for restaurants, law firms, accounting firms, architects/engineers, hospitality, and lodging. Can offer management liability. Carriers are A rated or better. Harry W. Gorst An MGA that operates in CA only with limits of $250,000, $500,000 and $1 million. Target classes are retail insurance agents, hotels, and restaurants. Can offer defense outside limit, and vicarious liability for international accounts. Coverage is written through Premier Professional Liability and Shand Morahan. Hull & Company, Inc. An E&S broker that operates in all states with limits of up to $5 million. Will consider all classes except government entities, law firms, and staffing firms. Can offer stand-alone or with D&O. All carriers are A rated. Insurance Innovators Group An MGA/E&S broker that operates in the continental United States with limits of up to $10 million. Target classes are lawyers, technology, insurance agents, and architects/engineers. Can offer E&O, and for-profit and nonprofit D&O. All carriers are A+ rated. Intercorp, Inc. An E&S broker/program administrator that operates in all states with limits of $5 million. Will consider most classes but specializes in manufacturers (also a special program for National Glass Association members). All carriers are rated A or better. IT Risk Managers, Inc. An E&S broker that operates in all states (depending on product and market) with limits of $1 million - $10 million. Target class is technology companies. Can offer GL, property, EDP, PL, identity theft, and database. All carriers are rated A or better. Jacobs & Associates An E&S broker that operates in OH only with limits of $10 million-plus. Target is any class of small to mid-sized accounts. Can offer D&O and fiduciary. Carriers are USLI, Houston Casualty, and Aspen Specialty. James River Insurance Company An insurer that operates in all states except NH and OH with limits of $5 million. Target classes are firms with fewer than 100 employees (will consider up to 250), food services, fast food, and retail. Will not consider municipalities and government entities, law firms, foreign-owned corporations, temporary staffing, and professional employment organizations. Can offer third-party liability. James River is an A- rated carrier. Jimcor Agencies An MGA/E&S broker/wholesaler that operates in most states with primary and excess limits of $10 million (higher limits available). Will consider all classes including but not limited to manufacturers, lawyers, medical facilities, and professional firms. Can offer D&O, third-party, BI exclusion includes carveout for emotional distress; waiver of deductible if no liability available; defense in addition available; soft hammer, no hammer available. All carriers are rated A- or better. Johannes/Stoermer Co. An MGA that operates in KY and OH only with limits of up to $5 million. Target is many classes of business with up to 200 employees. USLI is the A++ rated carrier. Johnson & Johnson, Inc. An MGA that operates in all states for EPLI and concentrating on GA, NC, SC and TN for other products, with limits of up to $5 million. Will consider most classes. Will not write government agencies. USLI (A++) and Shand Morahan (A) are the carriers. M.J. Hall & Company, Inc. An MGA/E&S broker that operates in AK, AZ, CA and NV with limits of up to $5 million. Target classes are D&O (for-profit and nonprofit) and EPLI (primary or excess available). Will not write surety. Packages can include GL, property, crime, glass, and inland marine. All carriers are A rated. M.J. Kelly Co., Inc. An MGA/E&S broker that operates in AR, FL, IL, KS, MO, MS, NE, NM, OK, TN, TX and UT with limits of up to $5 million. Target classes are accounting firms, homeowners associations, retail, transportation/trucking, and vet clinics. Will not write bars/taverns, casinos, aviation, government agencies, law firms, nursing homes, unions, or restaurants. Can offer duty to defend, optional coverage for punitive damages. USLI/Mt. Vernon (A++), Tudor (A+), and Beazley Group (A) are the carriers. McLeckie Insurance Group An MGA/E&S broker that operates in AR, FL, LA, MS, OK and TX with limits as needed. Target class is auto dealers. Various admitted and nonadmitted carriers are used to place coverage. Midlands Management Corp. An MGA that operates in AR, KS, OK and TX with limits of $1 million/$1 million. Will consider most classes except governmental agencies, bars, nightclubs and adult entertainment facilities. Can offer professional liability (lawyers, architects/engineers, E&O, and nonprofit D&O), medical (med mal for physicians, surgeons and dentists), specified medical for allied health care professional and facilities, and tenant discrimination liability. Shand Morahan is the carrier. National Insurance Professionals Corp. A/D/O Risk Placement Services A program administrator that operates in all states except LA with limits of up to $5 million. Will consider most classes. Can offer professional liability. All carriers are A rated. NIF Group, Inc./NIF Pro An E&S broker that operates on an admitted basis in all states and nonadmitted in 30 states with unlimited limits. Will consider all classes. Coverage can be written on a stand-alone basis or with D&O and fiduciary. All carriers are rated A or better. NorthCoast Excess & Surplus Agency, Inc. An E&S broker that operates in OH only with limits of $2 million/$2 million. Will not write unions. All carriers are rated A+. Philadelphia Insurance Companies An insurer that operates in all states except LA with limits of up to $10 million. Target classes are agricultural, manufacturing, publishers, retail businesses, service companies, wholesale, accounting firms, casinos, contracting/construction, real estate management, restaurants, oil/gas, technology (high-tech, bio-tech, med-tech), transportation other than air, utilities, medical offices/physician groups, co-ops (utility, agricultural), airline/aviation industry, and research and development stage companies. Contact for prohibited classes. Can offer D&O, fiduciary, and crime. Both Philadelphia Indemnity and Philadelphia Insurance are A+ rated companies. Prime Insurance An MGA(EIBS)/insurer(Prime) that operates in all states except AK, CA, CT, NH, NY, RI and TX with all limits. Will consider all classes. Can offer monoline liquor, assault/battery, and after 3 a.m. closings in the hospital industry. Prime is a B+ rated carrier. Professional Indemnity Agency An MGA/E&S broker that operates in all states with limits of $2 million or $1 million/$3 million. Target classes are hospitality, restaurants, law firms, and auto dealers. Will not consider public entities, schools or unions. Can offer fiduciary liability. Houston Casualty, U.S. Specialty, HCC Specialty, and Lloyd’s are the A rated or better carriers. Professional Liability Insurance Services, Inc. A national program administrator that operates in all states with limits of up to $5 million/$10 million. Will consider all classes. Can offer business interruption for food-borne illness outbreaks/trade name restoration (TNR) for restaurants, hospitality restoration/loss of business income and incident response expense, miscellaneous E&O, and lawyers professional liability (Texas only). Lloyd’s is the A rated carrier for all product lines, except Service Lloyd’s (A-) for lawyers (admitted product in Texas only). Quadrant Insurance Managers An MGA that operates nationwide—with some exceptions—with limits of up to $5 million. Target classes are insurance companies/agencies, banks, colleges/universities, hotels/motels/ restaurants, and the health care industry. Can offer D&O, E&O, and stand-alone third-party harassment/discrimination. All carriers are rated A- or higher. Rockwood Programs, Inc. An MGA/E&S broker that operates in all 50 states with limits of $250,000 - $10 million. Will consider all classes. Will not write PEOs. Can offer D&O; admitted stand-alone market in all states; various other A rated or better markets available for hard-to-place risks; franchise market (available in all states). Rockwood Guardian Program has a low minimum premium for risks with fewer than 15 employees. Policy enhancements include: full prior acts (included on all new business and renewals, no additional premium and no proof of prior coverage needed); supplemental defense costs up to $1 million limit; no “failure to make partner” exclusion; $100,000 sub-limit for wage and hour; third-party available for all classes of business (up to $1 million limit); and HR policies and procedures are not mandatory. Certain policy restrictions may apply in AK, CA, LA and WA. Avemco (A+), NAS (A+), Beazley (A-), and XL (A+) are the carriers. Roush Insurance Services, Inc. An MGA/E&S broker that operates in IL, IN and OH with limits of $1 million (excess available to desired limit). Will consider any class. Can offer E&O, D&O, employee dishonesty bonds, property, liability, and equipment breakdown. The A rated carriers are Scottsdale and Shand Morahan. Russell Bond & Co., Inc. An MGA/E&S wholesaler that operates in CT, MA, NJ, NY, PA and VT with limits of $100,000 - $25 million. Will consider all classes. Coverage is written monoline or in conjunction with D&O, school board legal, and public officials. All carriers are rated A- or better. Smith Bell & Thompson, Inc. An MGA that operates in all states. Target classes are home health care, medical equipment suppliers, medical staffing, medical facilities, and social services. Can offer D&O, liability, professional and GL liability. Swett & Crawford An MGA/E&S broker that operates in all states with limits of up to $50 million. Can offer D&O, E&O, fiduciary, and GL. All carriers are rated A- or better. Tennant Risk Services Insurance Agency, LLC An E&S broker that operates in all states with various limits. Will consider most classes but specializes in EPLI for medical providers. Can offer third-party discrimination/harassment and tenant discrimination. All carriers are rated A- or better. Tri-City Brokerage, a Division of BISYS Commercial Insurance An E&S broker that operates nationwide with primary limits of up to $15 million (may be layered to meet the needs of the client). Target classes are employee leasing (PEO), franchise operations, hospitality (restaurants/hotels), law firms, and larger employer risks (5,000-plus employees). Can offer punitive damages, third-party liability, multi-year deals, and full prior acts. The A rated or better carriers are ACE, AIG, Travelers, Chubb, and RSUI. USG Insurance Services, Inc. An MGA/E&S broker that operates in all states except AK and HI with limits of up to $25 million (with virtually unlimited excess capacity). Will consider all classes including hard-to-place: auto dealerships, boat dealers, credit reporting/collection services, educational services, employment agencies/PEOs, governmental entities, hospitals, HMOs, PPOs, nursing homes, labor organizations, motorcycle dealers, political organizations, real estate companies, and temporary staffing. Can offer D&O, E&O, and miscellaneous professional. All admitted and nonadmitted carriers are A rated. Victor O. Schinnerer & Co., Inc. An MGU that operates in all states and territories except Puerto Rico with limits of $5 million. Target class is design professional firms. Will not write contractors. Can offer D&O, fiduciary and EPLI in a combined package. CNA is the A rated carrier. Worldwide Facilities, Inc. An E&S broker that operates in all states with all limits. Will consider all classes including law firm EPLI. Can offer D&O, crime, fiduciary, and K&R. All carriers are A rated or better. Yates & Associates Insurance Services, Inc. An MGA that operates in CA only with various limits. Will consider all classes. All admitted and nonadmitted carriers are A rated. * |
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