EPLI Abroad: Tough Sell Getting Better

By E. E. Mazier

NU Online News Service, May 2, 4:06 p.m.EST?Employment practices liability insurance is still ahard sell overseas, but opportunities exist for the persistentinsurer, a panel of experts advised at an industry meetingyesterday.

"The book is there," assured panel moderator Paul J. Schiavone,vice president and chief underwriting counsel for AmericanInternational Underwriters-AIG in New York.

But he added that due to the generally low incidence ofemployment practices lawsuits abroad, it is difficult to convinceoverseas employers to pay for EPLI in the worldwide hardmarket.

His and other panelists' comments came at a ProfessionalLiability/Employment Practices Liability symposium for lawyers andaccountants held by the Professional Liability Underwriting Societyin New York.

Mr. Schiavone said potential buyers want "the deductibles to bezero," and the retentions (the self-insured amount an insured mustpay before a policy kicks in) are low, Mr. Schiavone observed.

Cathleen M. Fitzpatrick, senior vice president at Marsh Inc.,New York, reported that her company has been seeing more inquiriesfrom overseas employers about EPLI and that there appears to bemore willingness among carriers to accommodate the needs of thoseemployers.

Alan A. LeNoble, vice president at Liberty InternationalUnderwriters, New York, said he found that EPLI is more likely tobe sold in countries that have a case-law precedent type of legalsystem, such as the United Kingdom and Australia.

In contrast, he described a case in Colombia in which apparentmedical malpractice resulted in the death of a newborn. Mr. LeNoblesaid that while attorneys in the United States "would have been allover this," in Colombia the incident was regarded an act of God, areflection of the culture.

He also observed that since Japanese-owned corporations in theU.S. --such as Mitsubishi-- have been hit with substantialemployment discrimination lawsuits in recent years, employers inJapan are now more willing to buy EPLI.

Mr. LeNoble also predicted that the next "hot spot" for theinternational EPLI market will be Israel. Among the reasons forthis are that the Israeli society is litigious and many U.S.attorneys have repatriated there, he explained.

The panelists agreed that in most cases when EPLI claims arepresented overseas, the payouts are $5,000 or less. At the sametime, premiums are low.

Mr. Schiavone suggested that one deterrent to more lawsuitsabroad is that in most countries, the losing party must pay thelegal costs of the other side.

Ms. Fitzpatrick added that the EPLI market abroad isapproximately at the stage in which the U.S. market was five-to-10years ago. "The [employment] laws are starting to change and therewill be requirements in place" in countries such as the U.K. and inthe European Union, she noted.

Mr. LeNoble said that when evaluating the size of an exposure,he looks at how many U.S. workers are at a particular overseascompany.

This is because expatriate employees, who have certainexpectations of a workplace environment stemming from their U.S.experiences, are the ones more likely to initiate an employmentpractices lawsuit against a company abroad, he explained.

Finally, Mr. Schiavone suggested that the current anti-immigrantclimate found in some European countries will probably have aspillover effect on employers--and by extension the EPLI market--asthe number of discrimination claims by immigrant workers is likelyto rise.