Small Businesses Still Not Buying EPLI, Researcher Says

Middletown, Conn.-based MarketStance recently provided statistics to National Underwriter revealing that most small businesses remain non-buyers of standalone employment practices liability policies.

MarketStance, a provider of market and business demographic data as well as analytical services, examined EPLI buying patterns for 7.4 million small-business locations in total, defining small businesses as those with less than 50 employees.

According to MarketStance, just 80,747 of those small businesses were covered by standalone EPLI policies--roughly 1.1 percent.

MarketStance Founder and Chief Executive Officer Fritz Yohn reported similar findings in an article he authored for National Underwriter on Feb. 11, 2002.

According to the more recent statistics for 2008 compiled by MarketStance, which Mr. Yohn provided to NU earlier this month, small-business buyers of EPLI paid $82.7 million in premiums, or about 8.0 percent of a $1.0 billion EPLI premium total for all 8.7 million businesses studied.

The cost of coverage averaged roughly $5.24 per thousand dollars of covered payroll for small firms.

Although the recent statistics also show that less than 10 percent of national accounts (with 1,000-plus employees) bought EPLI, compared with 12 percent of middle market enterprises, Mr. Yohn stressed that the buying patterns being tracked are for standalone EPLI coverage to explain the disparity.

The statistics do not include the EPLI that is included with many larger firms' directors and officers liability policies, he said, citing that as a possible reason middle market percentages came out higher in this analysis.

The MarketStance data captures buying patterns for firms with paid employees only.

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