Have you heard the news? The Great Recession is over! Yep, the media are simply awash in glad tidings, from the first quarter's nationwide employment growth of 162,000, to the sudden burst in home sales in many metropolitan areas, to the Dow topping 11,000! Woo-hoo! Happy days are here again!
Well, except that unemployment is still hovering at 9.7 percent, the housing sales heat will likely cool off after the federal tax credit expires and layoffs in the financial services industry, including the insurance sector, are well above the norm.
Insurance companies slashed 9,200 jobs in March, according to the U.S. Bureau of Labor Statistics. The news was especially rough for agents and brokers, the largest category, where employment slipped 3.1 percent to 633,200. I may be a math moron (blame it on the switch from arithmetic to "new math" when I was a kid), but these ugly numbers don't look like much of a recovery to me.
In fact, although the recession's orgy of cutbacks, downsizing and layoffs may have improved conditions on business balance sheets, it may also have opened the door for legal headaches down the road.
If your business was among the unlucky ones forced to scale back to survive, you're not alone. However, all the belt-tightening that agencies have endured over years of a soft market could translate into a host of new errors and omissions exposures--which is the subject of this month's cover story on agency E&O. Layoffs, diversifying your business and crossing state lines to take advantage of the region's business needs are all common tactics adopted by agents and brokers--and each has its own unique set of E&O risks.
And although the waves of layoffs may be slowing, the number of employment practices liability (EPL) lawsuits being filed with the EEOC is growing (see "The rising tide of EPL"). Employers that panicked and didn't follow careful risk management techniques in laying off employees could be facing a raft of problems when disgruntled ex-employees decide to sue. Even current employees can make trouble: a recent Advisen study reports a dramatic increase in wage-and-hour lawsuits, which are now outstripping work discrimination filings, attributable to the increased workload being piled on those employees still left standing after mass layoffs.
In September 2009, 500 AA&B readers responded to a survey on cost-cutting methods. Surprisingly, 36 percent reported adopting no such measures; 54 percent of respondents reported that staff levels had remained the same over the past year, while 12 percent actually reported increases. Seems that years of a soft market had created an agency force that was already lean and mean enough to take on the recession.
Let's hope that prudent approach to bad economic times will serve you well now that things are getting better--sort of.
