Employment law constitutes one of the fastest growing categoriesof civil litigation and has given rise to an increasing need foremployment practice liability insurance, which transfers the riskof these losses to insurers.

Employment practice lawsuits can be expensive for carriers inthis complicated line of business. From the insured's perspective,an EP loss is disruptive, leading to employee turnover and loss ofproductivity, and affecting goodwill. A best-case scenario arisesfor insurers and insureds when legal exposures are avoided orminimized, such as when the carrier provides policyholders withaccess to personnel management strategies at the start of thepolicy period.

The adjustment of EPL claims should be regarded as acomprehensive endeavor involving loss intervention and riskmanagement activities. Opportunities for risk minimization may berealized at the claim-reporting stage, particularly if the incidenthas not yet matured into a lawsuit or administrative charge.Suppose that the insurer has been put on notice of a harassmentcomplaint that has not been investigated by the insured. Riskminimization may be achieved when claim models direct insureds toinitiate timely, appropriate remedial action in response tocomplaints, because the law requires covered employers to promptlyredress harassment.