Compliance with the Fair LaborStandards Act has created much of the additional activity todayunder employment practices liability insurance (EPLI) coverage.Companies of all sizes can find themselves defending againstallegations of discrimination, harassment or violations ofwage-and-hour laws. These types of claims can place companies atrisk for large financial losses, whether or not the allegations canbe substantiated. The key for insurance agents is to help theirclients handle situations proactively, with professional guidanceand support from their EPL carrier. In this way they can avoidclaims in this area, rather than merely responding only after aclaim has been made. Because wholesalers specializing inprofessional lines know all the pros and cons and newest EPLcoverage enhancements available on the market, they can help retailagents and brokers find the best fit for their clients. What shouldyou look for in carriers who are best able to protect your clients?Underwriting experts: Will they tailor the policyto fit the unique exposures of your insured? Superiorclaims handling: Will the carrier quickly and efficientlyhandle your client's claims, and does the carrier use law firmsthat specialize in employment practices issues? Riskmanagement: Does the carrier offer a comprehensive riskmanagement program, including hotlines, training, audits, andsample documents for implementation? Financial strength ofthe carrier: This is especially important in today'suncertain economic climate. Work with only A-rated carriers at theminimum, using admitted paper for the state when available. Forexample, Atlantic Risk utilizes Beazley (rated A by A.M. Best) andPhiladelphia (A+) for our EPL policies as carriers with strongfinancial backing and innovative EPL policies. Once mainly aconcern of larger businesses, EPL is important coverage forbusinesses of all sizes. “Our small business owner found thebenefits of carrying a comprehensive EPLI policy gave them peace ofmind with all the employment issued facing small business ownerstoday,” said Jackie Ortega, account manager for Filer InsuranceInc. in Miami, Fla., an agency which recently placed EPL for asmall retail business client with Philadelphia through our company.The client was especially pleased with the additional enhancementcoverage given by the Philadelphia policy's “Bell endorsement,”including terrorism travel reimbursement, which covers any directoror officer for emergency travel expenses that he or she incurs inthe event of a “certified act of terrorism;” identity theft expensecoverage, which reimburses the expenses of any director or officerwho becomes a victim of an incident of identity theft; andworkplace violence counseling if a violent incident occurs at anyof the insured's premises

Beazley Group, a leading insurer of management liability risks,has launched a new EPL policy that offers expanded coverage foremployment-related privacy violations and covers the cost of hiringprofessionals to help employers cope with a range of major eventsimpacting the workforce.

One of our brokerage clients, ARM-Capacity of New York, foundBeazley's product an ideal choice for one of its clients andincluded the management liability coverage in addition to the EPL.“We were able to include all the features of their current coverageand lowered their deductibles and premium, without sacrificing anycoverage and actually added enhancements to their policy,” saidKate Carey, business insurance specialist at ARM-Capacity. Inaddition to covering claims for discrimination, harassment andother standard employment allegations, the Beazley EPL policyoffers: o Privacy violation coverage o Employment event coverage oOutside directors coverage o Civil fines assessed under the HealthInformation Portability and Accountability Act (HIPAA) o Negligenthiring o Optional additional defense limit o Optional third-partycoverage o Wage and hour coverage available to qualified insureds oClaims reporting as soon as practicable o 70/30 settlement clauseBeazley's new EPL policy also offers privacy violation coverage,which protects employers against liabilities they may incur in theevent of the loss or theft of employees' personal information,including Social Security numbers, account or health information.Coverage also extends to the consequences of an employer's failureto inform employees in a timely manner that their personalinformation has been compromised, consistent with applicable laws.“Employers have more sensitive information about their employeesthan ever before, and the exposure in the event that information iscompromised is very real,” said Carrie Brodzinski, EPL productmanager for Beazley. Another innovative coverage extension inBeazley's new EPL policy is employment event coverage, whichprovides employers with a sublimit to cover the costs of hiring apublic relations firm, a security firm or mental healthprofessionals to cope with the aftermath of one of the followingevents: o The layoff or material change in the employment status of20 percent or more of the workforce o Public announcement of athird-party claim or allegations of discrimination or harassmentimpacting an executive officer o A workplace disaster resulting inthe loss of life or imminent threat of the use of a lethal weaponon the employer's premises. The best way to protect against theunexpected cost of an employment claim is to expect the unexpectedand to take proactive steps to avoid behavior that can lead toclaims. Transfer of risk through insurance is an important backstoponce a claim arises, but the best outcome for an employer is neverto have a claim at all. As you can see from the examples above,specialty insurers are providing innovative EPL coverages designedto address the challenges of today's work environment. With theright EPL policy, your clients can transfer risk and have all thetools to prevent claims as well. An interview withPhiladelphia Insurance Co. Brad Lacey, assistant vicepresident, product manager of Philadelphia Insurance Co. answeredthe following questions that I posed at a recent round tablediscussion. Are there any new claim trends for EPLinsurance your company has been monitoring? I can't sayit's a trend yet, but we have seen an increase in discriminationlately from both ends of the employment process: hiring and firing.Applicant discrimination causes might be due to a more diverseworkforce than ever before and greater competition for the limitedopenings. Age discrimination claims have increased due to layoffsand downsizing. We also have seen increased activity in retaliationallegations. Additional causes of the uptick may be from the EEOCintensifying its enforcement and greater knowledge of employmentlaws by the general population. Can you give someadvantages of your form for the small business owners todaydeciding whether they can afford EPL insurance? Withtoday's tight budgets and cost-cutting environment, I don't thinkmanagement can afford to be distracted with employment litigationthat takes the focus away from production. A big advantage to thepolicy is the defense cost and optional duty to defend. The insuredcan elect to obligate the carrier to defend the claim and selectcounsel, subject to the insured approval. In addition, coverageextensions are available for Fair Labor Standards Act orwage-and-hour claims. There is optional coverage for levied finesand penalties for violating federal immigration laws. The claimsmade EPL policy is broad and relatively inexpensive. Many times itis sold with D&O liability insurance. Given the currenteconomic times with downsizing and layoffs, are you seeingincreased EPL situations, and how best to handle? Whendownsizing or layoffs have occurred or are expected in the future,we underwrite the account in search for a systematic andnon-discriminatory reasoning behind it. Was a whole department ordivision terminated? What determined who got laid off–was it the“last in, first out” method? Was the reasoning clearly documented?Was a severance package offered? Was there a voluntary option, suchas early retirement? When these elements are not satisfactoryand/or major downsizing is anticipated, underwriters may choose touse a downsizing exclusion that applies if a certain percentage ofthe workforce is terminated. What can you recommend toclients today to help avoid EPL claims from arising? Firstdocument, document and document. Establish, implement and monitorinternal employment practices policies and procedures. If acorporation believes its greatest asset is its employees, then thehuman resource department serves a crucial function. Companiesshould seek loss control and risk management techniques and beproactive in obtaining legal advice. Many EPL carriers offer suchservices for their policyholders. Lastly, consider transferring therisk by purchasing a broad employment practices policy from afinancially stable insurance carrier.