Q. How long have insurers offer stand-alone Employment Practices liability Insurance?

A. In the 1990's, D&O underwriters began to offer the industry's first EPLI stand alone policy. Because the exposures were not fully understood and there was not a historical basis for underwriting prices and underwriting loses quickly became unprofitable. In hindsight underwriters would say that their pricing and use of retentions was not wisely utilized. Recently, the industry has started to raise prices, choose insurers wising and increased retentions in order to return to profitability.

Q. Who are included as insures under an EPLI policy?

A. Employment Practices Liability Insurance is different then D&O that the entity is included as an insured as are directors, officers, employees, former employees and in some policies independent contractors, leased, and temporary employees.

Q. What does "3rd party' coverage mean?

A. Third party coverage originally addressed the exposure that insured has when their employees committed wrongful acts outside the insureds environment. The most common example is an outside sales force. The next generation increased coverage to extend to third parties that although were not employees came in to the insureds' environment and were a result of an employees' wrongful act. We call this two way 3rd party coverage. Recently, many insurers have considered this coverage to be better addressed under an insured's general liability policies and have started to exclude all types of third party coverage.

Q. Is EPLI catastrophic or a frequency problem?

A. In the early 1990's when EPLI became available most thought of it as a catastrophic coverage, however the exposure has experienced great frequency. Both business type and geographic local has shown that EPLI has great accessibility to frequency. In addition, in the last 7 or 8 years defense and settlements are not uncommon to exceed seven digits. The litigation trend is also now experiencing class action status. There is a great concern by the underwriting community that professional plaintiffs have will continue to targeted corporations with large employees for class action litigation.

Q. What things should insureds consider when evaluating EPLI?

A. Other then premium, retentions, contractual wordings, continuity, claims handling, consideration should be given to the insurer's loss prevention services offered its insureds.