A rolling wave of sexual harassment accusations swept the nation during 2017, taking down major household names in entertainment, politics, and beyond. The focus on harmful behaviors, power dynamics in professional relationships, and long-hidden cultures of harassment has had wide-reaching impacts, launching the #MeToo movement and creating what is now being called “the Weinstein Effect.”
It has also prompted the question of whether increased attention would have an impact on the employment practices liability insurance space, as organizations realize that harassment and discrimination claims aren’t isolated to the rich and famous. Insurance professionals say that although the high-profile cases have brought some focus to the risk of workplace sexual harassment claims, they have not seen a corresponding flood of new applications for EPL coverage or higher limits bought by existing customers.
“To date, we have yet to witness a surge in new business applications or a noticeable increase in EPL limits of liability for those clients that already buy,” said Kelly Thoerig, US employment practices liability product leader for Marsh, in an email to Advisen. “That said, many risk managers, HR directors and general counsel are beginning to take a hard look at whatever risk-transfer solution they have in place to address sexual harassment, as well as related issues of discrimination, hostile work environment and retaliation, and questioning whether that solution meets the particular needs of the company’s own employee base, industry, and geographic location in light of the current media environment.”
Patrick Mitchell, management liability product head for Hiscox, said he does expect to see an increase in EPL cases. The insurer emphasizes to clients that claims occur in every industry, he said.
“It’s not just a large or well-known company problem and it’s not just in particular industries,” he told Advisen. “We see this for companies of all sizes.”
The lack of surge in new applications could be attributed to the fact that since the early 1990s when the coverage first came into prominence, it’s become a fairly standard purchase for most businesses as part of a full complement of commercial insurance. The coverage generally covers defense and claims costs for not only sexual harassment cases, but also a much wider scope of claims due to discrimination based on age, sex, race, or disability, wrongful termination claims, and other employment-related issues.
The insurance industry appears to be taking a wait-and-see approach to whether public harassment cases develop into more EPL claims. Advisen data show that sexual harassment/discrimination case filings actually dropped in 2017, although there was an uptick in filings from May 2017 on. Data from the Equal Employment Opportunity Commission (EEOC) indicated that there were 12,428 sexual harassment-related charges in fiscal-year 2017, a drop from the previous year. The number excludes cases reported to state authorities.