Employment Practices Liability Insurance (EPLI) recently has emerged as one of the most frequently used professional liability coverages. This is due in large part to the rash of discrimination claims and the increasing size of the awards. The Jury Verdict Research Co. reported that the median compensatory jury award in employment practices claims increased from $151,000 in 1999 to more than $218,000 in 2000.

EPLI has gone from virtual obscurity just ten years ago to being standard in many company’s insurance portfolios today. However, as a result of the significant claims settlements, premiums are on the rise. Additionally, carriers are increasing deductibles and tightening their underwriting requirements.

Although some small employers are concerned about the premium increases, they also should consider the valuable services that often accompany EPLI. In addition to insurance protection, some carriers offer an extensive array of loss control and risk management services — important since the leading cause of running afoul of the law is employer ignorance, rather than bad intentions.

Discrimination cases against U.S. employers continue to increase. Although sexual discrimination and harassment cases get lots of attention, age discrimination claims cause more long-term problems and have a larger settlement potential than other types of discrimination cases.

By virtue of their longer employment, older workers typically have significantly higher salaries than their younger counterparts, increasing the amount of any settlement automatically. Additionally, it’s more difficult to mitigate these claims since it’s harder to find comparable work for older employees. And, finally, these cases typically garner much empathy with juries, since most jurors can easily put themselves in the employee’s shoes. All of these factors point to large settlements and possible class action suits.

When downsizing and cutting expenses, be sure to avoid any appearance of targeting one group, especially your older workers, and carry adequate professional insurance in case a downsizing does lead to lawsuits. One of our professional liability specialists would be happy to review this matter with you.

It has long been recognized that directors and officers are the people who can make or break a company. However, after the collapse of companies such as Enron, Global Crossing and K-Mart, D&O underwriters are taking a closer look at board members. As a result, corporations should be prepared to provide additional information about their company directors.

The company’s charter and the workings of the audit committee also will be scrutinized, as will its insider trading policies. Underwriters are attempting to determine the independence of the audit committee, as well as possible conflicts of interest with board members. Underwriters probably will request documentation on these company policies.

Companies also should be prepared to begin their renewal process far earlier than in past years. What might have taken 30 days to complete in prior years could take 90 to 120 days now because of lengthy information requests. Plan for a time-consuming renewal process and let us assist you in this effort.