Skill up on the Fundamentals and Trends of Employment Practices Liability Insurance

Paul Lucas [00:00:06] Alright, hello, everybody, and welcome to a very special webinar today brought to you in association with Sovereign Insurance. Just asking for your patience for a minute or two, while some of you file in, I see the numbers are creeping up gradually. While we're waiting, I encourage you to take advantage of the chat box, which should be at the bottom of your screen. It would be great if some of you could type into that now let me know who you are and where you're coming from today. As we prepare for today's presentation looks like the numbers are rising very, very rapidly. So it won't be too long until we officially get this underway. So yes, we have a couple of fantastic presenters for you today from Sovereign Insurance. Looking at the fundamental and trends of Employment Practices Liability insurance will be beginning in just a moment. Looks like somebody's already taking advantage of the question and answer box. And yeah, hello to Elaine. Hello to Celia. I see a few people are starting to file in. We'll be using that question and answer box. You might not be surprised to hear to take your questions a little bit later on, which we'll be throwing at the guys towards the end of the presentation. But yeah, I think there's a sufficient number of you now joining us. So it's time for me to sort of get things officially underway. So hello, everybody, and welcome to today's webinar with Sovereign Insurance helping you skill up on the fundamentals and trends of Employment Practices Liability Insurance. I'm Paul Lucas, global editor at Insurance Business. I'll be your host today for what promises to be an exciting look at the EPL landscape, its key exposures, trends in the market, and perhaps most importantly, answering some of the key questions on the minds of brokers who are actively selling in this space. Before we begin in earnest a few housekeeping notes for me to run through. If you need any technical support during this webinar, please use the q&a box as we have a team on hand to help you with any issues. We would also love to hear your feedback on the poll questions which you will see during the presentation as well. So please be sure to participate when prompted. And last but not least, this webinar recording will be made available to all attendees after the event. So if you have any distractions during the live feed, don't worry, you will get another opportunity to watch it back. At the end of the presentation. There will also be a question and answer session. So as I mentioned earlier, be sure to type any questions you have into that q&a box. And that's down at the bottom of your zoom screen. Remember, the more feedback we get the more we know about the issues you're facing with your EPR clients. So please engage with us today using that q&a function, so we can point you in the right direction. But back to the subject matter at hand brokers know that EPL insurance is a vital piece of the puzzle for executives when it comes to minimizing the impact of employee litigation and emerging workplace challenges. Trends are making conversations around this type of cover, perhaps more critical than ever, there are of course booming legal exposures, but this has been offset somewhat by some general market softening with the rates that boomed during the pandemic amid a loss of capacity stabilizing. Now, at a critical time, data brokers are well positioned to secure their clients vital coverage, especially if they are proactively working with them on risk mitigation strategies that could lower premiums. Now in this webinar, sovereign insurance hopes to further that broker cause by helping you gain a stronger understanding of employee Practices Liability coverage, shedding light on EPL risks to your clients, businesses and how to mitigate them and exploring the factors and market trends influencing EPL. But to take us on that journey, we're going to need some expert guidance and as the phrase goes to experts are better than one. That's why I'm delighted to welcome Andre Linsky, Manager at National Professional Lines and Eduard Lecker, Senior Underwriter Management Liability. Now Andre began his career as a broker before moving to the carrier side of the business, so he's well versed in the pressures and issues that you may face. Meanwhile, Eduard has been in the insurance business for more than 10 years, and during that decade has also experienced life as both a broker and insurer across multiple lines of business. I'm sure you will agree that they have a lot of fantastic insights for us today. So let's not wait any longer. Let's delve into all things EPL. Andre and Eduard, over to you. 

Andre Linsky [00:04:42] Okay, so thank you so much for the introduction, Paul. So what we'll start with the presentation again, welcome everybody. I see we already have close to 2[00 participants, so this is great to see obviously. So we will go to the next slide. So as you see Andre Linsky, this is myself and Eduard Lecker will be presenting today. We will first of all start with the management liability insurance overview because obviously Employment Practices Liability is a line of business that usually is part of a package policy that includes Directors and Officers liability commonly called DNO Employment Practices Liability that we commonly know as EPL that we will discuss more in detail today. There is fiduciary liability, okay. And there is fidelity or crime, which is the other line that we usually see in this packaged policies. So first of all, we will quickly just describe each one of these lines without going too much into details. So directors and officers insurance is the first line of business. It protects directors and executives against liability arising from decisions and actions they're taking in the course of their duties. Lawsuits can come from several parties, right third party shareholders, regulators. It could be financing companies, it could be buying different places the claims can come from and it usually covers current past and future directors of the company. So usually the coverage is quite broad. We'll go to the next slide. So what is the DNO policy structure so normally there is at least three insuring agreements that are the side A, side a side B side c some carriers call it coverage, one coverage two coverage three. So there's different ways to call it but basically the most important one, the reason why directors buy DNO insurance or companies by DNO insurance is so today, it provides coverage directly to insured persons when the loss is not indemnified by the legal entity. In the absence of this coverage, obviously directors could be held personally liable, which can put their own personal assets at risk. Okay so if a director and officer doesn't buy the you know, insurance or the company doesn't buy one for them, they're putting their own assets at risk, if the company is not able to indemnify them example, if the company goes bankrupt, it doesn't have the funds. It cannot indemnify the directors. Okay, Site B, which is another very common coverage that we see. Wouldn't be an old policy provides coverage to the entity when indemnifies. Basically the directors, right, so it's the same thing the lawsuit comes against director but in this case, the entity will pay for the directory it will indemnify them but the insurance company will indemnify the company will reimburse the company for the payments it's made. And finally Site C because directors and officers policies actually became some popular and there were a lot of new entrants into the market in the 90s. Obviously side c which is entity coverage that covers the entity itself for different types of scenarios is also part of the no policies for the last few decades. Okay, so what are the features usually of private DNO policies, most insurance carriers will have a very broad definition of insurance. You know, it will include the organization but also directors and officers, even employees. outside entity persons, like there's different types of different people who are a part of the definition of insured. There's additional coverages that are often available so additional sidey. So an extra million for example, for the directors themselves on top of the limit for site A, B and C, derivative investigation coverage, crisis cost and video others that are available for the you know, policies. So quickly, how do we underwrite the annual policies? We need an application as an insurer, we need financial statements. Obviously, as we said, a company cannot indemnify director if it goes bankrupt. So it's very important for us to make sure that the company is not heading into that direction. So financial statements are vital. And information available online can give us a lot of information obviously about past claims of the company. And any litigation that was involved in prior times and also we could research the products and services that the company is offering if our insured forgot to mention everything on the application. Okay, so we will go quickly talk about fiduciary liability, so won't go too much into detail. As our main goal is to speak about employment practices today. So fiduciary policies basically provide coverage for fiduciaries of example, employment employee benefit plans. So could be pension plans, health benefit plans, it could be defined benefit pension plans, which are quite more rare these days, only larger companies will still offer them to their employees, defined contribution pension plans, which are a little bit less risky, right, because employees make the decision of the investments they made. So this is the type of plans that obviously, we're able to provide coverage for, and usually, insurers in that space can do. If we go to the next slide here, what we need to underwrite fiduciary liability, again, application that has some control questions, financial statements, and actuarial reports, especially for defined benefit plans where we need to see well is the company investing enough money into the fund, right, if if the company was to go bankrupt, are they going to be able to sustain in pay for all these pension liabilities that they have so this is the information we normally require for that. And then next, we're going to have a quick look at Fidelity, which is the last coverage before we talk about employment practices liability. So fidelity, it's a little bit different because it's mostly first party coverage. It's not a third party coverage like the three others, which are the four others sorry, which are liability coverages. So crime is really, for losses caused, the more often the most claims we're going to see it's going to be employee dishonesty, right? It's when employees steal money from their own employer the results of other coverages forgery, computer fraud, property located inside or outside of the premises, you know, when you have when you walk some money into a safe for example, things like this will be covered by a crime policy. There will be several insuring agreements. So the order is only three to six, maybe within crime you it's very common to see 10 to 12, for example, and social engineering sub limits are often offered so you know, cyber policies have social engineering coverage. Crime policies tend to have it as well. For those who don't know social engineering is when someone makes you believe that they are someone else and they make you transfer the money. Okay, so example they could pretend that they're your boss, send you an email from your from your managers inbox and pretend to be him and make you make a transfer. So that's what social engineering is. Quickly what we need one the right crime. So obviously, crime, it's the most of the underwriting is based on controls, right. So applications tend to be longer. We do tend to see applications that are 5 6 7 pages long, because there's a lot of controls. In terms of what we also need financial statements. Very important to see because obviously, if companies are struggling financially, they will tend to cut corners on controls related to crime. So this is a piece that that's very important to us to review as well before we can quote fidelity. Okay, so we have a little poll for you here. How would you rate your current knowledge of employment practices, we're gonna get into employment practices now? Right, we did a little bit of the introduction about the line of business, we're gonna get more deep into employment practices. So a poll should pop up. Within the next few seconds. We're going to ask you how would you rate your current knowledge of the Employment Practices Liability Insurance space? 

Andre Linsky [00:14:28] I don't see the poll but I think it's still. 

Andre Linsky [00:14:52] Okay, I didn't see it pop up. We have the poll.  

Andre Linsky [00:15:03] Sorry, a little bit of a technical difficulty here, but 

Andre Linsky [00:15:07] Never a Zoom meeting without without some technical issues. Oh, it popped up. Okay. So I think maybe it doesn't pop up for myself. Okay, perfect. Excellent 

Andre Linsky [00:15:29] Okay, so maybe give it 30 seconds and we can share the results 

Andre Linsky [00:15:49] okay, thank you everyone 

Andre Linsky [00:16:02] okay, the results pop up to Okay. So I don't see them. So I think there's a difference. So results are okay, I got them now. So 60% average knowledge, okay of employment practices 30%, low and 10%. High, which is very common for this presentation. So thank you, everyone. So from here, we will start discussing Employment Practices Liability, I will pass the conversation to my colleague, Eduard. 

Eduard Lecker [00:16:38] Thank you so much, Andre. And yeah, let's hope we can get all those averages to experts by the end of today's presentations, of course. Alright, so EPL, which is what we're here for employment practices, liability insurance, what's the purpose of it? As you can see, it's to protect the organization against any allegations or lawsuits coming from current past employees, even employee candidates, which is what people don't think about. And even third party is that not related to those three that we've mentioned, if their rights have been violated. So what businesses need to buy this coverage, and it's fairly simple, I would say all businesses, all sizes, small, large, if you have even one employee, you can have an unhappy employee. And they can bring a lawsuit against you and you can lose a lot of money, any employer, right? So any organization, any size litigations are on the rise lawyers, they also like the cost of inflation to go up. So their fees are going up every year. So you know, they're gonna need some protection for that for your clients or employers. general liability policies do not cover Employment Practices Liability, which is actually a very important distinction to note that employment or employer liability is a coverage that usually comes with CGL policy. It's not the same as Employment Practices Liability, they're named very similarly. Employment liability covers things that would not be covered generally, under workers compensation, it's more related to your bodily injury on the job, things like that. Employment Practices Liability policies are more to deal with issues not related to bodily injury, or property damage, because that's actually excluded on most policies, or has very minimal coverage for bodily injury. So it's not for that it's mostly for employment related issues, which we're gonna discuss in the next coming slides. And, you know, society is continuously changing, we've all been seeing the news and what things have been happening, you know, employees maybe before would have been less likely to give claims about or, you know, be quiet about certain things, which are now are more vocal about it, and, you know, they can put on social media, they don't have to be as quiet anymore as it used to be. So, employment practices, liability insurance, we need it, as we discussed, some industries need more than others, of course, any industry that, you know, sees a lot of high turnover, historically, for claims, you know, restaurants, hotels, any retail golf clubs, have seen a lot of EPL claims coming out for a myriad of reasons. Large, you know, high earners, or industries that have high earners, are also very much a higher risk for EPL because, you know, they earn more money, they'll want bigger settlements, they can hire better lawyers because they have more money for it, of course, also, employees in the US, as you know, the story goes, the US is more litigious than us Canadians. And some states are more litigious than other states, California has mentioned they're in New York, Texas. Usually, if you have an EPL policy with us employees, you'll actually see a higher deductible just for having one US employee, one contractor there kind of thing. And, you know, all employers and employees are the subject to you know, legal environment and, you know, demands by prospective employees, former employees and things like that. So we can dive into a bit better what we insure under EPL or any insurer that provides EPL. So there is employment practice. liability coverage. And there's third party employment liability coverage. So, for Employment Practices Liability coverage, if I was to read the wordings which I know everybody's here to discuss wordings as the most exciting part about it, then I'm reading the sovereign wording. Of course, different tours can have different wordings that will mention that the insurer will pay on behalf of the insured loss which the insured becomes legally obligated to pay on account of any claim for employment practices wrongful act first made against the insured during the policy period, or if applicable, during the extended reporting policy period. Now, I know all of you understood what that meant, and we don't have to talk any further with Employment Practices Liability. But of course, we have to discuss it. So I will actually give you the English version of what we read on the wordings. So employment practice liability coverage, what is the employment practices liabilities, wrongful act, it's a nice long title, but it's better makes more sense. If you look at the examples. The definition will include wrongful dismissal, termination, discharge and employment. So you fire an employee, they're unhappy with the discrimination. So it could be based on age, sex, gender, race, myriad of reasons that an employee did not get the position, failed to get a promotion or even just got wrong treatment while they were employed. harassments emotional, physical, sexual harassment, wrongful termination, I should have not been fired sort of thing. Breach of employment contract, that provision of career opportunity, failure to employer promote defamation or privacy violations, violations of common employment laws, retaliation, so let's say you've done something to say your employer is doing something wrong. And because of that, they start building a case against you to fire you later. Things of that nature, and wrongful failure to provide them force adequate or consistent corporate policies. So as you can tell some of them kind of work together, they intertwine. And that's sort of what we will be covering, those are the allegations that would come through and whether the allegation is valid, or could be frivolous could be just, you know, there are people like that the insurer will defend your claims, as long as they fit within those, and the defense costs are still there. So that's another thing to consider for people or companies to think, well, if it's frivolous, I don't have to pay anything. Well, the lawyer still wants their money to defend you. And that's what we're here for to help you with it. All right. What do most policies not cover? So Wage and Hour claims. So the insurance policies actually do not cover the if they let's say, Give an allegation say you owe me $20,[000 in lost wages. The EPL policy will not cover that. It will cover the defense costs to defend against that claim. That's a pretty important distinction to make. taxes, fines and penalties as generally not covered by insurance. Punitive damages, as we know, usually do not, is not covered by insurance policies, severance payments, similar to wage and hour not covered. There are exceptions for it's called termination last differential, which I'm pretty sure people will already asking what that is in the chat. It's pretty much the difference between what the employer offered as a severance before the suit was provided, and statutory minimums that are provided. So we can potentially cover that difference subject to of course, there's always some sort of exclusion or, you know, prefaces of when we would pay when would not pay, it has to be reasonable, you have to consult a lawyer, things of that nature, as many wordings differ. So it's important to read the wordings and then worker compensation, employment insurance, disability benefits, those are not covered here, mostly because they're covered by other policies, or their coverages themselves. So workers comp is covered by WSIB, or similar one, or employer liability, which is under a CGL policy, employment insurance is government so we won't cover and disability benefits. All right. So again, as we talked about wordings, we can talk a little bit about the definition of insured, which is obviously the key. So directors and officers are covered because they can be mentioned employees, it normally does not include independent contractors, but we'll talk about that a little bit later. Family members of the directors and officers or employees and legal representatives, heirs of the estates, things of that nature. Third party claims which I know you're thinking, Who is this third party if it's not an employee, it's not a prospective employee, and it's not the employer so who was involved here? So the definition as I will read it here, any national person who is not an insured person or applicant for employment with the insured organization, including but not limited to customers, vendors, suppliers. What is covered is actual or alleged the harassment or discrimination against the third party based on any characteristic protected by the Canadian Charter of Rights and similar sort of things. I'm not going to be they'll have that. So essentially, it doesn't necessarily have to be an employee or somebody who's a candidate for employee, it could be your employees potentially harassing or discriminating a client. And that client brings a suit that can actually fall under third party Employment Practices Liability coverage. And make sure to read, it's not included automatically in every policy. So it's important to make sure you have this coverage. So now that we've discussed some employer liability pools, we're going to put in Florida liability practices. Sorry, we're going to have another poll. And I guess based on your personal opinion, what do you think is the most common employment practices liability claim based on the ones that provide that I can actually go back to that slide, so it'll be a little easier? So there's no wrong answers, but there are prizes at the end. No, I'm kidding. 

Andre Linsky [00:25:52] Yeah, I think a q&a should pop up now again.  

Andre Linsky [00:25:58] Okay, perfect. 

Eduard Lecker [00:26:07] And I think we're not going to see the results again, as last time. 

Andre Linsky [00:26:10] Yeah, I will. Try to get them okay. 

Andre Linsky [00:26:24] We'll just wait a few seconds for everybody to answer. 

Eduard Lecker [00:27:03] Right, okay. Okay. So we have wrongful termination, 84% discrimination 12% and 4% of sexual harassment. Oh, okay. Well, you guys, I thought you said you guys are average learners. But you got the answer? Absolutely. Correct. It is wrongful termination. So you guys are experts already after this half an hour of the presentation. 

Andre Linsky [00:27:27] Excellent. So I will take over from here at word with the claims scenario. So I just wanted to quickly mention so those are not real claim scenarios. They're not sovereign claims or claims from anywhere else. But obviously, we made them up to show you a little bit what can happen in terms of claim activity. Because as a broker, when you want to offer a product to a client, you obviously want to give them examples of what can happen because, you know, it always happens to others, right? That's, that's how we often see things. So we can go to the first claim. So I have about 10 claim scenarios. So there's quite a bit, but actually, they're pretty good to give you good examples. So the first one, harassment colleagues are making inappropriate comments about cultural food preferences of their colleague, that comes from a different culture. employee reports the bullying to the employer, and the employer does not do anything to stop the situation. Maybe the harassing employee is one of the best salespeople in the company and the employer doesn't want to do anything. So this type of claims, by the way, could be very expensive, right? It could easily hit over $1[00,[000 in defense and settlements for the employer. So this is this is something common retaliation. And boy makes a complaint to HR. The day following inappropriate behavior by its manager the night before the company function. When the manager finds out, he starts building a case leading to the employee's eventual termination. So this is a type of retaliation claims it happens more than you think actually in companies. So that's quite interesting one, the next one we have failure to promote. Okay, so this is when we give preferences to other people. So this example Lisa is working for the same company for several years has great production results, has the right behaviors. And when a new sales manager position is posted, she immediately shows interest to her manager. Okay, another employee much younger with less experience in education that Lisa is given the role. She decides to sue her employer for failure to promote that she believes she didn't get the new All due to her age. Okay, that happens a lot in family in companies where there's family members involved as well, that's, that's one of the types of companies where you would see such claims where example, someone of the family members of the President gets a promotion over someone who deserves it more, obviously. So, the next one, we have wrongful dismissal. So John works for four years for the same company, his employment is suddenly terminated. There is no warnings due to his poor performance this last quarter. Okay, he wasn't given the chance to obviously change anything to the way he's working. His employer denies any severance payment as the employees arguing that the termination is for cause John launches an action against the former employee. Okay, those are very common, right, employers will decide that the termination is for cause and not to pay any severance. This will pretty much in any situation trigger any PL claim. Okay, so because they don't even give the statutory, the statutory payments, discrimination. Okay, so after starting new employment last month, Amy finds out she's expecting her first child, she immediately informs her employer of the wonderful news. A few weeks later, her employment is terminated for poor performance at work. She then brings an action to the Human Rights Tribunal alleging that her employment was terminated due to her practice. Okay. So that also it's a type of claim that I've seen over my career, unfortunately, we can go to the next one. So the other one interview process, right? Not only employees could bring an action against us for Employment Practices Liability. So in this case, Jonathan is interviewed by company ABC, newly created position, and he believes he has all the required skills for the job. He finds out a month later that he didn't get the job and the successful applicant has less much qualifications than he does. He files a lawsuit against the company alleging that he wasn't the successful candidate due to his ethnicity, ethnicity, right? So it could be necessarily it could be sexual orientation, there's different types of discrimination that could be alleged, okay, in the interview process. So obviously, another one to think of. So even if your current employees, a company doesn't think that there's a chance that they will ever get sued for employment practices, it could come from a candidate. Okay, so the seventh constructive dismissal. So there's different types. This one could, yeah, it could be seen as a constructive dismissal. So Emily's working for company ABC. For the last couple of weeks, she noticed that her employer has been treating her differently. She has been kept away from participating in important projects. Other colleagues are chosen to participate to corporate events, she was always going and her manager started micromanaging or work. She suffers from all these changes and decides to leave the company. She initiates a constructive dismissal action against her employer a month later. And unfortunately, this is a type of claim I've seen in the past. IT companies tend to try to do this to avoid paying the severance, they basically push the employee out of the company by taking these steps, which is not very nice, obviously. Okay. The eighth claim scenario sexual harassment. Okay, so if a female employee of a restaurant keeps getting inappropriate, sexual comments towards her from her boss, she informs HR but nothing is being done to stop the behavior. The employee initiates a lawsuit against her employee. And we've seen this type of scenario is happening more and more with the different cultural changes that we've seen, obviously in the last few years. Okay. The ninth one third party PL Okay, so Edward touched up a little bit on this earlier, a male restaurant employee makes inappropriate advances to a female client. Okay, while taking her order, the client firmly indicates her refusal, but he continues his behavior. The client makes a complaint to the manager but no action is made. It's taken. The client initiates an action against the employee so as you can see clients will also bring in EPL actions for third party PA. Okay, and the last one that we have sexual harassment So given the latest. So that's the last example. That's a severance claim. So given the last technological developments, and this, you know, it will happen more and more. Okay with the development of AI lately, the company decides they no longer need the Mark. Mark worked there for 15 years, Mark is informed that his employment is terminated and they offer him a two week pay, obviously, two weeks of severance for 15 years doesn't make any sense. Mark consults with a lawyer. Okay, because by doing so you push it to the lawyer, right? Mark consults with the lawyer and initiates a lawsuit against his former employer for the lack of appropriate severance pay. Okay? So offering severance doesn't mean we're not going to get sued. It's still possible that the employees unhappy with with the severance pay. Okay, so those were the claims examples. Very interesting ones. And obviously, if you're a broker, you can use these examples with your clients, like I said, the beginning right to, to show them why they need EPL insurance, because I know I've been to Vancouver a couple of weeks ago, I was in Quebec City last week, and a lot of brokers mentioned was that clients don't feel the need to buy directors and officers slash Employment Practices Liability, because they don't see what could happen. So obviously, to these examples can be can be used to convince clients to buy the coverage. Okay, so what happens if we don't buy Employment Practices Liability? Okay, so obviously, the company can suffer financial loss. 

Andre Linsky [00:36:48] Because they're gonna have to pay possibly a larger severance, they may have to pay high defense costs to defend themselves. So obviously, they're exposed there, there is a big reputational loss. And this is new with social media and internet. But today, I don't know if it happened to any of you. But I've seen in the past someone on my Facebook page, go online and complain about how their employer did something for them right around them, how they got terminated. So obviously, there is a reputational exposure. Now you also have these different how it's called Glassdoor I believe the name is pages were unhappy employees will go by give you a bad rating. And obviously, when you're looking to hire talent that you're very interested in, especially in this difficult employment market. If you have a bad rating on one of these websites, it could affect it could affect your chances of getting the right candidate, right the candidate that every employer wants, and obviously morale and productivity. The one we have difficult employment practices, or difficult situations within companies, the morale and productivity are affected, as well. So the Employment Practices Liability on the writing what we need, it's pretty simple. We need an application with all the controls answered. Normally, the application will have the employee count, it will show you where they're located. Right. Because more employees, there is more chances they are they going to bring an action against us. Right. There's also questions, you know, are you planning a layoff because if you're planning a layoff, your risk is higher. US employees, US employees are important because the cost of litigation in the US is much, much higher. than in Canada, there's different laws in the US that make employers more liable towards employees than in Canada, for example. So California, which is another state that we keep a close eye on, when a client has California employees, courts are very generous towards these employees. So obviously, for insurers, especially out of Canada, it's more difficult to underwrite and obviously financial statements for the same reason. As we look at it for crime companies who are not doing well financially will tend to cut corners in terms of controls within the company and then maybe cut corners when it comes to employee terminations. Okay, so another poll question for you. What do you think is the average Jury Award for an employment related case? Okay, so it should pop up again. 

Andre Linsky [00:40:17] So the poll should be up. 

Andre Linsky [00:40:49] We do see a few questions by the way in the chat, we will answer them during the q&a session at the end. So just a few more seconds for the poll. 

Andre Linsky [00:41:13] And yeah, for questions, try to use the q&a box if possible. As in the chat, there is a lot of messages too, sometimes we may miss them. So we have the poll results here. So we have 34%. Who said $156,[000 11% said 1,[000,055% said 217,[000. Under right, this 55% It is $217,[000. The average settlement as you can see, it's a lot of money right? To pay if you didn't buy the coverage. Again, EPL depending on what type of company it is, it could be frequency issue, it could be severity issue in some for some classes. But at the end of the day, these litigations can be very expensive. And Eduard will actually discuss a little bit about the trends to finish the presentation. So birthday. 

Eduard Lecker [00:42:20] I'll take over. Yeah, perfect that Yeah, to just echo and response. So this is the last part. So we're gonna be answering questions after if you can just put the questions in q&a, I saw a few very good questions in the chat. But I didn't see them in the q&a section. So I just want to I want to answer them, but we'll do it at the end. So what can your clients or any employers really do what loss controls can have in place to avoid a claim, I mean, it's obviously best to avoid a claim, then, you know, having coverage for a claim because it's still time consuming. It's going to make insurance getting insurance harder later with claims history. So what we always suggest is an employee handbook that's distributed to all employees that make sure they read it, sign it a test, do it once a year, just to make sure you have a record of it. Make sure that the employment handbook is written by a professional, human resource consultant, employment lawyer, people that know what they're doing in this field and know what potentially can come up. It's going to help avoid any confusion with employees about what's expected of them and from you what you expect from your employees. Right, their senior management, human resource service needs to participate in all complaint processes and employee terminations. As you saw from the claims examples, a lot of it is what we brought to HR and they did nothing spoke to their manager, they didn't do anything. That's really a big issue. regular employee reviews and checkpoints throughout the year. So again, just make sure the employees know what's expected of them. And if they are issues or poor performance, at least discuss it, and you document that that's very important. All right. As I said, document all your actions, because if, you know, if you come to a judge, or arbitrator or mediator or anything like that, they're gonna ask you, well, what's your proof that you've told the employee to do this, and your memory is not always the best, at least you can say we've talked about it, they've signed it, there's documentation of everything we've done, accommodate and protect employees. So I mean, more recently, let's say with pandemic related to, let's say fields, you'll need to provide personal protective equipment. For persons with disability you need to provide proper access and things like that. Use employment lawyer when you do have a termination, of course, any professional HR consultant or an employment lawyer because you know, they can give you some good advice that will save you money. In the long run. Have the employee sign a severance discharge letter, so of course, signatures speak louder than words in our legal society. And all the regulations in each province of course, they differ and not just provinces, but also states. Of course, as we mentioned, California is highly litigious so if you're gonna hire somebody, they're not what you should do there. And maybe you should get A few professionals because one professionals like I know everything about every state in every province. So maybe somebody that has more of a focus in California, somebody that's more focused on Canada, Ontario, Manitoba, wherever it is. So some trends that we can discuss quickly here. I know we're kind of cutting into our question and answer time. But I'll try to be swift here. So increased focus on diversity, equity and inclusion, environmental social governance initiatives. So where maybe 20 years ago, this would have not been as important to people, environmental diversity, now it's very much at the forefront of a lot of, you know, the new workforce, the millennials, Gen z's, that's definitely a very important for them. And, you know, when they are even being looking for a place to work at, they would take that into consideration. So while they're employee that of course, there'll be looking into what initiatives Do you have, how do you treat all those issues, higher wage earners bring forth litigation. So it used to be historically that the lower wage earners who are usually more subject to layoffs will bring all the BPL claims for that. But now we're seeing the trend that actually higher wage earners are bringing forth more claims. For whichever reasons there may be inflation, as we discussed earlier, again, lawyers, they already charged a lot. And their prices are only going up. I'm sorry, to any lawyers in the room, I apologize right away. Retaliation claims are on the rise. Again, it's hard to prove. But a lot of people feel like they've you know, the boss is kind of doing something against them, the employer has something against them. So they're retaliating for potentially doing something. Sexual harassment claims on the rise since me too, of course, that brought to the forefront again, just similarly similar to diversity and equity. Whereas maybe 20 years ago, people would have been less likely to come forward with allegations like that, of course, right now, they're more likely to come forward with allegations like that rise of mergers and acquisitions activity. So of course, when the company is merges or acquires what usually happens after is layoffs, because you don't need two employees doing the same job, leading to claims there. And also a different company culture. The employee who worked for the company may not like the new culture can also create a bit of an issue there. Again, potential dismissals, potential claims, which is what we've been seeing here. Work From Home, as you can see, I'm here now and a lot of you are most likely. And back to the office policies, we're seeing not general rise here, because some employees were hired during COVID, where maybe their contract said, you can work remotely and some were hired before COVID and says, You are expected five days at the office. We're kind of back to normal. Now, what's going on? Now? What's the who's right, who's wrong here? If an employee does not want to go back into the office for whichever reason? What can the employer do? So we're seeing things like that pandemic kind of touches upon the back to work, but also really, pandemic related the fields like nurses, retirement homes, things like that. Their expectations are a lot higher since the pandemic, I mean, they worked, they would expect the PPE as I mentioned, and other things to ensure their own safety. And if an employee doesn't provide that you're open to litigation, worker classification disputes. So we've talked about it earlier saying that usually independent contractors are not counted as employees. But there's a lot of, I would say, common love, lawsuits or statutory things that were happening, that kind of see independent contractors more as employees, especially if you have your company that hires independent contractor to say, I don't have employees, I don't have to pay and benefits, I don't have to pay HST on it. However, this independent contractor you're hired, you're the only contract, they come to your office every day, they're going on to five, when the front of the judge generally to take a look at and say, well, it's only an independent contractor by name, because they still just talk to you. You're the only person who employs them. You're the only person who pays them. And they go to your office nine to five every day and don't do anything else. So how are they not an employee. So that sort of gray area also leads to a lot of litigation. And some industries, as again mentioned, are more susceptible to pandemics as we saw with hotels, restaurants, once they've closed everything down. Of course, you don't need employees anymore. layoffs, things of that nature kind of start happening. And now the employees are more aware of these things where they have not been in the past. So again, all of that opens you up to more litigation, so something to consider as potential employers and employees as well. So we've reached the fun part, the questions. So I hope we have a few questions for us here. 

Paul Lucas [00:49:42] Yeah, I will. I will rejoin you gentlemen, thank you very much for a fascinating talk. And of course, while you've been presenting, we're putting together some of your questions entered via the q&a box. There is still time to ask questions. We're on about 10 minutes we do have a hard stop then. By all means, get them in now we will endeavor to do to pose as many as possible during the time remaining. So let's dive in. First of all, the most common question that we've been asked is Will the slides be shared after so gents, are you able to confirm that one? The nodding of the head suggests yes. So I think that's good news for everybody. Okay, so I'll start with this one, which is from a Mr. anonymous, insurers often don't inform the broker of an EPL situation right away. If the insurer agrees, the lawyer that the client engaged was experienced, not conflicted, and have accepted acceptable rates, should the cost incurred prior to notice erode the deductible? Quite a complex one that one? I'll repeat it if you need be. What are your thoughts gents, anybody can dive in? 

Eduard Lecker [00:50:45] I think I think I got the gist of the question. So essentially, if the insured doesn't let the broker know ahead of time, if I understand it correctly, you can confirm in the chat. So the insurance saying well, there isn't a claim, but they had a knowledge of the claim. Until the broker the broker, of course, in good faith brings it to us the insurer, but we find out that there is an allegation or potential incident. That's the question, as I understood it, a lot of the policies will have a prior knowledge sort of a exclusions. So if there is a prior knowledge by the insured beforehand, the claim would actually end up being denied. Again, this is something that we need to go we act in good faith from the insured as the broker does. So we would need to see it, then we have the policy wordings to kind of protect it in case there is foul play, I would say. And should they decide not to let us know about the potential incidents? And it's a question on the application as well. I should mention that. 

Paul Lucas [00:51:39] Okay. We have a question more, I think just a more of a search for confirmation, perhaps from Beverly Fox. She's saying similar loss control measures as for abuse liability, yes. Or no? 

Andre Linsky [00:51:54] Yeah, afterwards, maybe? Yeah. You didn't more GL than I did. 

Eduard Lecker [00:52:00]Yeah, I mean, I guess it would be similar abuse is obviously more focused on the abuse. And a lot of times involves things with the younger children and adults and persons with disability where I guess more the last controls here and more towards your employees, which would usually be adult age. And it's probably more broad, whereas abuse is more specific to your emotional, physical, psychological abuse, where here, you know, retaliation for that's not involving, technically in abuse, or physical or emotional is just sort of stopping you from promoting, it's a different thing. It's also for abuse, loss controls, you won't really have employment, you know, reviews once a year, for the people that come there. So it's a little bit different. I understand the similarities. I mean, if you have good ideas about what to do in abuse situations, a lot of it could be taking into these protocols for employees. But of course, they're a little a little different. I wouldn't say they're exactly the same, but that's a very good question. 

Paul Lucas [00:53:01] Okay, I'm gonna ask one that's actually been put into the chat box. I do encourage everybody, please do enter them into the q&a box. But this one's just coming from Anna Veroni. She says, How long does the employer have to report the claim to the insurance company? 

Andre Linsky [00:53:16] Yeah, so that would be it depends on what the wording says. But normally, it says as soon as practicable. So as soon as they know about it, they know that even if they know there's a potential litigation, so example, they didn't know I terminate someone tomorrow morning, and I don't give them any severance payment. Is that enough? Potentially, right. I know that they may come back against me, but obviously, as soon as they receive the lawsuit, at least they have to, I have to inform the insurer, depending on what the wording says, depending of how insurers react, how they applied the policy, but a late notice could be used against an insurer to deny a claim or to not to at least reduce the deputies. So depending of the legislations obviously. 

Paul Lucas [00:54:08] Okay. For everybody watching, I'm closing the chat box now. So focus in on the q&a box, please. Next question is most civil cases in Canada are tried by judges without a jury. So it's the 217k figure that you had earlier? Is that from the US claimed experience? 

Eduard Lecker [00:54:26] Yes, so that's a US data. Unfortunately, in Canada, we don't have that much. I guess data about this, because the companies don't are not obligated to share this technically, like directly to say this, how much was paid for everything. So we do turn to the US a lot because they have forgot their department that every claim any employment practices claim is filed there. So they have a lot better data because a lot of times it's a federal situation where here employment laws more provincial as well. So that 217 is a good point. There's actually a US figure, so the dollar amount is higher because US Dollars are higher than ours. So 

Paul Lucas [00:55:02] All right, I appreciate how quickly you guys are racing through these. Next one is from Earl Kowski. He says how often per year should the handbook be reviewed? 

Andre Linsky [00:55:15] Again, I think they should. This new, like there needs to be an HR consultant who gives this advice or at least maybe an employment lawyer. But I would say it doesn't have to be reviewed several times in a year. But at least like if we see on an application example, that it's been 10 years it hasn't been reviewed, obviously wouldn't like it. If it's in the last two, three years. I think it's acceptable. So it really depends. But it's not on a monthly basis or quarterly basis. It's more in terms of yours. 

Paul Lucas [00:55:50] Okay, this one comes from an anonymous attendee who would purchase a standalone EPL policy and why not get a full DNO policy? 

Andre Linsky [00:56:00] So good question. Obviously. I've seen I would say I've seen it come from hotels. I've seen submissions with EPL only for hotels. I don't know why they didn't want to buy DNO, but that's quite, quite common. Obviously, they have higher exposures than other industries. So maybe they're only thinking about that part of thing but as an insurer, we like to actually have DNO because, you know, private DNO most of the claims will come from the Employment Practices Liability side of things. So at least we can collect some premium on the DNO side to compensate for the claims. So very good question. 

Paul Lucas [00:56:45] Okay, I will probably, by the way, everybody, probably no time to sort of get any further q&a questions in. I will ask a few more that are already entered though. So next one comes in from Saqib Mahmood he says just to confirm you said even if someone is onboard as an independent and they are perhaps rude or any other scenario, the company they work for will be on the hook? 

Eduard Lecker [00:57:09] Was a potentially there could be bring an EPL claim to right so a third party if I understand the question effected by your employee could bring forth suits which will be covered on our third party EPL claim. If that's okay, as long as you're eligible, of course subject to the policy wording would flitters 

Paul Lucas [00:57:32] Alright, next one from Rory O'Donoghue. He says would having a policy encourage employers to offer less severance, so insurance would pay? 

Andre Linsky [00:57:43] Well technically policies don't cover the severance that you're supposed to offer? And this is why it's excluded. Right? Otherwise, employers would simply sell the claim to the insurance company they would they would terminate every single person without severance and say the insurance companies are going to be for it. But usually the severance that should have been first offered is excluded. 

Paul Lucas [00:58:08]  

Okay, I'm gonna try and squeeze in two more, we got just over a minute left. So next one from Sharon Macklin. She says what is the minimum policy premium for sovereign? 

Andre Linsky [00:58:19] So it's 3500, 3500. And that includes DNO EPL fiduciary. So the whole line. 

Paul Lucas [00:58:30] This one, this one's probably a big question. For the brief time that we have left for assess for insurance premium financing. Please discuss provision that makes a DNO policy cancelable are scenarios where premiums become fully earned. That comes in from Richard McGee. 

Andre Linsky [00:58:48] Well, maybe yeah, we only have a minute. So that may be but I would. So it really depends, you know, policies have different provisions. One thing I would say for premium financing and DNO policies is I really don't recommend it simply because the policy covers bankruptcy, right, it covers the liability of your directors in case of bankruptcy. So if your financing company basically can cancel the policy when you went bankrupt, when you needed the most, it's the worst time to to have it on premium financing. So I would I would just say premium financing shouldn't be done on DNO policies in general. I know I didn't answer the whole question. 

Eduard Lecker [00:59:34] Yeah, it also depends, right? Because some carriers will have a minimum retained and all of that stuff. So it's a very broad question, but I guess Yeah, with the I guess, a few seconds left, it's going to be difficult to answer. But if you want to send us a message, we can try to answer it in more detail. Whoever asked the question, yeah. 

Paul Lucas [00:59:51] Yeah, well, on that note, I think it is, of course, time to wrap up, but huge thanks. Once again. It's been a fascinating webinar. And thank you to everybody for joining us. discussion. Thank you most of all, of course, to Andre and Eduard, for all of the insights. We hope we've addressed a lot of your questions. But remember, you can always check out the additional resources and reach out to Sovereign Insurance to find out more on behalf of insurance, business and Sovereign Insurance. It's goodbye from me, Paul Lucas. Take care, and we'll see you next time. Have a great day everybody. Thank you