Employment practices liability (EPL) insurance could become increasingly popular in the UK as companies face up to the potential of litigation amid the #MeToo movement, according to Marsh.
Workplace issues have been firmly in the spotlight recently: #MeToo highlighted widespread sexual harassment and sexist behaviour at work, and gender pay gap reporting has heightened the awareness of equal pay issues. As a result, companies are facing increased reputational and employment risk, says Eleni Petros, employment practices liability insurance practice leader at Marsh.
These types of issues have traditionally been siloed and left for HR to deal with, but the #MeToo movement means it now extends beyond that realm, says Petros.
“#MeToo is more than just an employment risk for companies, it’s also a risk facing the boards. This is no longer just a HR issue… it’s one of the many risks that a company needs to consider,” she told Insurance Business. “In the same way that cyber risk isn’t just about the IT department, it’s about the board too, this is another example of that.”
In the US we are already seeing litigation emerge off the back of the movement, and there is no reason that the UK won’t follow suit, says Petros. But with a lower take-up of EPL this side of the pond, companies could face significant financial consequences.
“Compared to the US, proportionately very few companies here in the UK buy EPL. We are seeing more of an interest in that coverage from companies than we used to, and I think the reason for that is because defending these claims can be extremely costly for companies,” Petros said.
While the claims environment for EPL has been benign in recent years, that is slowly changing, according to Petros. As a result, underwriters are also beginning to place more scrutiny on companies looking to take out EPL cover, and will want to see that firms are fostering the right kind of culture.
“From talking to underwriters… I definitely think that when they are looking at EPL insurance, they will put more scrutiny on the kind of questions that they ask companies, and will place more emphasis on the training programs that are in place at these firms,” Petros said.
Increasingly, underwriters will want to see evidence of initiatives such as Diversity & Inclusion policies being in place, and unconscious bias training being provided to employees.
“The issue for companies is that if you have a situation where the culture isn’t right top-down, then the danger for boards and directors is the claims against them will be – you knew this conduct existed and you did nothing about it,” Petros said.
As workplace issues continue to dominate headlines, insurers and brokers may well see more enquiries about EPL from their clients, including those that have never held the cover before.
Petros added: “Companies that haven’t bought it before are more interested in learning about it, and some companies that have bought it at quite low limits are looking at increasing that.”
