2021 Insurance Fact Book

Employment Practices Liability Insurance

Following the flood of high-profile sexual harassment lawsuits since 2017 spurred by the #MeToo movement, there has been a dramatic increase in the purchase of employment practices liability insurance (EPLI). The coverage was developed in 1990, following the rise in employment-related lawsuits that emerged after the passage of the Americans with Disabilities Act of 1990 and the Civil Rights Act of 1991. The coverage protects businesses from the financial consequences of various types of employment lawsuits such as sexual harassment, job-related discrimination, hostile work environment, wrongful termination and retaliation. Other coverages include invasion of privacy, false imprisonment, breach of contract, emotional distress and wage law violations. Sexual harassment lawsuits filed with the U.S. Equal Employment Opportunity Commission (EEOC) alone rose by more than 12 percent from 2016 to 2017. In 2017, the EEOC recovered almost $70 million in victim restitution, 47 percent more than the $47.5 million it recovered in 2016. Median loss from sexual harassment case verdicts rose from about $136,800 in 2015 to about $221,000 in 2018, according to Advisen and Nationwide.

Employers currently are purchasing stand-alone EPLI policies, reversing the trend of including EPLI coverage with D&O insurance, according to the Risk and Insurance Management Society (RIMS). There are about 20 major carriers and about 20 smaller companies that offer the coverage. Insurance research firm found that U.S. companies spent an estimated $2.2 billion on EPLI coverage in 2016 and projected the market would grow to $2.7 billion in 2019. Demand is likely to continue. According to the 2018 Hiscox Workplace Harassment Study, which used data collected in June 2018, about one in three workers (35 percent) reported that they had been harassed at work. Among women, the figure is even higher, at 41 percent.

Results from the 570 respondents to the 2019 RIMS Benchmark Survey from the Risk and Insurance Management Society and Advisen (MarketStance latest data available) showed that the average insurance premium for EPLI rose 3 percent in 2018. Information technology companies were the most likely to purchase EPLI coverage, with 70 percent of companies saying they purchased the coverage, followed by consumer staples firms with 52 percent. Of consumer discretionary companies, 47 percent bought coverage, and banks and professional services rounded out the top five with 46 and 44 percent, respectively. American International Group was the leading writer, based on EPLI premiums written, with a 17.5 percent market share in 2018, followed by Tokio Marine Holdings Inc. with 15.4 percent. Markel Corp. ranked third with 11.2 percent, and Chubb Ltd. and Fairfax Financial Holdings Ltd. ranked fourth and fifth with 10.4 percent and 7.5 percent, respectively.

Trends In Employment Practices Liability, 2013-2019


Year Median (midpoint) award Probability range (1)
2013 $100,000 $15,707 - $251,623
2014 86,250 20,000 - 302,574
2015 83,000 17,839 - 347,498
2016 122,170 25,000 - 447,437
2017 126,000 25,000 - 550,000
2018 190,000 34,193 - 551,121
2019 209,191 58,083 - 636,500
Overall $120,000 $25,000 -$414,150

(1) The middle 50 percent of all awards arranged in ascending order in a sampling, 25 percent above and below the median award. The median represents the midpoint jury award. Half of the awards are above the median and half are below. This helps establish where awards tend to cluster.

Source: Reprinted with permission of Thomson Reuters, Employment Practice Liability: Jury Award Trends and Statistics, 2020 edition.

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Employment Practices Liability Verdicts, By Defendant Type, 2013-2019 (1)


(1) Based on plaintiff and defendant verdicts rendered.

Source: Reprinted with permission of Thomson Reuters, Employment Practice Liability: Jury Award Trends And Statistics, 2020 edition.

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