Rates, Retentions Up in Employment Practices Liability Market: Report

In its annual survey of the employment practices liability insurance (EPLI) market, The Betterley Report found that rates are continuing their trend upward, in part because commercial rates in general are on the rise but more specifically thanks to COVID-19 and ongoing #MeToo concerns.

The report is published by Richard Betterley, president of Betterley Risk Consultants Inc.

“Compared to 2019, we see the rate increases accelerating and much more widespread retention increases,” Betterley said.

Of the 20 EPLI carriers responding to the survey, 15 reported rate increases for the line ranging from 5% to 35%. The other five insurers surveyed for the report did not report on their rate trends.

Betterley said that increases are sometimes across the board but increasingly they are a function of the insured’s characteristics. “Increases may be more likely in certain jurisdictions, industry classes, size, and mass claims exposures,” he said in the report. “This, of course, makes sense, as these characteristics already affect their rates and retentions. What we are seeing more recently is that these characteristics are playing a bigger role for insureds that share one or more of these characteristics.”

EPLI has been a mature market for many years, with growth averaging 10.2% over the last four years in the United States, according to the report.

The volume of business (gross written premium) for 2019 was $2.9 billion by MarketStance’s most recent estimates that cite steady employment growth in the United States, modest increases in take-up rates, and recent upward rate pressure for the growth.

MarketStance foresees annual premium rising above $3.1 billion due to firm rate trends and increased middle-market penetration, with the majority of premium growth occurring in 2021 as COVID-19-related economic headwinds abate.

One disappointing trend, according to Betterley, is EPLI insurers seem less willing, or able, to offer robust preventative value-added services. Perhaps a bit healthier profit margin might make it easier to keep providing them, he said.

He said preventative services have moved more to a self-service format, rather than with actual risk management vendors. “I’m saddened by that because self-service isn’t always effective,” he said. “There’s nothing wrong with online training, as long as it’s done right. As opposed to here’s some stuff you can read it if you want.”

The “Employment Practices Liability Insurance Market Survey” by The Betterley Report was first published in the mid-1990s.