Intense competition for employment practices liability business
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Rates in the employment practices liability market continue to “drift up,” but there is resistance against that trend from competing insurers, says a report on the market.
“Incumbent insurers want (and often need) higher rates, but insurers that would like to steal customers away are willing to forgo an increase to gain a customer,” says the executive summary of the report, “Employment Practices Liability Insurance Market Survey 2016: Slight Rate increases for Renewing Insureds, but Competition for Conquest and New Accounts Remains.”
The report, which was issued by Sterling, Massachusetts-based Betterley Risk Consultants Inc. last week, is based on a survey of the products of 31 major EPLI markets.
“Although these increases are not dramatic, they do represent a departure from the flat rates in most other property and casualty lines,” says the report, which estimates there will be up to $2.2 billion in annual premiums in the market in 2016.
Total capacity is about $500 million using U.S., Bermuda and London sources, although there are reports of as much as $800 million, says the reports.
Claims frequency continues to be costly for underwriters, says the report.
“Insureds have had more covered claims than expected, combined with increasing defense costs,” says the report. “This has increasingly been met by some insurers with mandatory higher deductibles.”
The report says the two claims problem areas are those related to multiple plaintiffs, where brand name companies are targeted and coercive action is threatened unless the defendant settles quickly; and wage and hour claims.
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