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Blended coverage holds down costs for EPL, GL


Harrah's Entertainment Inc. reduces its cost for excess employment practices liability insurance by blending the coverage with its excess general liability protection.

Some employers purchase directors and officers liability policies with an EPLI endorsement. However, it is unusual to blend EPLI and general liability coverage, said Bradley Darr, senior client executive for Beecher Carlson in Brentwood, Tenn., who places casualty coverage for Harrah's.

Harrah's maintains a large self-insured retention for EPLI claims with separate per-occurrence and aggregate limits.

Above Harrah's retention, National Union Fire Insurance Co. of Pittsburgh, Pa., a New York-based unit of American International Group Inc., provides the employer with a layer of EPLI coverage, said Mr. Darr.

The EPLI limits provided by National Union are equal to general liability limits sold to Harrah's by Bermuda-based ACE Ltd., he said.

Lance J. Ewing, vp-risk management for Harrah's, declined to provide specific limit amounts.

But above the separate EPLI and GL towers sold to Harrah's by National Union and ACE, Cincinnati-based Great American Insurance Group and Bermuda-based Endurance Specialty Holdings Ltd. sell Harrah's the blended excess EPLI and GL coverage in a 50/50 quota-share arrangement between the two insurers.

Their contract language provides the EPLI coverage as an endorsement to their general liability policies, Mr. Darr said. Although the coverages are blended, the policies provide separate EPLI limits from the general liability component.

"This is the only program I have ever seen (with EPLI coverage) blended in with the casualty insurance," Mr. Darr said. "Most casualty carriers would not structure this program."

But the insurers agreed to the arrangement because of the large layers that Harrah's would have to exhaust before insurers became liable for an EPLI loss, Mr. Darr said. It would take an award stemming from a large class action lawsuit to pierce the layers.

By integrating Harrah's EPLI into its excess casualty program, instead of purchasing it on a stand-alone basis in the executive liability marketplace, Harrah's reduced its premium by about 50%, Mr. Darr said.