EPL Insurance Pricing Trends 2024

EPL Insurance Market Update

Today’s insurance trends are directly related to what has happened in the past, combined with emerging factors like new technologies, economic shifts, and sociopolitical events that penetrate workplace dynamics.

EPL Insurance Pricing Trends 2023

Let’s touch on last year’s trends to provide some perspective.

To start, rates were able to stabilize last year. After a period of increases, EPL insurance rates stabilized in 2023 as businesses bounced back from the steep fundraising decline in 2022. This stability points to more steady jobs, leading to fewer EPL claims. As a result, businesses experienced flat or minimal rate increases.

New entrants into various markets, including EPL, were also a major factor in last year’s prices. The increased competition among insurers contributed to the stabilization of rates because, as always, competition is a sign of a healthy industry, encouraging more choices for insureds to pick the best coverage for their companies.

Moreover, nothing keeps prices flat or lower quite like taking safety measures against potential threats at work. Insurers continued to emphasize strong risk management practices, such as training and documentation, as a factor in determining premiums.

Economic conditions, such as layoffs and economic downturns, can also influence claim activity and, consequently, insurance rates.

2024 EPL Market Factors

Now, let’s look at three factors that impacted EPL prices the most this year.

Changes in employment laws and regulations, particularly in areas like discrimination, harassment, and wrongful termination, can impact the risk profile of businesses and their insurance needs. The recently introduced Employment Rights Bill in the UK is a prime example of legislation that can shake up EPL needs as businesses adjust.

Social and political movements also influence employee expectations and legal standards, leading to increased claims activity in certain areas. For example, higher DEI awareness, and how companies approach this subject, can either increase or reduce EPL claims.

Furthermore, emerging tech like AI is influencing insurance needs as bias concerns rise — especially on the recruitment front. This year, around 87% of companies are using this technology for recruitment, which calls for more risk management strategies geared toward safely adopting AI. Any mishaps in its functionality could further trigger EPL claims.

As of Q3 2024, 77% of EPL renewal pricing remained flat (a 4% increase YoY), and 1 to 9-point increases made up 16% of all renewals (a 1% decrease YoY). Significant increases (over 20 points) remained at 5% (flat YoY). See the numbers reflected below in the Monthly Renewal Pricing Analysis graph from CRC.

Source: EPL REDY Index Q3 2024

How EPL Insurance Benefits All-Sized Companies

Now more than ever, EPL insurance has become a pressing need for companies big and small. While the US Equal Employment Opportunity Commission (EEOC) filed 24% fewer employment litigation cases this year, with most cases citing the Americans with Disabilities Act (ADA), employers can never be too careful.

In many cases, EPL insurance helps companies handle the legal fees stemming from an employment lawsuit. According to a law firm, these can cost $75,000 when reaching a settlement and skyrocket to $125,000 pre-trial if it goes to court. Whether an employer is at fault or not, these unforeseen expenses will surely throw a spanner in the works and undermine business success.

To understand the risks of employment lawsuits, here are some of the most common ones covered by EPL insurance:

• Discrimination: Employees who feel at a disadvantage at work due to their race, age, and gender, often file discrimination lawsuits. In the 2024 Fiscal Year, most discrimination cases were filed under the Age Discrimination in Employment Act (ADEA).

• Harassment: When employees receive unwelcome treatment due to their age, race (over 40), gender, national origin, and disability, among other traits, harassment lawsuits ensue. Sexual harassment has been a prevalent issue in recent times — this year, the EEOC filed five sexual harassment cases on behalf of teenage workers.

• Failure to hire or promote: The ADA takes center stage in these claims when employees or potential ones feel they weren’t considered to be hired or promoted due to a protected condition.

• Retaliation: These cases are possible results of employees voicing discrimination concerns and receiving retaliation from their employer, such as a cut in hours or pay.

• Wrongful termination: This case occurs when employees feel they were terminated unlawfully under their contract. Although employees might feel this way about being terminated regardless, these lawsuits take clear legal specifications from an employment contract to be valid.

Learning about the most standard and covered EPL claims helps paint the picture of how often these incidents can occur despite companies taking all the right steps to keep their workplace safe. When legal fees alone can undermine an organization’s future, it’s best to take precautions before it’s too late.

EPL Insurance Claim Examples

Let’s get more granular and examine potential cases where EPLI can cover employers.

Wage and Hour Claims

Misclassification of employees as exempt or non-exempt, failure to pay overtime, and other wage and hour violations continue to be a major source of litigation. In such cases, an employee claims their employer didn’t pay their overtime hours and sues them.

The Fair Labor Standards Act (FLSA) and various state wage and hour laws provide employees with significant rights, and employers must ensure they comply with these regulations. The company’s EPL coverage will help offset legal fees stemming from this case.

Discrimination and Harassment Claims

These remain one of the most common types of EPL claims. Recent years have seen increased scrutiny of workplace culture and a heightened awareness of issues like sexual harassment, racial discrimination, and age discrimination. This year, the EEOC reported they received over 500,000 calls and 81,055 new charges regarding discrimination, even though 45% of workers are unaware of their company’s anti-discrimination policies.

High-profile cases involving tech companies — such as Carta’s sexual harassment case in 2023 — and other large organizations have underscored the significant costs and reputational damage that can result from such claims.

Retaliation Claims

The EEOC also defines retaliation as “making it personal.” A common case can be an employee voicing discrimination concerns to their manager or HR department due to gender, race, or age. The employer might take some necessary steps to mitigate their concerns, but the employee notices their pay has been cut or is being asked to work fewer hours. These are clear grounds for a retaliation case if these measures aren’t stated in the employee’s contract of employment.

Employees who report discrimination, harassment, or other workplace misconduct are protected from retaliation under federal and state laws.

Trending EPL Insurance Issues

Insurance trends are highly influenced by external factors, which are ever-changing. What issues have shaped this year’s EPL pricing? Let’s take a look.

Factors Impacting EPL Pricing in 2024

One of the biggest factors that was forecast to influence 2024 EPL pricing in 2024 was tech layoffs. While these started in 2022 and went on through 2023, this year showed no signs of stopping for tech companies looking for more stability as investors remained cautious. TechCrunch reports that there were 130,000 job cuts across 457 companies, including giants like Tesla, Amazon, and TikTok. January saw the most layoffs with a total of 34,107 followed by August with 26,024 employees let go.

The second factor was a direct consequence of layoffs: new entrants. As most affected workers were educated and experienced, they were able to quickly get back on their feet with new job posts.

These trends, coupled with an increase in insurance carriers, helped the EPL market stay stable and even lower prices in some cases.

2025 EPL Insurance Pricing Outlook

So, what should we expect for next year? For the past year — spanning Q3 2023 until Q3 2024 — numbers have represented trends that could potentially remain going into 2025.

For instance, CRC Group’s REDY Index for Q3 2024 demonstrates the industry has stayed flat for a year. At the moment, there aren’t major indicators to expect changes next year, but any changes in the tech industry and other sectors could shake this up.

Most importantly, high-risk industries like healthcare, auto dealers, restaurants, staffing agencies, and law might face the most volatility due to their workplace dynamics. The hospitality industry often grapples with overtime pay and other wage-related issues, while healthcare faces wrongful termination and discrimination claims more frequently.

S&P Global is also forecasting a stronger tech IPO market next year, hoping it will return to pre-pandemic levels. The market waned this year as a result of weaker funding and inflated valuations, which experts say might lead to exits igniting their engines as the industry stabilizes. IPOs are a good sign of job growth and less downsizing, leading to favorable conditions in the EPL space.

The world also experienced several presidential elections in major countries, which undoubtedly creates shifts in every direction as new leaders step into office. The political and social climate, in addition to the usual varying rates according to location and high-risk industry, can always bring unpredictable outcomes.

Employment practices liability insurance has always been characterized by keeping companies up and running during tough periods, which are often underlined by layoffs and other downsizing decisions. Insurance can help promising businesses weather these storms, ensuring the well-being of the company, executives, and employees alike. As the tech market begins to stabilize into a healthier shape, EPL insurance remains a key tool to ensuring safe and sustainable growth.

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