Employment law constitutes one of the fastest growing categories of civil litigation and has given rise to an increasing need for employment practice liability insurance, which transfers the risk of these losses to insurers.
Employment practice lawsuits can be expensive for carriers in this complicated line of business. From the insured's perspective, an EP loss is disruptive, leading to employee turnover and loss of productivity, and affecting goodwill. A best-case scenario arises for insurers and insureds when legal exposures are avoided or minimized, such as when the carrier provides policyholders with access to personnel management strategies at the start of the policy period.
The adjustment of EPL claims should be regarded as a comprehensive endeavor involving loss intervention and risk management activities. Opportunities for risk minimization may be realized at the claim-reporting stage, particularly if the incident has not yet matured into a lawsuit or administrative charge. Suppose that the insurer has been put on notice of a harassment complaint that has not been investigated by the insured. Risk minimization may be achieved when claim models direct insureds to initiate timely, appropriate remedial action in response to complaints, because the law requires covered employers to promptly redress harassment.
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