LicataRisk Provides a New Creative Service for Employment Lawsuit Defense
Another case of disrupting the insurance market —
Employees do sometimes sue their employers over some real or fabricated offense. Employers carry Employment Practices Liability (EPL) Insurance which, if structured correctly, will cover the claim.
That is not the end of the story, however. The EPL insurance market is broken from the standpoint of the honest employer who wants his or her claim defended and honor protected. Faced with the submitted claim, insurers will assign an internal adjuster who will engage an outside law firm to contact the employee’s attorney, and begin settlement negotiations.
Insurer Controls the Case
Say, in your case as the employer you know the claim is not legitimate and you want your insurer to mount a vigorous defense. How do you think your request will be responded to? Your insurer will advise you that they have the right to settle the claim at their option, and that you have a duty to cooperate under the terms of the policy.
Not Motivated to Help
Do you think the insurer will be motivated by the fact that your honor is at stake, and that you never discriminate against any group or type of person, and that a settlement will look like an admission of guilt. Not likely. Nor will they be swayed by the prospect of a settlement generating more, similar claims with a resulting skyrocketing of your Employment Practices Liability premiums. More claims against your company, when they come, will be covered by the next insurer in line, as your present insurer bails ship.
This endless cycle of settlements, more claims, and constant market-wide premium increases is what we are all dealing with in the current EPL insurance market. Since all insurers act in the same way, like a cartel, encouraging more claims, they are rewarded as an industry by the self-fulfilling upward migration of gross, aggregate premiums going into their cash registers.
The increasing frequency of claims hurts each individual employer, yet is not in any way a negative to the insurance market.
A New Model
We at Licata Risk Advisors are offering a new model, disrupting the status quo. We will negotiate on your behalf a state of the art EPL insurance policy with one major difference: the deductible. The deductible will be higher than normal, resulting in a savings in the premium. Claims within the deductible will be defended by a law firm under contract with our company, with the premium savings going toward the legal fees involved in the defense. We will agree to defend every claim that is defensible and winnable.
Bottom line: your company is protected and your employees know you treat all employees fairly and will not tolerate bogus claims to the contrary. Aggressively defending your company sends the right message, and is the best business practice at the same time.
Please call me, Frank Licata, to learn more about how this will work. 617-718-5901, or email me at [email protected]
Jan 04, 2019