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Survey Report

Insurance Marketplace Realities 2025 – Employment practices liability

October 4, 2024

The EPL market continues to be competitive with markets eager to write new business and maintain their renewals.
Employee Experience|Financial, Executive and Professional Risks (FINEX)
N/A
Rate predictions: Employment practices liability (EPL)
Trend Range
Domestic markets -5% to +5%
Bermuda markets Neutral increase (Arrows pointing top) Flat to +5%

Competition is still strong and keeping the EPL market stable

  • Rates: The extent of rate increases will be determined by many factors, particularly industry, loss history and location of employees. Assuming no change in risk profile and no losses, rate increases are more likely to be close to or at flat. California continues to be the most problematic jurisdiction for insurers. New Jersey, New York and Florida remain challenging as well.
  • Retentions: While many retentions have been stabilized, loss history and location of employees may still lead to increases in retentions. Markets continue to seek separate retentions for class actions, especially in California. Moreover, some domestic markets have also sought separate retentions for states (e.g., California, Illinois, New York and New Jersey) and sometimes even county-specific retentions. In many instances, there are separate (higher) retentions for highly compensated employees in certain industries.
  • Limits: Both Bermuda and the domestic markets are managing their capacity on any given risk. Domestically, markets are providing between $5 million and $10 million. In Bermuda, markets are cutting back to $15 million ($10 million in some instances).
  • Excess: EPL markets are generally following primary increases in addition to looking to adjust increased limit factors (ILFs) for certain risks.
  • Capacity: Overall capacity in the EPL market is stable. Additional capacity (Relm) has recently been added in the Bermuda market.
  • Underwriting: Expect some questions regarding ESG (specifically, diversity, equity and inclusion initiatives), pay equity audits, adherence to new pay transparency laws and labor shortages. Some markets may ask about the use of AI in employment decisions. Many markets have separate questionnaires for biometrics, sexual harassment and pay equity.
  • Coverage: Coverage remains intact; markets continue to add privacy/biometrics exclusions, and in some cases, broaden existing exclusions. Small sublimits for defense cost coverage are available from certain insurers upon satisfactory completion of the previously mentioned biometric questionnaires.

Focus continues on use of artificial intelligence (AI) in employment

  • Earlier this year, Colorado passed a law aimed at regulating the use of AI systems and imposing certain obligations on employers. This law is a first of its kind and is set to go into effect in February 2026.
  • Legislators in several other states have proposed bills aimed at regulating the use of AI systems to make, or to assist an employer in making, employment decisions. More specifically, these bills seek to mitigate the risk of algorithmic discrimination arising from an employer’s use of an AI system.
  • In addition to state legislators, the EEOC included guidance on the use of AI in its updated Strategic Enforcement Plan.
    • The EEOC guidance is “limited to the assessment of whether an employer’s ‘selection procedures’ — the procedures it uses to make employment decisions, such as hiring, promotion, and firing, have a disproportionately large negative effect on a basis that is prohibited by Title VII.” Essentially, it is focused on disparate impact claims.

DEI initiatives could lead to reverse discrimination claims

  • The Harvard and UNC Supreme Court decisions have cast a watchful eye on diversity, equity and inclusion (DEI) initiatives within organizations.
  • While the decision was specifically limited to affirmative action in admissions processes in higher education and the legality of same under Title VI and the Fourteenth Amendment, the decision has led to more scrutiny of corporate DEI programs and their hiring processes, as well as reverse discrimination claims.
  • Companies should continuously examine their DEI policies and initiatives to ensure they do not inadvertently lead to reverse discrimination claims.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

Contact

National Employment Practices Liability Product Leader, FINEX North America

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