risk report with Henriott Group, Inc.
December 2011
Workplace and Risk Management topics aimed at business owners, managers and other organizational leaders.
“We will open the book. Its pages are blank. We are going to put words on them ourselves. The book is called Opportunity and its first chapter is New Year’s Day. ~ Poet Edith Lovejoy Pierce
Management Malpractice Continued…..
Cyber Risk… What is it?
Henriott News & Updates
Discussing the 2nd leg of the Management Malpractice Stool….. Employment Practices Liability (EPL).
View a short video discussing a growing concern in all industries.
Check out our new blog series, C’Mon Man!
Employment
nd
The 2
Practices:
Leg of the Management Malpractice Stool
Just a quick survey before we dive in to this month’s topic. Have you ever hired anyone? Fired anyone? Had employee disagreements? Reorganized your company or had to make layoffs? For those of you who answered No to all these questions, congratulations and I’d like to know what you do for a living! For the other 100% of you, this month’s topic will be something you’re interested in. In our November Risk Report we covered the first leg of the Management Malpractice area – Directors and Officers Liability. In this edition of the Risk Report, we turn our attention to a risk inherent in every business that has employees…Employment Practices Liability (EPL). According to researchers, three out of five employers will be sued by a prospective, current or former employee while they are in business. While many suits are groundless, defending against them is costly and time-consuming. First, some interesting and somewhat frightening statistics from the Equal Employment Opportunity Commission (EEOC) from 2010: Approximately 100,000 individual charges of employment discrimination were filed in the US, with Retaliation charges surpassing Race charges for the first time in history; The EEOC collected more than $300 million from employers on behalf of employees in 2010 – the highest total ever and doesn’t include monetary benefits obtained through litigation; Approximately 40% of claims submitted to the EEOC result in a favorable outcome for the charging party…the other 60% can still sue the employer.
According to a recent CNA publication: 80% of those sued feel the suit is baseless and unfair; 41% of jury verdicts are against firms with 15-100 employees; Defense costs average over $300k and last over two years; 67% of tried cases result in a victory for the plaintiff. These statistics speak for themselves as to the growing magnitude, likelihood and potential financial consequences of EPL claims on organizations of all types and sizes. So, what can your organization do to help mitigate this growing and significant risk you ask? A combination of a strong EPL policy as part of your insurance program is a must as are basic risk management practices. Below are some observations about both strategies and as always, we’re available to discuss in more detail with you whenever you would like! Insurance Coverage 1. EPL policies provide protection for a wide list of employment related claims, such as discrimination, harassment, wrongful termination, failure to hire and wrongful discipline among many others; 2. EPL coverage is accessible as part of a package policy, part of a suite of executive protection coverages or on a stand-alone basis with a wide range of limits and deductibles available in the market; 3. Depending on the number of employees, deductible chosen and the controls in place, a benchmark premium would be $1,500-$5,000 per $1 million of coverage; 4. Many policies contain loss control and risk mitigation services that the insured organization can access to improve their control environment; 5. EPL policies are not all the same, so look for provisions such as: a. Broad definitions of Insured, Claims, Loss and Covered Practices b. No exclusion for Prior Acts c. Include emotional distress and mental anguish d. A “softened” hammer (settlement) clause and mediation provisions e. Risk management services included Risk Management Practices 1. Verify the Employee Handbook complies with current employment regulations and outlines all policies and terms of employment in clear and concise language; 2. Require employees to sign an acknowledgement form for receipt of Handbook; and 3. Develop training for supervisors including interviewing skills, performance reviews, ‘zerotolerance’ policy, etc.
Cyber Risk… What is it? Although we’ve touched on this topic previously, Cyber Risk is becoming such a growing concern that we believe the more information we can provide the better. In that vein, we wanted to share this short video from the Hartford that does a pretty decent job of highlighting the issue in layman’s terms. We continue to hear about claims from companies in all industries, large and small, so unfortunately it may be a matter of when, not if, your organization is faced with a cyber-related incident. Here’s the link: http://bit.ly/tjXgdz.
The Latest … Henriott News & Updates Message from Rick Davis, President & COO “If you haven’t caught ESPN’s “C’Mon Man” segment during NFL football games on Sunday, you’re truly missing out on some good clean humor related to the highlights of that week’s games. Recently it seems like I’ve been reading more and more insurance related articles that, after reading them, have caused me to sit back and say…C’Mon Man?! Really? You can’t be serious?! So, I thought we’d start our own “C’Mon Man” series of brief articles or references to articles that at least I find humorous and maybe you will also. If not, that’s ok too!” Here is a link to our introductory blog “School Sued After Boy’s Burp Led to Trouble” or go to our website at www.henriott.com and click on Blogs & Articles.
Henriott Group’s Milestone Risk Management program is aimed at helping your company lower it’s Total Cost of Risk. Talk to your Henriott professional for more information about this proprietary process.
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