Underwriters develop loss prevention techniques for third-party claims

Underwriters must develop loss prevention techniques to address businesses prone to coverage liability claims exposures arising out of discrimination, harassment and other employment practices issues, according to recent findings from the PLUS Employment and Fiduciary Issues Symposium.

Panelists at the symposium suggested underwriters must begin to anticipate third-party exposures because the nature of employment practices liability is changing. Third-party exposures are a result of claims from non-employee’s who were in contact and somehow involved at a business level with a policyholder’s own employees.

Philip Voluck, partner, Kaufman, Schneider & Bianco, LLP, says third-party exposures in the workplace are considered a covered claim. “The actions of employees of an insured who have contact with customers can make the employer vicariously liable,” he says. “Federal law interacts with state law, but not arcane local ordinances. A part of these claims are attorneys’ fees.”

Third-party coverage is a relatively new phenomenon, initiated because discrimination claims were not covered under the CGL, and therefore adjusters do not know how to handle the loss costs, according to Elizabeth Benet, vice president of General Re Corp. She says claims range from $25,000 to $46 million.

Businesses exposed include security operations, property managers, entertainment, healthcare, counseling, finance, real estate and insurance.