PAMIC Underwriting & Loss Prevention Seminar Employment Practices Liability & Personal Lines Cyber Liability David Richardson November 9, 2017

Agenda Employment Practices Liability Coverage Market Underwriting Claims Risk Management Hot Topics Personal Lines Cyber Liability Cyber Evolution The Risk Coverage Marketplace Service Offerings

What are we covering? EPL provides coverage for claims made against a company by their employees, former employees, applicants (and third party’s) for issues related to their employment. 1st party coverage – claims arising from a wrongful employment related act allegedly committed by insureds, employees and volunteers performing operations on the insured’s behalf. 3rd party coverage - claims arising from alleged discrimination or sexual harassment committed by insureds against customers, clients or vendors.

What are we covering? Who is Covered? Directors/Officers Owner Employees Temporary Help Volunteers Independent Contractors Who can bring Claims? Employees Applicants 3rd Parties EEOC Directors

Marketplace ~ 55 standalone EPL carriers + BOP/CGL enhancements $2.1 billion in GWP Very mature market – limited differentiators Continued claim pressure from EEOC, unemployment, rising costs Emerging Threats / Hot Topics

The Policy Duty to Defend Indemnification Claims made and reported Right to Settle (Hammer Clause) Retro Dates Exclusions

Underwriting Considerations Rating – per employee US vs Foreign Full Time vs Part Time Top 5 states Turnover Compensation Controls Loss History Financial Condition Smaller Insureds are better?

Underwriting Considerations Bad Classes Auto dealerships Casinos Educational services -- Schools, Colleges and Universities Employment Agencies & Employee Leasing Political Organizations, Federal, State & Local Governmental Services or Agencies Healthcare and Residential Care Facilities; Law Offices or Legal Services, Security Brokers Membership Recreation Clubs - Golf, Tennis, Fitness & Country Clubs Real Estate Offices or Agents for Wrongful 3rd Party Acts Coverage Bad States – AL, CA, DC, FL, IL, NJ, NY, & TX

Common Claims Wrongful Termination Breach of Employment Contract Discrimination Harassment Failure to Employ/Promote Wrongful Discipline or Demotion Invasion of Privacy Defamation or Employment Related Slander Retaliation

Equal Employment Opportunity Commission The EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee

Protections – Federal Statutes The Fair Labor Standards Act (FLSA) of 1938 The Equal Pay Act of 1963 Title VII of the Civil Rights Act of 1964 Age Discrimination in Employment Act (ADEA) of 1967 The Pregnancy Discrimination Act (PDA) of 1978 Migrant & Seasonal Agricultural Worker Protection Act of 1983 (amended in 1986) The Worker Adjustment and Retraining Notification (WARN) Act of 1988 The American with Disabilities Act (ADA) of 1990 The Family and Medical Leave Act (FMLA) of 1993 The Uniformed Services Employment and Reemployment Rights Act (USERRA) of 1994 The Genetic Information Nondiscrimination Act (GINA) of 2008

Protections – State & Local Fair Employment Practices Laws -- employment discrimination statutes every state has one generally broader than the corresponding federal statutes remedies can be more generous tend to present more exposure to smaller insureds Whistle-blower Statutes -- similar to federal statute -- protects employees from retaliatory actions by their employer when employees report violations of any law on the part of the employer Public Policy Protection -- common law remedies that protect employees from retaliation for exercising their lawful rights (i.e. right to file a workers’ compensation claim, right to be involved in labor actions); typically an exception to state employment at-will doctrines Administrative Procedures procedures enforced by state agency for resolving employment related violations if filed in conjunction with an EEOC charge; EEOC typically defers matter to the state agency for investigation and adjudication once “probable cause” is determined, matter is reviewed via a hearing administrative law judges award damages in many states

Risk Management Varies according to program provider but generally includes: On-line risk management services providing services normally provided by a Human Resource Department including: templates for employee handbooks, employment related policies, applications, Legal hotline providing employment related consultations or legal advice

Hot Topics Very Active EEOC Wage and Hour Equal Pay Act Americans with Disabilities Act Immigration

PERSONAL LINES CYBER LIABILITY

CYBER EVOLUTION Bad Guys using same tricks and scams (phishing, ransomware) Commercial moved from Data Breach to full Cyber Suites Personal lines moving from ID Theft to Family Cyber Insurers have been a key solution for insureds Aware, Responsive, Flexible Solutions Connected like never before; more connections, more vulnerabilities What’s top of mind now with many? Fire, Quake, Coverage C Limits or…… Hacking, Virus, Loss of Data or System, Cyber Bullying! What’s Next? More Service? More Indemnification?

THE RISK IS REAL!

THE RISK IS REAL!

THE RISK IS REAL!

Coverage Extortion Data Replacement and System Restoration Social Engineering (Fraud) Identity Theft Cyber Bullying Breach Notification Costs Internet Clean Up Legal Expense Reimbursement

Marketplace 3 to 5 carriers Segmentation Mass Market, Mass Affluent, HNW Underwriting the risk – How? Bad states? Demographics?

Service Offerings Educational alerts, tips and trends Identity Theft Remediation Breach Notification Support Extortion SME’s Tech Support

Contact Information Thank you! David Richardson Senior Vice President Berkley Re Solutions a Berkley Company 3 Stamford Plaza, 9th Floor 301 Tresser Blvd Stamford, CT 06901 Office: 203.905.7006 Mobile: 215.962.8282 Email: Jcron@berkleyre.com