“…industry experts say they have seen an increase in wage-and-hour claims, which has led some insurers to stop writing such defense coverage, which most typically is provided for as a sublimit under employment practices liability insurance policies…”
As layoffs drive wage-and-hour claims, middle-market employers may find defense coverage more difficult to find and more costly when they do, particularly in California, insurers and brokers say. The market firming for wage-and-hour defense coverage comes after a rise in claims by laid-off workers who allege violations of the Fair Labor Standards Act and other laws, according to brokers and insurers.
“It’s a reflection of how difficult it is for employees to find another job,” said Christian Hamlin, a professional lines producer in the Los Angeles office of wholesaler Burns & Wilcox Ltd.
The U.S. unemployment rate remains high, but has improved from the decade’s peak unemployment rate of 10.1% in October 2009, according to the U.S. Department of Labor’s Bureau of Labor Statistics. In February, the U.S. unemployment rate was 8.9%, a 0.1% decline from January, according to BLS.
At the same time, Coverage remains available as some insurers continue to provide it, said Michael Mahoney, senior vp at Willis Insurance Services of California Inc. in San Francisco.