US insurers trail Bermuda, London in W&H offerings

Adeola Adele, National EPL Product Leader, Willis

Brokers at Willis have been pushing US insurers to “step up” with meaningful Wage & Hour policies, said national EPL product leader Adeola Adele, but uncertainty surrounding anticipated amendments to the Fair Labor Standards Act could be making underwriters wary.

In an interview with Advisen prior to the RIMS annual conference in New Orleans next week, Adele provided a primer on the employment practice liability market and touched upon one of the major issues—Wage & Hour exposure.

She said Bermuda and London insurers have developed blended W&H/EPL policies in addition to a stand-alone W&H policy. Buyers appear to be welcoming this approach. But in the US, options are limited beyond policies offering defense costs only. Adele said she turns to mostly Bermuda, Markel, XL and Allied World on a primary basis in the US. More carriers are willing to write the risk on an excess basis.

US insurers “can do better,” said Adele, adding that midsize clients “can’t afford coverage, and face higher retentions.”

Potential changes to the FLSA, which has not been revised in about a decade, could be in the works but no one knows when they are coming. President Obama last year issued an executive order directing the Secretary of Labor to propose revisions to the act, specifically as it relates to overtime rules. The speed of Washington is another consideration. Could this become an issue–or a non-issue–for the next president?

Adele said the W&H issue has the “potential to get bigger.” The last revision of the law, in 2003-2004, was followed by an uptick in W&H filings as companies adapted.