There have now been over 6 million confirmed cases of COVID-19 infection globally, and over 370,000 deaths. As the numbers still increase, many insurance lawyers have started to predict the legal challenges and coverage claims that property and business interruption insurers, trade credit insurers, life and healthcare insurers, travel and event insurers, D&O insurers, and reinsurers are likely to face in the months and years ahead.
The UK’s Financial Conduct Authority (‘the FCA’) has recently announced its intention to bring a test case before the High Court of England and Wales on an expedited basis (leading up to a High Court hearing in July 2020), to consider the scope of coverage for COVID-19 related losses that may be available under Business Interruption Insurance policy wordings, governed by English law, issued by insurers such as Arch, Hiscox, MS Amlin, QBE, Royal & Sun Alliance, and Zurich.
But what of Employment Practices Liability (EPL) insurance claims, relating to COVID-19?
COVID-19 is likely to result in an increasing number of EPL claims, in the US and internationally, including in the following contexts:
Willis Towers Watson’s recent scenario analysis of the COVID-19 Pandemic, published on 1 May 2020, has predicted that EPL claims in the US market alone may amount to US$3.6 billion (compared to US$4 billion for D&O claims, and US$27 billion for General Liability claims).
Although every EPL insurance policy wording (and its applicable governing law) will require careful analysis, common policy wordings (including those governed by English law, Cayman Islands, or Bermuda law) often define an Employment Practice Wrongful Act as an actual or alleged act, error or omission committed or attempted by an employer or an employee for whom the employer is held vicariously liable relating to any actual or alleged (1) wrongful, unfair or constructive dismissal, discharge or termination of employment; (2) breach of written or implied contract of employment; (3) employment related misrepresentation; (4) wrongful deprivation of a career opportunity, failure to grant tenure or negligent employee evaluation; (5) harassment, unlawful discrimination or failure to provide adequate employee procedures and policies; (6) retaliation; or (7) defamation or invasion of privacy, arising solely as a result of the employment or non-employment by an employer of any current or former employee, or the treatment of any volunteer whilst undertaking work for an employer under its control and supervision.
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COVID-19, Employment Practices Liability Insurance, and Vicarious Liability: an Offshore Perspective