Third Party ExposuresThird Party ExposuresPLUS EPL & FI SymposiumPLUS EPL & FI Symposium

April 14, 2005April 14, 2005

Third Party ExposuresThird Party ExposuresPLUS EPL & FI SymposiumPLUS EPL & FI Symposium

April 14, 2005April 14, 2005

Elizabeth (Libby) Benet, Esq.Elizabeth (Libby) Benet, Esq.Vice President, General Reinsurance, Corp.Vice President, General Reinsurance, Corp.

Jack McCalmon, Esq.Jack McCalmon, Esq.Titus, Hillis, Reynolds, Dickman & McCalmonTitus, Hillis, Reynolds, Dickman & McCalmon

Philip R. Voluck, Esq.Philip R. Voluck, Esq.Partner: Kaufman, Schneider & Bianco, LLPPartner: Kaufman, Schneider & Bianco, LLP

Elizabeth (Libby) Benet, Esq.Elizabeth (Libby) Benet, Esq.Vice President, General Reinsurance, Corp.Vice President, General Reinsurance, Corp.

Jack McCalmon, Esq.Jack McCalmon, Esq.Titus, Hillis, Reynolds, Dickman & McCalmonTitus, Hillis, Reynolds, Dickman & McCalmon

Philip R. Voluck, Esq.Philip R. Voluck, Esq.Partner: Kaufman, Schneider & Bianco, LLPPartner: Kaufman, Schneider & Bianco, LLP

AgendaAgendaAgendaAgenda

Underwriting Third Party Underwriting Third Party Exposures.Exposures.

Types of potential claims.Types of potential claims.Underwriting and loss Underwriting and loss

prevention.prevention.The Real World (Tales From The Real World (Tales From

the Trenches).the Trenches).

Underwriting Third Party Underwriting Third Party Exposures.Exposures.

Types of potential claims.Types of potential claims.Underwriting and loss Underwriting and loss

prevention.prevention.The Real World (Tales From The Real World (Tales From

the Trenches).the Trenches).

Underwriting Third Underwriting Third Party ExposuresParty Exposures

Underwriting Third Underwriting Third Party ExposuresParty Exposures

Claims from a policyholder’s Claims from a policyholder’s employees’ contacts with employees’ contacts with customers, clients, vendors, customers, clients, vendors, visitors, patients or other non-visitors, patients or other non-employees.employees.

Coverage for liability claims arising Coverage for liability claims arising out of discrimination, harassment, out of discrimination, harassment, assault, coercion, emotional assault, coercion, emotional distress and humiliation.distress and humiliation.

Claims from a policyholder’s Claims from a policyholder’s employees’ contacts with employees’ contacts with customers, clients, vendors, customers, clients, vendors, visitors, patients or other non-visitors, patients or other non-employees.employees.

Coverage for liability claims arising Coverage for liability claims arising out of discrimination, harassment, out of discrimination, harassment, assault, coercion, emotional assault, coercion, emotional distress and humiliation.distress and humiliation.

Underwriting Third Underwriting Third Party ExposuresParty Exposures

Underwriting Third Underwriting Third Party ExposuresParty Exposures

Coverage came about because Coverage came about because these discrimination claims these discrimination claims were not otherwise covered were not otherwise covered under the CGL.under the CGL.

Relatively recent offering to Relatively recent offering to the market.the market.

Approximately 20 markets Approximately 20 markets offer the coverage today.offer the coverage today.

Coverage came about because Coverage came about because these discrimination claims these discrimination claims were not otherwise covered were not otherwise covered under the CGL.under the CGL.

Relatively recent offering to Relatively recent offering to the market.the market.

Approximately 20 markets Approximately 20 markets offer the coverage today.offer the coverage today.

Markets Offering Markets Offering CoverageCoverage

Markets Offering Markets Offering CoverageCoverage

AIGAIG LibertyLiberty

Chubb SpecialtyChubb Specialty LSR-AngelLSR-Angel

CNACNA MonitorMonitor

EvanstonEvanston NASNAS

FarmingtonFarmington PLIS (Lloyds)PLIS (Lloyds)

Five Star Managers (ACE)Five Star Managers (ACE) PUA (Lloyds)PUA (Lloyds)

GenesisGenesis St. Paul TravelersSt. Paul Travelers

Great AmericanGreat American US Risk UnderwritersUS Risk Underwriters

HartfordHartford XLXL

Houston CasualtyHouston Casualty ZurichZurich

Source: Source: The Betterley The Betterley ReportReport, December 2004. , December 2004.

Classes Of Business Prone Classes Of Business Prone To These ExposuresTo These Exposures

Classes Of Business Prone Classes Of Business Prone To These ExposuresTo These Exposures

Security OperationsSecurity Operations Property ManagersProperty Managers EntertainmentEntertainment HealthcareHealthcare CounselingCounseling Finance, Real Estate and InsuranceFinance, Real Estate and Insurance Establishments offering credit – e.g auto dealers Establishments offering credit – e.g auto dealers Membership Clubs – health, country and private Membership Clubs – health, country and private

clubsclubs Schools and UniversitiesSchools and Universities Car RentalsCar Rentals Hotels and RestaurantsHotels and Restaurants

Security OperationsSecurity Operations Property ManagersProperty Managers EntertainmentEntertainment HealthcareHealthcare CounselingCounseling Finance, Real Estate and InsuranceFinance, Real Estate and Insurance Establishments offering credit – e.g auto dealers Establishments offering credit – e.g auto dealers Membership Clubs – health, country and private Membership Clubs – health, country and private

clubsclubs Schools and UniversitiesSchools and Universities Car RentalsCar Rentals Hotels and RestaurantsHotels and Restaurants

Third Party Exposures In Third Party Exposures In The WorkplaceThe Workplace

Third Party Exposures In Third Party Exposures In The WorkplaceThe Workplace

The nature of EPLI.The nature of EPLI.Third-party exposure as a covered Third-party exposure as a covered

claim.claim.Impact of federal, state & local Impact of federal, state & local

regulations.regulations.Attorney’s fees.Attorney’s fees.Litigation vs. Resolution.Litigation vs. Resolution.Preventive tools.Preventive tools.

The nature of EPLI.The nature of EPLI.Third-party exposure as a covered Third-party exposure as a covered

claim.claim.Impact of federal, state & local Impact of federal, state & local

regulations.regulations.Attorney’s fees.Attorney’s fees.Litigation vs. Resolution.Litigation vs. Resolution.Preventive tools.Preventive tools.

Underwriting/Loss Underwriting/Loss PreventionPrevention

Underwriting/Loss Underwriting/Loss PreventionPrevention

How does the prospect interact with others?How does the prospect interact with others? More independent interaction greater the riskMore independent interaction greater the risk

How do other third parties interact with the How do other third parties interact with the prospect?prospect? ““Open to the public” equals greater riskOpen to the public” equals greater risk Is control of the workplace contracted to a third party?Is control of the workplace contracted to a third party?

Doctors, consultants e.g.Doctors, consultants e.g. Policies and ProceduresPolicies and Procedures

Open Reporting for employees and third partiesOpen Reporting for employees and third parties Orientation for employees and third partiesOrientation for employees and third parties

TrainingTraining EmployeesEmployees VolunteersVolunteers Those who “significantly interact” with your workplaceThose who “significantly interact” with your workplace

How does the prospect interact with others?How does the prospect interact with others? More independent interaction greater the riskMore independent interaction greater the risk

How do other third parties interact with the How do other third parties interact with the prospect?prospect? ““Open to the public” equals greater riskOpen to the public” equals greater risk Is control of the workplace contracted to a third party?Is control of the workplace contracted to a third party?

Doctors, consultants e.g.Doctors, consultants e.g. Policies and ProceduresPolicies and Procedures

Open Reporting for employees and third partiesOpen Reporting for employees and third parties Orientation for employees and third partiesOrientation for employees and third parties

TrainingTraining EmployeesEmployees VolunteersVolunteers Those who “significantly interact” with your workplaceThose who “significantly interact” with your workplace

Scenario OneScenario OneScenario OneScenario One

Board Member, investor Board Member, investor and largest account holder and largest account holder of small regional bank of small regional bank makes lewd and makes lewd and suggestive comments to suggestive comments to the Bank President’s the Bank President’s assistant each time he assistant each time he deposits money into the deposits money into the facility. The President, who facility. The President, who reports directly to the full reports directly to the full Board, does nothing when Board, does nothing when assistant complains.assistant complains.

Board Member, investor Board Member, investor and largest account holder and largest account holder of small regional bank of small regional bank makes lewd and makes lewd and suggestive comments to suggestive comments to the Bank President’s the Bank President’s assistant each time he assistant each time he deposits money into the deposits money into the facility. The President, who facility. The President, who reports directly to the full reports directly to the full Board, does nothing when Board, does nothing when assistant complains.assistant complains.

Scenario TwoScenario TwoScenario TwoScenario Two An auto parts dealership An auto parts dealership

hires attractive teenage hires attractive teenage females to deliver parts to females to deliver parts to businesses that service businesses that service automobiles. Delivery automobiles. Delivery personnel are rated on personnel are rated on customer satisfaction. One customer satisfaction. One delivery person complains delivery person complains to her manager of a to her manager of a particular male mechanic particular male mechanic employed by his largest employed by his largest customer. She claims this customer. She claims this mechanic makes her mechanic makes her “scared.”“scared.”

An auto parts dealership An auto parts dealership hires attractive teenage hires attractive teenage females to deliver parts to females to deliver parts to businesses that service businesses that service automobiles. Delivery automobiles. Delivery personnel are rated on personnel are rated on customer satisfaction. One customer satisfaction. One delivery person complains delivery person complains to her manager of a to her manager of a particular male mechanic particular male mechanic employed by his largest employed by his largest customer. She claims this customer. She claims this mechanic makes her mechanic makes her “scared.”“scared.”

Scenario ThreeScenario ThreeScenario ThreeScenario Three

Nursing home Nursing home patient alleges an patient alleges an “on premise” rape “on premise” rape by a visitor of by a visitor of another patient another patient and an employed and an employed attendant. attendant.

Nursing home Nursing home patient alleges an patient alleges an “on premise” rape “on premise” rape by a visitor of by a visitor of another patient another patient and an employed and an employed attendant. attendant.

Scenario FourScenario FourScenario FourScenario Four

Church volunteer Church volunteer makes a claim for makes a claim for sexual battery from sexual battery from a part-time youth a part-time youth minister. minister.

Church volunteer Church volunteer makes a claim for makes a claim for sexual battery from sexual battery from a part-time youth a part-time youth minister. minister.

Scenario FiveScenario FiveScenario FiveScenario Five

Sales person attends Sales person attends a seminar related to a seminar related to her job. Another sales her job. Another sales person from a person from a competitor asks her to competitor asks her to dinner and later to his dinner and later to his room. In his room, he room. In his room, he physically attacks her. physically attacks her.

Sales person attends Sales person attends a seminar related to a seminar related to her job. Another sales her job. Another sales person from a person from a competitor asks her to competitor asks her to dinner and later to his dinner and later to his room. In his room, he room. In his room, he physically attacks her. physically attacks her.

Scenario SixScenario SixScenario SixScenario Six A man in a wheelchair attempts A man in a wheelchair attempts

to park his vehicle in the local to park his vehicle in the local “fast food” establishment and “fast food” establishment and dine inside. The man cannot find dine inside. The man cannot find a place to park his oversized van. a place to park his oversized van. Even if he could find a spot, the Even if he could find a spot, the parking lot is too steep for him to parking lot is too steep for him to safely navigate his chair into the safely navigate his chair into the restaurant. Once he gets into the restaurant. Once he gets into the restaurant, he goes to the restaurant, he goes to the bathroom, only to find that it bathroom, only to find that it cannot accommodate his cannot accommodate his wheelchair. wheelchair.

A man in a wheelchair attempts A man in a wheelchair attempts to park his vehicle in the local to park his vehicle in the local “fast food” establishment and “fast food” establishment and dine inside. The man cannot find dine inside. The man cannot find a place to park his oversized van. a place to park his oversized van. Even if he could find a spot, the Even if he could find a spot, the parking lot is too steep for him to parking lot is too steep for him to safely navigate his chair into the safely navigate his chair into the restaurant. Once he gets into the restaurant. Once he gets into the restaurant, he goes to the restaurant, he goes to the bathroom, only to find that it bathroom, only to find that it cannot accommodate his cannot accommodate his wheelchair. wheelchair.

Scenario SevenScenario SevenScenario SevenScenario Seven

An employee of a An employee of a local delicatessen local delicatessen assaults a woman assaults a woman who works for an who works for an office in the same office in the same building where the building where the deli is housed on the deli is housed on the ground floor. The ground floor. The assault occurs during assault occurs during the employee’s the employee’s working hours.working hours.

An employee of a An employee of a local delicatessen local delicatessen assaults a woman assaults a woman who works for an who works for an office in the same office in the same building where the building where the deli is housed on the deli is housed on the ground floor. The ground floor. The assault occurs during assault occurs during the employee’s the employee’s working hours.working hours.

Scenario EightScenario EightScenario EightScenario Eight

Sales employee Sales employee sexually assaults a sexually assaults a customer during customer during an off hours an off hours encounter at a encounter at a local watering local watering hole.hole.

Sales employee Sales employee sexually assaults a sexually assaults a customer during customer during an off hours an off hours encounter at a encounter at a local watering local watering hole.hole.

Scenario NineScenario NineScenario NineScenario Nine

An employee An employee working for a working for a temporary staffing temporary staffing agency is sexually agency is sexually harassed by her harassed by her supervisor at the supervisor at the company where company where she is assigned by she is assigned by the agency.the agency.

An employee An employee working for a working for a temporary staffing temporary staffing agency is sexually agency is sexually harassed by her harassed by her supervisor at the supervisor at the company where company where she is assigned by she is assigned by the agency.the agency.

Scenario TenScenario TenScenario TenScenario Ten

Members of a Members of a residential, gated residential, gated community complain community complain that they are being that they are being singled out for singled out for speeding violations by speeding violations by the community’s the community’s security staff based security staff based upon their national upon their national origin.origin.

Members of a Members of a residential, gated residential, gated community complain community complain that they are being that they are being singled out for singled out for speeding violations by speeding violations by the community’s the community’s security staff based security staff based upon their national upon their national origin.origin.

What Have We Learned?What Have We Learned?What Have We Learned?What Have We Learned?

There are many different contexts in which third There are many different contexts in which third party exposures may arise.party exposures may arise.

Some exposures are absolutely preventable, i.e., Some exposures are absolutely preventable, i.e., ADA “public access” claims.ADA “public access” claims.

The debate will continue as to whether such The debate will continue as to whether such claims are properly handled under EPLI.claims are properly handled under EPLI.

This was the most informative session at the This was the most informative session at the entire symposium!entire symposium!

There are many different contexts in which third There are many different contexts in which third party exposures may arise.party exposures may arise.

Some exposures are absolutely preventable, i.e., Some exposures are absolutely preventable, i.e., ADA “public access” claims.ADA “public access” claims.

The debate will continue as to whether such The debate will continue as to whether such claims are properly handled under EPLI.claims are properly handled under EPLI.

This was the most informative session at the This was the most informative session at the entire symposium!entire symposium!