Staff Reporter

L.A. insurance brokers say there has been an increased demand for sexual harassment insurance following a recent pair of U.S. Supreme Court decisions that found employers can be liable for supervisors' conduct, even if they are unaware it is going on.

"This time last year, we had maybe five clients that purchased the coverage," said Timothy Noonan, president of Lockton Insurance Co. Inc. "This year we had probably 40."

Employment practices liability insurance covers damage awards in the event employers are found liable for sexual harassment, discrimination, wrongful termination and other "intentional acts."

Companies are spending, on average, about $100,000 annually on employment practices liability insurance, said Kenneth Adams, a spokesman for the Western Insurance Information Service.

Adams said the coverage is especially attractive to small and medium-sized businesses. "If you do have a claim you could be totally wiped out and dissolved. A lot of large corporations have their own legal departments, and feel they're doing an adequate job with sensitivity training."

Whereas five years ago a handful of companies were offering the insurance, now over 60 companies offer it in one form or another.

"Literally every day I get a press release or phone call from an insurance company saying, 'We're coming out with our EPL policy form,' " said Noonan.

"In 1991 no one had it, and now anywhere between 25 and 50 percent of our clients have some type of EPL coverage," said Keith Loges, vice president for J & H; Marsh & McLennan Co, the largest insurance broker in L.A. County.

Smaller, private companies, with up to 500 employees, tend to buy the coverage in combination with "directors and officers" (D and O) liability coverage, said Jennifer Franklin, vice president at Willis Corroon Corp. of Los Angeles. "They buy the combined policies with lower limits from $1 million to $5 million, with deductibles in the $25,000 range," she said.

Large companies "tend to buy it for the large class actions you see in the paper," she said. "They usually have high deductibles, some at $100,000, others at $500,000."

Vern Shughart, assistant vice president for Fireman's Fund, said the "key is having good practices in place. The recent Supreme Court rulings said that employers can protect themselves by having a good grievance procedure in place that is accessible to employees."

In 1991, the Civil Rights Act was amended in favor of plaintiffs in employment-related cases, allowing them to collect, among other things, punitive damages. Insurers began to offer forms of employment practice liability soon afterward.

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