Spring 2014 News - Analysis

Employment Practices Liability Coverage

Hiscox, an employment practices liability insurer, recently published a research study relating to employer risk of employee lawsuits, by jurisdiction. It concluded that, on average, an employer located in the United States has a 12.5 % chance of incurring an employment liability claim if it employs ten or more employees.

The District of Columbia and four states disproportionately account for employee lawsuit filings. Not surprisingly, California reported a 42 percent greater employer risk of litigation than the national average. California has enacted the most comprehensive employee protection laws in the country, particularly with regard to disability discrimination. In Illinois, employers confront a 26% higher risk; in Alabama, the risk is 25% higher and Mississippi , Arizona and Georgia also report higher than average risk of employment based claims for employers with 10 or more employees. Conversely, the lower risk states for employment practices litigation risk include Michigan, Kentucky, Washington, Massachusetts and West Virginia.

The report also notes that there is a substantial likelihood that employers in the highest risk states will incur catastrophic verdicts because there are no liability caps in their state employment discrimination statutes. Employers in high-risk states can minimize risk exposure by reviewing and revising employment policies and practices as necessary, and improving and expanding the training of their workforces to sensitize all employees to state and federal rules and regulations pertaining to work place harassment, discrimination and retaliatory actions.

Towers Reports Likely Upswing in Insurance Industry Merger Activity

Towers Watson recently surveyed insurance industry executives, 86% of whom expect to see an increase in merger and acquisition activity over the next three years as the world economy recovers from the 2008 financial crisis. The insurers were equally enthusiastic about expanding into new regions or sectors of the industry, organic growth and strategic acquisitions to improve their economies of scale. 

Have You Ever Wondered How Much GEICO Spends on Advertising Annually?

If you watch television in America, it is impossible to avoid the ubiquitous Geico Gekco and Maxwell the pig mascots. SNL Financial reports that Geico has led the U.S. property and casualty insurers in annual advertising spending for the past five years. During this period, it has been the only company spending more than $1 billion a year on advertising.

2013 Derivative Litigation Trends

Cornerstone Research, a Menlo Park, California research firm, recently released its 2013 Merger and Aquisition report, noting that more than 94 percent of large ($100M/greater) M & A deals in the United States were challenged by shareholders in 2013. Each of these deals attracted on average five lawsuits (612 in total), the vast majority of which were settled, usually before the deals were closed. Delaware, New York, California and Texas courts were preferred venues for these plaintiffs.


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