Tools + Intel.

The soft EPL market continued into the second half of 2025, with abundantcapacity driven by new entrants, particularly MGAs and Insurtech platforms,mirroring trends seen in the private D&O space. Most clean risks are renewingflat or with modest rate decreases, and underwriters remain aggressive inpursuit of new business.

However, beneath the surface, the line is facing growing social and politicalheadwinds. A cultural shift toward increased accountability in the workplaceis clashing with a wave of corporate pullbacks from ESG and DEI initiatives.Companies are quietly eliminating roles, scaling back programs, andreshaping their messaging, which is creating a breeding ground for employeedissatisfaction. This environment is expected to lead to a rise in discrimination,retaliation, and wrongful termination claims.

In addition, political affiliation is beginning to surface as a potential area ofexposure in discrimination and harassment claims. While there is currently nofederal protection for discrimination based on political affiliation in the privatesector, several states do afford varying degrees of protection. Given today’spolarized social and political climate, insurers are monitoring whether adverseemployment actions tied to perceived political preference or affiliations maytranslate into increased EPL claim activity over time. While still emerging, thisissue has the potential to become a more prominent factor in EPL litigation,depending on how courts and state legislatures evolve.

A recent court ruling rejected the notion that members of a majority groupmust overcome a heightened pleading standard to bring a discriminationclaim against an employer. This decision has turned the spotlight on reversediscrimination claims and will likely result in similar lawsuits.

While rates remain competitive on clean risks, underwriters are beginning toincrease retentions across the board, particularly through the use of separateclass action or jurisdiction-specific retentions for California, New York, andhigher wage earners. These trends are likely to persist, as insurers try tobalance pricing stability with increased claims volatility. Underwriters areespecially cautious around industries like healthcare, staffing, hospitality, retail,auto dealers, law firms, and certain tech sectors.

Supplemental coverages, such as wage and hour defense, FLSA, and IRCAdefense, with cost sublimits, remain available in most states but continue to betightly restricted or sublimated in California. A limited number of carriers havebegun offering defense-only sublimits for BIPA (Biometric Information PrivacyAct) exposure, though these are typically not automatic and may requiretargeted underwriting or supplemental applications.

While California EPL rates have cooled somewhat, with many clean accountsrenewing flat, it remains a difficult jurisdiction for underwriters due to itslitigation climate, evolving employment laws, and aggressive plaintiffs’ bar.As a result, many national carriers continue to apply stricter underwritingand higher retentions on California-headquartered or high-employee-countbusinesses operating in the state.

Overall, EPL coverage remains widely available, and most carriers are notpulling back on capacity. However, underwriters are laser-focused on emergingissues including pay equity, employee privacy, ESG-related disclosures, andsexual harassment claims, particularly in light of social inflation and thepotential for large settlements or class actions. More insurers are deployingsupplemental questionnaires and industry-specific scrutiny, particularly insectors with volatile workforce dynamics or unionizing activity.