Third Party Exposures PLUS EPL & FI Symposium April 14, 2005

1. Third Party ExposuresPLUS EPL & FI SymposiumApril 14, 2005 Elizabeth (Libby) Benet, Esq. Vice President, General Reinsurance, Corp. Jack McCalmon, Esq. Titus, Hillis, Reynolds, Dickman & McCalmon Philip R. Voluck, Esq. Partner: Kaufman, Schneider & Bianco, LLP

2. Agenda • Underwriting Third Party Exposures. • Types of potential claims. • Underwriting and loss prevention. • The Real World (Tales From the Trenches).

3. Underwriting Third Party Exposures • Claims from a policyholder’s employees’ contacts with customers, clients, vendors, visitors, patients or other non-employees. • Coverage for liability claims arising out of discrimination, harassment, assault, coercion, emotional distress and humiliation.

4. Underwriting Third Party Exposures • Coverage came about because these discrimination claims were not otherwise covered under the CGL. • Relatively recent offering to the market. • Approximately 20 markets offer the coverage today.

5. Markets Offering Coverage

6. Classes Of Business Prone To These Exposures • Security Operations • Property Managers • Entertainment • Healthcare • Counseling • Finance, Real Estate and Insurance • Establishments offering credit – e.g auto dealers • Membership Clubs – health, country and private clubs • Schools and Universities • Car Rentals • Hotels and Restaurants

7. Third Party Exposures In The Workplace • The nature of EPLI. • Third-party exposure as a covered claim. • Impact of federal, state & local regulations. • Attorney’s fees. • Litigation vs. Resolution. • Preventive tools.

8. Underwriting/Loss Prevention • How does the prospect interact with others? • More independent interaction greater the risk • How do other third parties interact with the prospect? • “Open to the public” equals greater risk • Is control of the workplace contracted to a third party? • Doctors, consultants e.g. • Policies and Procedures • Open Reporting for employees and third parties • Orientation for employees and third parties • Training • Employees • Volunteers • Those who “significantly interact” with your workplace

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

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

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

12. Scenario Four • Church volunteer makes a claim for sexual battery from a part-time youth minister.

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

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

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

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

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

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

19. What Have We Learned? • There are many different contexts in which third party exposures may arise. • Some exposures are absolutely preventable, i.e., ADA “public access” claims. • The debate will continue as to whether such claims are properly handled under EPLI. • This was the most informative session at the entire symposium!