Employment practices liability insurance (EPLI) has shifted from being a niche product for a few high-profile professions to a must-have for businesses of all sizes. Tokio Marine HCC – Cyber and Professional Lines Group (CPLG), based in Houston, Texas, has been at the forefront of this change, especially when it comes to franchise risk management.
Chris Murphy, senior vice president of EPL, and Lauren Wilke, director of underwriting EPL, lead CPLG’s EPLI division with a combined 40 years of experience. Their insight shows just how much the industry has evolved. “Back when we started, EPLI was optional and aimed mainly at lawyers and doctors,” Murphy said. Today, it’s a standard part of coverage for businesses from small franchises like Jamba Juice to giants like Facebook and Google.
For smaller businesses, EPLI is particularly critical. Research from ARAG Legal Solutions Inc shows that seven out of ten small businesses have faced at least one legal issue in the past three years, a 230% increase since 2015. These legal challenges don’t just affect finances; they cause stress and can seriously damage a business’s reputation. For franchise owners, this damage happens on two fronts: inside the company, where fear of copycat lawsuits grows, and publicly, where social media and review sites like Yelp can spread negative attention rapidly.
Wilke pointed out the role of technology in amplifying problems. “Everyone has a camera in their pocket now,” she said. “An employee’s complaint, captured on video and shared widely, can make an already emotional situation even harder to handle.” This emotional side often leads to costly battles. CPLG works closely with clients to help them find solutions without letting emotions drive up defense costs.
What sets CPLG apart is its long history with franchise EPLI, starting back in the late 1990s. They developed customized forms and endorsements specifically for franchises, a strategy many competitors now follow. A key part of their approach is the risk management service called HR Pilot®, provided free with every policy. Unlike some competitors who limit legal support to a few hours, HR Pilot® offers unlimited help with managing people and workplace issues every day.
HR Pilot® helps businesses handle concerns before they become lawsuits. Whether it’s workplace relationships, bullying, or medical leave, the tool provides real advice, not just legal guidance. This front-line support helps prevent claims and protects the business.
CPLG also understands the volume nature of franchise claims. Murphy mentioned a client who files around 100 claims a year. Instead of shying away, CPLG encourages reporting every claim so they can address them quickly and close cases efficiently.
The company builds strong relationships between clients, HR Pilot® staff, and claims teams. Wilke said these connections allow for swift communication when problems arise, keeping businesses protected during tough times.
Despite all this, EPLI claims continue to rise, partly due to ongoing cultural shifts like the #MeToo movement. For brokers working with franchise clients, Murphy stressed the importance of checking clients’ current EPLI coverage. Many small franchise owners only have limited EPLI included in their business owner’s policy, which often isn’t enough. “A $50,000 or $100,000 sub-limit isn’t enough anymore,” he warned.
Brokers should ask clients for their EPLI policy details, including limits and available risk management tools. Wilke confirmed that comprehensive coverage and proactive help from services like HR Pilot® are essential in today’s world. “We encourage our insureds to get their HR policies in order, and if they don’t have any, we help them build those through HR Pilot®,” she said.
As claims grow more common, the message is clear: EPLI is no longer a nice-to-have. It’s a critical protection that needs to fit the real risks businesses face, especially for franchises working in a noisy, digital world.