National Underwriter - December 5, 2011

ADA Amendments: Broader Definition
Likely to Cause Spike in Claims

BY CHAD HEMENWAY

S TEPS TAKEN BY federal officials to broaden the definition of “disability” is putting pressure on employers—and insurers are forecasting an increase in employment-practices liability (EPLI) claims.

The Americans with Disabilities Act Amendments Act (ADAAA), which went into effect on Jan. 1, 2009, directed the U.S. Equal Employment Opportunity Commission (EEOC) to revise its regulations “to restore the intent and protections” of the original act, and to address what lawmakers felt was a too-narrow view taken by courts of the original ADA provisions.

The EEOC’s final regulations to implement the ADAAA were made available on the Federal Register Web site in March 2011 and were put into effect just this May.

INSURANCE IMPLICATIONS

As a result of the EEOC rulings,

The amount that disability-related claims increased in 2010 compared to 2009, according to the EEOC.

17%

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which broaden the definition of disability to include protections for employees with, for example, cancer, diabetes or epilepsy, Salvatore Pollaro, managing director for Markel, is one of many experts who expect to see an increase in the frequency and severity of ADA-related EPLI claims in 2012.

“Right now, there is a lot of interpretation going on” around the “ dif-ficult-to-decipher” revised regulations, he says. “And any time there is uncertainty, there is an opportunity for indecision, or the wrong decision—which can be costly.”

Employers and insurers are “uncer-
tain how the courts will interpret the
law,” adds Damien Magnuson, senior
vice president of Executive Perils, an
independent wholesale broker. “After
all, there has not been much con-
sistency in the courts, which is why
amendments to the act were made in
the first place.”
Joni Mason, senior vice president
and employment-practices liability prod-
uct manager at Chartis Insurance, says the
definition of disability under the law was
“significantly expanded” by the ADAAA,
and she also expects claims numbers to
grow as a result.

That’s a potentially disturbing statement for both insurers and employers, as disability-related claims already increased 17 percent in 2010 compared to 2009— before the revised final regulations went into effect in May.

In response to the changes, Mason says Chartis is training its underwriters to adjust to the expanded definitions of disability. Pollaro says Markel’s underwriters are taking a similar approach as they would with other emerging issues: a careful watch.