The Employment Insurance Soft Market Bubble

JFK
May 21
2 min read

Updated: May 22

A warning to the industry from James Felton Keith

I'll state it plainly. The Employment Insurance market of 2025 is looking like the Cyber Insurance market of 2015 that I remember. It's soft and it has easy to identify risk. I'll explain what that means below for the non-insurance professionals. This will be expensive for operating businesses and hiring people to oversee our technological assets. The way we solved the soft market in Cyber was that we added a standardized diagnostic process via ISO-27001:2013. It became baked-in to every cyber protocol for vetting risk management by 2017 -- eventually getting magnified by the New York Cyber Reg. We cannot afford to wait four years in this market of workforce resilience.

Parallels to Cyber & Employment Insurance Growth:

Factor	Cyber Insurance (2010–2020)	EPLI (2025 onward)
Market Softness	Low premiums, loose underwriting pre-2015	Similar soft pricing now
Rising Claims Frequency	Data breaches, ransomware surge	Discrimination, retaliation, DEI noncompliance
Social Awareness	Public scrutiny on data privacy	Social justice, DEI, #MeToo, regulatory changes
Regulatory Pressure	GDPR, state privacy laws	New equal rights amendments, ISO-30415, ESG
Explosion in Loss Ratios	Forced hard market by 2015–16	Social inflation >10% now, likely rising severity
Underinsurance	Most companies had no cyber policy in 2010. It was a $10B market in 2020.	Many small/mid firms still skip EPLI today
Loss Prevention Model	ISO-27001:2013 Cyber Resilience	ISO-30415:2021 DEI Workforce Resilience

Social Inflation & Its Impact on EPLI

10% social inflation in 2025 means jury awards, legal fees, and settlements are rising faster than CPI (consumer price index). A normal number is ~3.5%.
This erodes insurer profitability and makes underwriters tighten terms and raise premiums, similar to what occurred in the cyber market post-2015.

Why EPLI Could Grow Like Cyber Insurance

Litigation Trends: Claims around workplace harassment, wage disparities, and DEI failures are surging.
Regulatory Push: Compliance audits and ESG mandates now require documentation of fair employment practices both locally and globally.
Corporate Exposure: The risk of reputational damage from EPLI-related claims is higher than ever.
Adoption Gap: Like cyber 10 years ago, EPLI penetration among SMBs is still low. There's ample room for growth.

Projected Growth Potential

If EPLI follows a similar path:

Market Size Today: Estimated ~$7B annually in gross written premiums.
Possible Growth: Could grow to $10B+ by 2030, especially if social risk keeps accelerating and coverage becomes a must-have for compliance and reputation management.

Conclusion

We should anticipate that EPLI could experience a cyber-like growth curve over the next decade. The combination of social inflation, increasing litigation risk, growing awareness, and emerging regulations makes EPLI a high-potential growth line—especially if underwriters begin reassessing risk amid rising loss ratios, just as they did in cyber after 2015.

Solution

The way to shock a soft market and retain your insured clients is to offer comprehensive loss prevention (consulting) for insured that have low interaction with their brokers. This type of interaction helps companies understand the systemic risks of employees having a general perception of being retaliated or discriminated against. It also helps them build internal feedback mechanisms, as the ISO-30415 standard details, to manage risks before they become claims.