【導(dǎo)讀】Page1. 63.Rev.1228,*. Page2. 87Va.L.Rev.85,*. 17of26documents. 2020. 20ndj.L.Ethics&pubpol'y639. Length:6805words. Summary:. Text:. [*639]. Introduction

　　

【正文】 surance industry has begun this journey by raising the price of [*653] epli in some cases, up to fourhundred percent. N68 the industry maintains that the higher premiums are in place because during epli39。s short life, better loss history data n69 has bee available and that data has facilitated more accurate underwriting and pricing. N70 higher premiums relate solely to costs and not prevention. Higher premiums create an incentive in that the filing of a claim may make premiums go up but higher premiums do not create the incentive employment law builds to prevent wrongful practices. To realign incentives, there must be more than a higher premium. There must be a barrier to the incentive to transfer risk that arises, unless the employer retains the incentive to prevent the wrongful practices. When underwriting epli coverage, insurers can add to the data traditionally relied on for pricing and look also to the atmosphere the employer creates. Most employers who seek coverage have never had a claim filed against them. To an insurer evaluating whether to provide coverage, such an employer would be desirable. An insurer, however, could go further to mandate that this employer have in place appropriate efforts at prevention of wrongful employment practices before approving coverage. If such a requirement is too onerous, insurers could, in the alternative, offer discounts or reduced premiums for employers who actively seek to provide a nondiscriminatory workplace, much like employers who receive group health discounts for nosmoking policies or workers pensation discounts for safe workplaces. N71 Many epli carriers have employed an intersection of underwriting with the encouragement of prevention. Some insurers require applicants to examine their antidiscrimination policies and procedures and often insist on a fullscale audit of the pany39。s human resources practices. Other insurers offering epli have denied coverage to applicants who do not have in place adequate antidiscrimination preventive procedures. N72 still, some insurers provide inter guidance on appropriate human resource practices with thirty minutes of free telephone counsel [*654] per month and a reduction in the deductible if they use the counseling. N73 Page 7 87 Va. L. Rev. 85, * Such market enforcement by insurers to prevent discrimination aligns the moral framework and the supreme court39。s efforts in offering the affirmative defense while still allowing options for those employers seeking to transfer risk. So long as an appropriate preventive program is in place (., an employer cannot transfer risk without proactively seeking to prevent discrimination before it happens) the moral framework of employment law can coexist with the incentive to transfer risk, making epli39。s moral hazard less troubling. Conclusion Morality includes a public rule system that offers a rational guide to positive conduct. In their efforts to regulate discrimination, congress and the courts have created an evolving rule system that sets the legal and moral standard for appropriate conduct at work. This standard of conduct reflects that discrimination is both immoral and illegal and results in employer liability for damages. The sting of damages is the law39。s primary means of motivating pliant, preventive, nondiscriminatory work environments. Employment practices liability insurance allows employers to transfer the law39。s economic motivator to a third party insurer. Epli, therefore, potentially creates a moral hazard that employers will engage in conduct, or fail to prevent it, because any resulting liability belongs to the insurer. This moral hazard is particularly troubling in light of the peculiar character of employment law. Unlike other areas of liability, a wrongdoer employer bears no personal risk of harm. Compared to the wrongdoer driver who risks injury in an accident or the wrongdoer arsonist who risks a burn, the employer has an incentive to avoid discrimination primarily by the damages imposed if it fails. The supreme court upholds the preventive force of employment law39。s moral framework by giving employers an affirmative defense if they use preventive medicine and make a good faith effort to stop discrimination before it starts. If epli coverage is contingent on similar proactive measures, the moral hazard disappears, thereby realigning the incentives created by employment law39。s moral framework and the incentives of employers to manage their risk. Legal topics: For related research and practice materials, see the following legal topics: Labor amp。 employment lawdiscriminationactionable discriminationlabor amp。 employment lawdiscriminationharassmentsexual harassmentemployment practicesdischarges amp。 failures to hirelabor amp。 employment lawdiscriminationtitle vii of the civil rights act of 1964remediesgeneral overview Footnotes: N1. For the intellectual foundations of theories of risk aversion, see john von neumann amp。 oskar menstern, theory of games and economic behavior (princeton univ. Press, 60th anniversary ed. 2020). For more recent empirical evidence of the influence of risk aversion on decision making, see choices, values, and frames (daniel kahneman amp。 amos tversky eds., 2020)。 judgment under uncertainty: heuristics and biases (daniel kahneman et al. Eds., 1982). N2. See christopher parsons, moral hazard in liability insurance, 28 geneva papers on risk amp。 ins. 448, 451 (2020). While moral hazard is a term of art for economists and the risk management industry, this article considers it in the ethical context of perverse incentives and unintended consequences. N3. Robert h. Jerry, ii, understanding insurance law 10[c][2], at 13 (1987) (the existence of insurance could have the perverse effect of increasing the probability of loss... . This phenomenon is called moral hazard.). N