Forty-eight percent of U.S. companies reported regulatory investigations as their top legal concern in the 2015 Litigation Trends Annual Survey from Norton Rose Fulbright.

And they’re not overestimating the exposure. With investigations by the U.S. Department of Labor, Environmental Protection Agency (EPA), National Labor Relations Board and others at an all-time high, it may be only a matter of time before your commercial client is targeted.

Large, publicly traded companies are not the only vulnerable entities. “U.S. Equal Employment Opportunity Commission (EEOC) statistics show that there are approximately 250 employment-related claims filed every day,” says Edward McNally, vice president and underwriting officer, Management Liability and Financial Institutions, CNA. “No matter how good you think you are in your company’s human resources and risk management practices, you have an exposure due to the fact that you have employees.”

For agents looking to expand offerings to their commercial and financial institution clients beyond standard property-casualty lines, management liability coverage offers an attractive sales opportunity. In particular, employment practices liability coverage can be a foot in the door for independent agents who work with small and midsize companies.

“From a defense cost perspective, the average EEOC charge is more than $25,000,” McNally says. “From a small or midsize company perspective, there are no nuisance claims anymore when it comes to employment practices liability. $25,000 is real money to most small businesses.”

In the current legal and regulatory environment, both agents and their clients confront significant exposure. McNally notes that from a professional liability perspective, agents cannot afford to overlook discussions with their clients regarding the advantages offered by management liability coverage.

As you prepare to make the pitch to your commercial clients, what trends are affecting the management liability market?

Economic instability. Interest in the private company management liability market has renewed in light of the economic uncertainty surrounding access to capital and interest rates. “We are seeing an increase in prospective insurance purchasers looking at private company management liability insurance for the first time,” McNally says. “If the economy takes another downturn and if an organization fails, individual assets may be at risk.”

Federal investigations and enforcement. Under the Obama Administration, federal investigations and enforcement activity have intensified—in addition to a “continued exuberance” to search and find something new, McNally notes. This trend is affecting both the directors & officers and EPLI spaces.

New DOL rules. Some small companies may not have been subject to the Fair Labor Standards Act of 1938, as amended at the federal level. But with new DOL rules, these entities need to be wary. “Smaller privately held companies should be focused on their management liability policies and what is covered,” McNally cautions. “They may have an exposure due to their relationships with larger entities that they had not previously regarded as an exposure.”

CNA offers packages of endorsements to address various industries and takes a more customized approach to management liability needs. For example, the CNA construction industry enhancement includes coverage for the federal Immigration and Nationality Act, which is important if the DOL becomes more vigilant in investigating I-9 violations. Meanwhile, the company’s manufacturing enhancement includes corporate manslaughter defense cost liability—something that wouldn’t be important to a construction company, but is to a manufacturer.

McNally notes that in addition to knowing the financial strength of carriers, agents must also know how the carrier will respond in the event of a claim. CNA is rated A (Excellent) by A.M. Best; A (Strong) by Standard & Poor’s; and A3 (Good) with all rating outlooks stable by Moody’s. The CNA management liability claim team is staffed entirely by attorneys who have experience in these areas.

“On the back end, that’s where the rubber meets the road,” McNally says. “According to Fitch Analysis, we’re the fourth largest D&O liability carrier in the market, and with that comes a great deal of stability and commitment. We’re 100% committed to this product and this space.”

Only the relevant insurance policy can provide the actual terms, coverages, amounts and conditions for an insured. All products and services may not be available in all states and may be subject to change without notice. CNA is a registered trademark of CNA Financial Corporation.