“A record number of 99,947 charges of discrimination were filed against employers in the fiscal year 2011,” says Spunberg, “the highest number in the 46-year history of the commission. The EEOC has recovered $365 million on behalf of those who filed the charges.”

He adds that the budget filed by the EEOC for the fiscal year 2012 indicates more charges and recoveries will likely be filed and secured. “When the EEOC works with plaintiffs to resolve issues, the company has to pay losses, which means carriers have to pay losses,” he notes.

The second avenue driving EPLI rates is wage and hour litigation, as managed by the Department of Labor's Wage and Hour Division. The division has increased its staff of investigators, says Spunberg, and expects to see an increase of 12,000 compliance actions over the next fiscal year, a 45 percent increase from 2011.

“We may see dislocation in the marketplace because not all carriers will be willing to provide such aggressive coverage for clients. Whereas a typical yearly increase would be a flat-to-5 percent renewal, we are seeing a firming in the rate environment. In California especially, retentions on pricing are going up, and it is becoming difficult to place coverage.”

In order for underwriters to plan for future rate changes in liability coverage, Spunberg recommends that they dig into regulatory and monetary policy issues. “They define the environment in which your clients work, and what they can and cannot do to define exposure.”