Liability Insurance Rates May Be Trending Lower

11/15/2006


Professional liability insurance premiums for engineers and architects are predicted to flatten out or even decrease over the next 12 months, according to a recent survey of 14 leading A/E insurance companies.

The nationwide survey—carried out by the National Society of Professional Engineers’ Professional Engineers in Private Practice, along with the Risk Management Committees of the American Institute of Architects and the American Council of Engineering Companies—compiles information relating to coverage, exclusions, claim trends and the insurer’s history, among other issues.

Among the survey’s key findings were the following:

Through the first two quarters of 2006, the market has accumulated a record surplus of $405.5 billion. As these surpluses continue to rise, it’s estimated that premiums will continue to decrease.

Insurers are continuing to focus on more stringent underwriting of the risks for each of their potential insureds. Those who are considered higher risk, due to poor claims history or work in a high risk sector such as condominiums/multi-family, could experience higher rate increases or difficulty finding coverage.

Frequency of claims experienced in the A/E industry, as well as the severity of the claims, has remained fairly stable and in some cases decreased, which is also contributing to the stabilization of the rates.

Downward pressure on premiums is being driven by carriers trying to enter the market or build their book of business by offering lower rates as a means to encourage an insured away from a more established company.

Carriers were asked to provide their opinion of key issues facing the A/E industry. Some of the responses were:

Concerns regarding shared design over the Internet, such as Building Information Modeling;

Condominiums/multi-family housing creating very significant numbers of claims;

Slowdown in the housing market has made profits tight, so some developers/builders are becoming aggressive about hunting for A/E claims opportunities;

Plaintiffs are getting increasingly sophisticated in finding new ways to pursue claims for cost recovery against A/Es; and

Performance codes versus traditional building codes.

It is advised that A/Es purchase insurance intelligently. Carriers should be financially stable, have good claims service, and have a proactive risk-management program. A/Es should obtain the services of a knowledgeable broker who understands professional liability insurance.

A/Es should continue to pay attention to internal risk-management to minimize claims and pay close attention to financial ratings and exclusionary language upon renewal.

To download all survey responses and receive more information on liability and risk management topics for engineers, go to www.nspe.org/liability/in-home.asp .





No comments
Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
Combined heat and power; Assessing replacement of electrical systems; Energy codes and lighting; Salary Survey; Fan efficiency
Commissioning lighting control systems; 2016 Commissioning Giants; Design high-efficiency hot water systems for hospitals; Evaluating condensation and condensate
Solving HVAC challenges; Thermal comfort criteria; Liquid-immersion cooling; Specifying VRF systems; 2016 Product of the Year winners
Driving motor efficiency; Preventing Arc Flash in mission critical facilities; Integrating alternative power and existing electrical systems
Putting COPS into context; Designing medium-voltage electrical systems; Planning and designing resilient, efficient data centers; The nine steps of designing generator fuel systems
Designing generator systems; Using online commissioning tools; Selective coordination best practices
As brand protection manager for Eaton’s Electrical Sector, Tom Grace oversees counterfeit awareness...
Amara Rozgus is chief editor and content manager of Consulting-Specifier Engineer magazine.
IEEE power industry experts bring their combined experience in the electrical power industry...
Michael Heinsdorf, P.E., LEED AP, CDT is an Engineering Specification Writer at ARCOM MasterSpec.
click me