Architects and engineers tend to be careful planners, but things don’t always go as planned. That’s why there’s insurance. Architects & Engineers Professional Liability Insurance provides important coverage for claims involving defects, delays, and other professional errors or omissions. Right now, changes in rates and underwriting are making it more challenging to obtain coverage. Here’s what’s happening in the A&E professional liability market.
Professional Liability Rates Are Up
The Market Barometer from MarketScout shows that professional liability rates were up 6.7% in the third quarter of 2021. This is very close to the overall composite rate increase for commercial insurance pricing, which was up 6.8%.
Within the architects and engineers (A&E) niche, however, some policyholders may be experiencing steeper rate hikes.
According to Insurance Business, some carriers have left the marketplace, taken more severe rate action, or reduced the limits of liability offered. “Firms on the fringe – those that don’t show good risk management practices and have poor loss experience – are starting to see rate increases and coverage restrictions. However, it’s important to note that A&E firms with good loss experience and strong risk management practices still have plenty of choices and access to capacity,” explained Kevin Collins, Design & Construction Leader, Managing Director at Victor US.
Insurers Respond to Rising Claims Severity and Frequency
Business Insurance says that coverage prices have been increasing over the last three years in response to more frequent and severe losses. Now, experts say that the Surfside condo collapse is bringing even closer scrutiny to the architects and engineers insurance market.
On June 24, 2021, a 12-story condo in Florida collapsed, killing 98 people. According to The Washington Post, the collapse triggered a review of buildings that were at least 40 years old, some of which were evacuated over safety concerns.
The collapse also prompted insurers to take a closer look, and it’s not just the property insurance market that’s taking notice. According to Claims Journal, a real estate lawyer in south Florida said that anyone who had involvement in the Surfside condo could be held responsible for their negligence in the collapse, and that includes architects and engineers.
Securing the A&E Coverage You Need
A report from Advance Market Analytics has found that while demand for A&E insurance is increasing, rising claims severity is a major concern.
For professionals in the A&E segment, it’s important to be aware of these coverage challenges.
- Insurance rates are rising, so you may need to budget for higher premium costs.
- Getting the limits and coverages you need may take extra work and extra time. Don’t wait until the last minute to start thinking about your next renewal.
- You can’t afford lax risk management practices. Review and strengthen your policies, procedures, and documentation.
- Review your coverage and limits with your agent. Building costs have skyrocketed with labor and supply shortages. Find out if these market changes impact your coverage needs.
Heffernan provides customized business insurance coverages, as well as risk management services, claims services, loss control, and more. Do you need help securing Architects & Engineers Professional Liability Insurance? Contact the team at Heffernan Insurance Brokers.