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Architects & Engineers Professional Liability

Architects & Engineers Professional Liability. Zurich North America Design Professional. Overview. General Discussion on issues affecting A&e Professional Liability Insurance Conditions that specifically affect the underwriting process for a&e professional liability

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Architects & Engineers Professional Liability

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  1. Architects & Engineers Professional Liability Zurich North America Design Professional

  2. Overview General Discussion on issues affecting A&e Professional Liability Insurance Conditions that specifically affect the underwriting process for a&e professional liability Why is it so important to understand these issues Zurich’s response to market conditions

  3. Market Overview-Primary Market • Domination by two companies DPIC with plan agents, CNA with Pronet agents • Lack of senior technical underwriting knowledge • Lack of credible actuarial loss information • Small firms represent significant catastrophic loss exposure depending on area of practice • Adverse selection process at work

  4. Market Overview - Secondary Market Excess and Surplus Companies Highly Volatile -- over 20 insurers have entered and left in past 10 years • Only 3-4 stable providers remain • Stability in some areas in question due to prior growth in project insurance and large A&Es • New entrants lack long-term commitment that sophisticated A&Es require

  5. Profitability Factors • Focus on annual insurance or new products • Admitted coverage • Liability is negligence-based as opposed to strict or contractual • Severity of claims further reduced by computer-aided design developments and construction management practice • Statutory protection offered by most states for late and frivolous claims, statutes of repose or limitation, certificate of merit.

  6. Recent Developments • Rates for A&E professional liability have been increasing for past 18 months • Rates for project insurance have at least doubled since last year • Policy forms, especially on project insurance, have tightened in coverage • Large segment of construction project owners prefer the owner’s protective product offering to mitigate exposures

  7. Zurich North America’s A&EProfessional Liability Products • Owner’s Protective Professional Indemnity (OPPI) Offers same protection to project owners as project insurance by supplements underlying insurance instead of replacing primary coverage of A&e • Contractor’s Protective and Professional Indemnity Insurance (CPPI). Offers professional liability insurance to design builder in conjunction with OPPI coverage

  8. Emerging Issues • Economic downturn in private-sector construction • Condominium and residential construction market litigation • Increased contractual liability exposure with use of new COAA proposed contracts • Mold • New entrants to marketplace may repeat mistakes of the past

  9. Strategies for Survival and Growth • Employ best selection process • Growth with new products and services • Solidify existing broker/client relationships • Capitalize on cross-selling opportunities • Push for adequate rates on programs.

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