Engineering Inc. - January/February 2008 - (Page 27) Professional liability low rates and strong competition have engineering firms mulling their insurance options tability T he time to buy professional liability insurance (PLI) is now, according to the latest survey of insurance carriers conducted jointly by ACEC, the National Society of Professional Engineers (NSPE) and the American Institute of Architects (AIA). With a relatively uneventful 2007 and a bevy of insurance carriers looking to add more engineering clients, rates have stayed low, enabling carriers to compete on the basis of their services and experience as well as on price. Fifteen PLI carriers responded to this year’s survey and participated in interviews this past October with members of ACEC’s Risk Management Committee, NSPE’s Professional Liability Committee and the AIA’s Risk Management Committee. Across the board, premium rates remained flat or declined over the past year. All but one respondent said they expect the trend to continue through 2008. Thirteen of 15 carriers said they expect to achieve increased market share this year. Such findings translate into good news for engineering companies with a solid risk profile, says John Farrar, vice president of Clark Dietz Engineers, and Timothy Corbett, a former insurance executive who, as president of SmartRisk, advises A/E companies on risk management solutions. The insurance market today is “about as stable as it gets,” says Farrar. Circumstances have changed drastically from a few years ago, when several long-standing carriers dropped out of the market and opened the door for new players. Now, as newer entrants begin to gather steam and market share, the influence of big carriers is shrinking. Three of the largest—CNA, XL and Lexington— together underwrote about two-thirds of the PLI coverage for the design industry in 2007. The newer players “really haven’t seen many claims yet,” Farrar says, because it takes several years for projects to get through construction. Insurance carriers reported that claims severity and frequency remained flat in January / February 2008 enGIneerInG InC. A Picture of By Maureen Conley 27
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