Engineering Inc - July/August 2018 - 25

management before firms start to feel the strain of double-digit
However, a desire for growth and a good climate for negotiation
growth. Risk management is especially important in the large
does not mean taking on any job and any client. Strategic growth
majority of firms without in-house counsel or full-time risk
should include making sure the firm's liability is covered when
managers-94 percent and 95 percent of the survey respondents,
choosing each job. That is even more important considering, for
respectively.
example, that Beazley is seeing severity increases beyond simple
"As the construction market continues to grow, we are going to claims inflation that is likely fueled by projects becoming more
see increased claims frequency just because there are more projects complex and expensive.
going up," he says.
If a contract is potentially uninsurable, J-U-B will turn down a
Of those surveyed, 68 percent of firms report increased revenue
project. "We may consider a potentially risky project but only if
in 2017, and more than 40 percent grew by 10 percent or more.
the risk is manageable, or if it is mitigated by our contract, scope
Electrical and mechanical/HVAC firms had the largest increases
of services and insurance," says Haener.
but there is evidence of growth across all disciplines, project types
"The economy is good, and there is work out there. It is just
and geographical regions.
a matter of thinking strategically about how firms want to grow,"
In order to take advantage of growth opportunities in new geoRichards says.
graphic regions or technical disciplines, firms must have the talent
behind them to do so. Difficulties in finding that talent, which,
DEFENDING CLAIMS
according to Schwartz, is the biggest challenge for the industry,
For 52 percent of firms, claims are flat. However, 30 percent of
can stress project staffing and have a cascading effect on the end
firms reported higher claims while 17 percent reported a lower
product-adding more liability to your project and more risk for
number of claims. Overall, the number of claims is trending
claims.
upward. According to Messmore, errors of a technical nature are
Aside from managing risk when it comes to staffing and experstill a concern, affecting 42 percent of firms with claims last year.
tise, there is the PLI conThis is possibly due to challenges in quality assurance or the loss
tract itself. Negotiating
of experienced staff.
with your carrier or find"It is never pleasant to defend a claim," says Collins. "In most
ing a new carrier to better
cases, some combination of factors comes into play, and every
balance the liability and
firm is going to react differently." Collins adds that a decision to
your costs can be an effecsettle should be made jointly, and may require the informed contive tool in an overall risk
sent of the insured.
management plan.
Fischer had one eye-opening pre-claim experience that, while it
Kurt Fischer, president
never became a claim, required time, work and money to prepare
of Kurt Fischer Structural
for a deposition. A lesson having been learned, he is now much
Engineering, changed carmore thoughtful during the review process and more aware that
riers last year, opting for
what is done now can have an impact 10 years from now.
lower cost PLI that came
"Engineers are often viewed as people with deep pockets," says
with access to contract
Chris Anderson, president of DJ&A. Anderson's firm has had
reviews, dispute resoluthree frivolous claims thrown out in the past 10 years. "If we can
tion services such as legal
advice and education on
business practices. For
example, Fischer finds
Reasons Firms Changed PLI Carriers
value in the monthly seminars his new carrier offers
on how to avoid claims
72%
Lower Premium
and prevent losses.
Changed Carrier Based on Advice of Broker
28%
But negotiations
should not stop there.
18%
Better Policy Terms
Haener believes the cur14%
Could Not Renew with Existing PLI Carrier
rent economic climate
makes contract negotia4%
Not Satisfied with Claims Handling
tions of all kinds easier-
4%
including with clients.
Not Satisfied with Risk Management Programs
"When times are tight, it
2%
Needed Higher Limits Than Existing Carrier Provided
is tough to get anything
changed. Now, clients
2%
Not Satisfied with Pre-Claims Assistance
seem much more amena11%
Other
ble to contract terms for
insurability," he says.
0%
10% 20% 30% 40% 50% 60% 70% 80%

Sixty-eight
percent of firms
report increased
revenue in 2017,
and more than
40 percent
grew by 10
percent or more

JULY / AUGUST 2018

ENGINEERING INC.

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