Engineering Inc. - July/August 2005 - 25

ACEC 2005 Professional Liability Insurance Survey Of Engineering Firms For
Fiscal Year 2004 Firm Size by Field of Practice Firm Size gross revenue in
$ millions $0.5 $0.5 $1 $2.5 $5 $10 $20 $35 $50 All or to to to to to to to
or Firms less $1 $2.5 $5 $10 $20 $35 $50 greater Architectural 5% 2% 7% 5%
5% 5% 5% 10% 5% believe we are at the beginning of this down cycle, he
says. If Civil/General 24% 26% 27% 26% 26% 25% 20% 21% 20% 21% the pattern
holds true, it will be Electrical 9% 8% 9% 13% 9% 10% 6% 8% 10% 8% good
news for design profession- Environmental 9% 5% 6% 7% 8% 12% 11% 12% 10%
17% als, who will see a leveling off of Laboratory Testing 2% 1% 2% 3% 4%
5% 2% 0% premiums at the very least, and Landscape Arch. 3% 1% 4% 2% 7% 6%
4% 9% p r o b a b l y a reduction. That Geotechnical 6% 7% 5% 5% 4% 7% 6%
6% 6% 8% trend could accelerate if interest Mechanical/HVAC 9% 12% 10% 13%
8% 7% 6% 8% 16% 6% rates continue to increase and Process 2% 6% 2% 1% 1% 3%
3% the investment climate becomes Structural 15% 19% 30% 9% 18% 10% 15% 14%
12% 12% more favorable. Surveying 11% 8% 9% 9% 15% 14% 12% 14% 6% 9% M c C
o m b concurs: As the Other 4% 9% 2% 7% 1% 5% 5% 6% 3% economy gets
better, we should A firm was counted in every field of practice they
indicated. see the market soften up more, he says. But on the other hand,
Did You Change Carriers This Year by Firm Size ? he adds, we're really
restrictive Firm Size gross revenue in $ millions $0.5 $0.5 $1 $2.5 $5 $10
$20 $35 $50 i n what we're willing to con- All or to to to to to to to or
Firms less $1 $2.5 $5 $10 $20 $35 $50 greater sider. For example,
residential YES 25% 30% 28% 20% 33% 22% 37% 33% 8% 0% work of any kind is
expensive to NO 75% 70% 72% 80% 67% 78% 63% 67% 92% 100% insure. While
engineering firms average 3 percent to 4 percent of revenue from
residential work, Are Your Claim and Aggregate Limit the Same by Firm Size
? McComb says that residential Firm Size gross revenue in $ millions $0.5
$0.5 $1 $2.5 $5 $10 $20 $35 $50 All or to to to to to to to or c l a i m s
account for nearly 25 Firms less $1 $2.5 $5 $10 $20 $35 $50 greater percent
of all professional design YES 71% 68% 82% 75% 75% 67% 54% 69% 75% 58%
claims. NO 29% 32% 18% 25% 25% 33% 46% 31% 25% 42% The cost of insuring
surveyors also has risen, McComb adds. How often does your firm turn down
work due to concern about the potential threat of litigation? Geotechnical
professionals are Firm Size gross revenue in $ millions $0.5 $0.5 $1 $2.5
$5 $10 $20 $35 $50 s t i l l very difficult to write All or to to to to to
to to or Firms less $1 $2.5 $5 $10 $20 $35 $50 greater because everything
built rests on Frequently 2% 5% 3% 6% w h a t they do, he says. Sometimes
42% 42% 44% 33% 41% 38% 50% 38% 50% 60% McComb also says environmen-
Rarely 38% 27% 39% 38% 41% 40% 39% 56% 50% 40% tal engineers are not as
challeng- Never 18% 25% 17% 26% 19% 15% 11% 6% ing to insure as they once
were. C o r b e t t adds that water and Top Two Boxes 44% 47% 44% 36% 41%
44% 50% 38% 50% 60% wastewater infrastructure proj- Bottom Two Boxes 56%
53% 56% 64% 59% 56% 50% 63% 50% 40% e c t s , schools, and health care
facilities have been problematic for many engineering firms from Results
show that firms with the market is still fairly hard for from past years,
the number of an insurance standpoint. Those a n n u a l gross revenues of
smaller firms, he says, the hard small firms that remain unin- p r o j e c
t s share the inherent $500,000 or less saw greater pre- m a r k e t of 17
years ago was a sured surprises Brown. Only 3 u n c e r t a i n t i e s
associated with m i u m increases in 2004 than g re a t deal worse than
today. percent of all firms are going public spending, which has been l a
r g e r firms. Kopplin believes Mc C o m b predicts that larger b a r e ,
but 18 percent of the c o n s t r a i n e d in recent years, carriers see
these smaller firms firms may see some softening, smallest firms put
themselves in r e s u l t i n g in changing project as a bigger risk, or
maybe their but premiums for mid-size and this category. Brown still sees
a budgets and schedules. risk wasn't sufficiently accounted smaller firms
probably will just lot of competition among carri- New Insurers for in
previous years. be level for a period of time. ers for that class of
firms. We're in the Market Ken McComb, vice president Dana Brown, national
A&E talking policies that cost proba- at Professional Design Insurance
specialist for AIG, also expects bly less than $5,000 per year, The number
of insurance carri- Management Corp. PDI , says to see rates flatten; she
says they she says. ers becoming more active in the that the competition
is greater already have done so in 2005. M i d d l e t o n foresees a very
design professional marketplace to insure the larger firms. But if And
while rates have declined c o m p e t i t i ve period ahead. I may hold
part of the explana- July l August 2005 ENGINEERING INC. 2 5         

Engineering Inc. - July/August 2005

Table of Contents for the Digital Edition of Engineering Inc. - July/August 2005

Members in the News
Well-Prepared Leadership
Remembering the Codes
ACEC's 2005-2006 Executive Committee
Market Watch
Institute for Business Management
Contents
News & Notes
Business Insights
Cover Story: Interview with Senator Jim Talent
ACEC Fall Conference
EEA Call for Entries
One on One
Premium Increase Slowing
Legislative Action
From ACEC To You
Engineering Inc. - July/August 2005 - Cover1
Engineering Inc. - July/August 2005 - Cover2
Engineering Inc. - July/August 2005 - Contents
Engineering Inc. - July/August 2005 - From ACEC To You
Engineering Inc. - July/August 2005 - 3
Engineering Inc. - July/August 2005 - News & Notes
Engineering Inc. - July/August 2005 - 5
Engineering Inc. - July/August 2005 - 6
Engineering Inc. - July/August 2005 - Market Watch
Engineering Inc. - July/August 2005 - Legislative Action
Engineering Inc. - July/August 2005 - 9
Engineering Inc. - July/August 2005 - Cover Story: Interview with Senator Jim Talent
Engineering Inc. - July/August 2005 - 11
Engineering Inc. - July/August 2005 - 12
Engineering Inc. - July/August 2005 - 13
Engineering Inc. - July/August 2005 - Well-Prepared Leadership
Engineering Inc. - July/August 2005 - 15
Engineering Inc. - July/August 2005 - 16
Engineering Inc. - July/August 2005 - 17
Engineering Inc. - July/August 2005 - Remembering the Codes
Engineering Inc. - July/August 2005 - 19
Engineering Inc. - July/August 2005 - 20
Engineering Inc. - July/August 2005 - 21
Engineering Inc. - July/August 2005 - 22
Engineering Inc. - July/August 2005 - 23
Engineering Inc. - July/August 2005 - Premium Increase Slowing
Engineering Inc. - July/August 2005 - 25
Engineering Inc. - July/August 2005 - 26
Engineering Inc. - July/August 2005 - ACEC's 2005-2006 Executive Committee
Engineering Inc. - July/August 2005 - 28
Engineering Inc. - July/August 2005 - 29
Engineering Inc. - July/August 2005 - Business Insights
Engineering Inc. - July/August 2005 - 31
Engineering Inc. - July/August 2005 - Members in the News
Engineering Inc. - July/August 2005 - 33
Engineering Inc. - July/August 2005 - 34
Engineering Inc. - July/August 2005 - 35
Engineering Inc. - July/August 2005 - 36
Engineering Inc. - July/August 2005 - 37
Engineering Inc. - July/August 2005 - 38
Engineering Inc. - July/August 2005 - 39
Engineering Inc. - July/August 2005 - ACEC Fall Conference
Engineering Inc. - July/August 2005 - 41
Engineering Inc. - July/August 2005 - 42
Engineering Inc. - July/August 2005 - 43
Engineering Inc. - July/August 2005 - One on One
Engineering Inc. - July/August 2005 - Cover3
Engineering Inc. - July/August 2005 - Cover4
Engineering Inc. - July/August 2005 - EEA Call for Entries
Engineering Inc. - July/August 2005 - Entries2
Engineering Inc. - July/August 2005 - Entries3
Engineering Inc. - July/August 2005 - Entries4
Engineering Inc. - July/August 2005 - Entries5
Engineering Inc. - July/August 2005 - Entries6
Engineering Inc. - July/August 2005 - Entries7
Engineering Inc. - July/August 2005 - Entries8
Engineering Inc. - July/August 2005 - Institute for Business Management
Engineering Inc. - July/August 2005 - I2
Engineering Inc. - July/August 2005 - I3
Engineering Inc. - July/August 2005 - I4
Engineering Inc. - July/August 2005 - I5
Engineering Inc. - July/August 2005 - I6
Engineering Inc. - July/August 2005 - I7
Engineering Inc. - July/August 2005 - I8
Engineering Inc. - July/August 2005 - I9
Engineering Inc. - July/August 2005 - I10
Engineering Inc. - July/August 2005 - I11
Engineering Inc. - July/August 2005 - I12
Engineering Inc. - July/August 2005 - I13
Engineering Inc. - July/August 2005 - I14
Engineering Inc. - July/August 2005 - I15
Engineering Inc. - July/August 2005 - I16
Engineering Inc. - July/August 2005 - I17
Engineering Inc. - July/August 2005 - I18
Engineering Inc. - July/August 2005 - I19
Engineering Inc. - July/August 2005 - I20
Engineering Inc. - July/August 2005 - I21
Engineering Inc. - July/August 2005 - I22
Engineering Inc. - July/August 2005 - I23
Engineering Inc. - July/August 2005 - I24
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