Engineering Inc. - July/August 2008 - (Page 19)

professional liability insurance By Maureen Conley 2008 F Premium rates steady or falling— or the third straight year, ACEC’s Professional but for how long? Liability Insurance (PLI) Survey of Member Firms indicates that premiums are declining, while claims are holding steady. And many experts predict those trends will continue through 2008. Soft Market Survey and engineers, for Boston-based Lexington Insurance Company. “We remain committed to individual account underwriting. Accounts with good loss experience can lead to decreases and those with severe claims can experience increases. We always strive to create long-term relationships with our insureds and to moderate any necessary premium or deductible changes.” Despite recent market changes, carriers caution design professionals not to sacrifice continuity with the same insurer or quality risk management and claims The 2008 survey of 533 Member Firms (for F.Y. 2007) reveals that more insurance carriers are finding traction in the PLI market, a trend that is driving competition and helping keep rates low. In F.Y. 2004, six insurance carriers controlled 80 percent of the PLI market, with shares ranging from 4 percent to 34 percent. But in F.Y. 2007, the six top firms controlled 73 percent of the market, with shares ranging from 6 percent to 20 percent, according to the survey. PLI providers such as CNA/Schinnerer and XL Design Professional saw their respective market shares decline o r re m a i n m o s t l y e v e n t h r o u g h 2007—CNA/Schinnerer’s market share slipped from 34 percent in 2004 to 20 percent in 2007, while XL’s went from 21 percent to 19 percent. At the same time, relatively smaller players have sliced into the market with increased success. Beazley, for example, cracked the top six in just two years, capturing 8 percent of engineering firms in 2007. So what forces are driving this softer PLI market? Lee Genecki, chief underwriting officer for Travelers, says insurance companies have become a darling of investors, while several years without any major catastrophes have opened the door for an influx of inexpensive capital. Michael Welbel, a board member at A/E ProNet and president of M.G. Welbel & Associates, Inc., expects demand to diminish as the larger construction industry softens alongside the economy. Both men say rates might decline even further before they rise again, noting that insurance companies typically react to market forces after they take hold. Paula Dixon, senior vice president at Holmes Murphy & Associates and incoming president of the Professional Liability Agents Network, says that while “preferred risks” can expect a modest 5 percent drop, only “engineers that are exercising good risk management and staying away from residential work such as condos” are seeing significant decreases. “Premiums and deductibles are generally flat with prior years,” adds Robert Rogers, assistant vice president, architects I t’s likely the majority of [firms] were lured by the promise of lower premiums. ChuCk kopplin graef, anhalt, schloemer & associates inc. JULY / AUGUST 2008 ENGINEERING INC. 19

Table of Contents for the Digital Edition of Engineering Inc. - July/August 2008

Engineering Inc. - July/August 2008
2009 EEA Call for Entries
Table of Contents
From ACEC to You
News & Notes
Market Watch
Legislative Action
Congressman Kendrick Meek
Going Global
2008 Professional Liability Insurance Survey
Institute for Business Management 2008 Fall Course Catalog
Bridging the Gap
2008 Convention Wrap Up
2008-2009 Executive Committee
2008 Fall Conference Primer
Business Insights
Members in the News
One on One

Engineering Inc. - July/August 2008