Engineering Inc. - January/February 2008 - 29

Particular exposures That Might Lead to Higher rate Increases Than in recent years: 20% No New Exposures 34% Condominiums � � T here are a lot of competitive pressures to keep prices low. lornA PArsons CnA/viCtor o. sChinnerer & Co., inC. 13% Other 7% Past Claim Experience � � � � 13% School Projects 13% Land Surveying and Construction Staking Source: ACEC's 2007 Professional Liability Insurance Survey of Carriers Numbers might not equal 100 percent because they are rounded. Paula Selvaggio, president of Clevelandbased Selvaggio, Teske & Associates and the current president of the Professional Agents Liability Network, or PLAN, says engineering firms need to look out for “irresponsible pricing,” which has resulted from today’s “extremely competitive market.” She explains that, “at some point, claims will be higher than what carriers take in in premiums. Then there will be fallout, with carriers either shutting their doors or raising their rates tremendously.” Selvaggio adds that, above all else, engineering firms should work with a specialist who can help shepherd them through the insurance selection and application process. “Premiums are affected 25 percent by how you complete an application,” she explains. Often, Selvaggio says firms will enter the same information every year, “without elaborating on project types, or quality control measures they might have taken to improve themselves.” She says those steps will go further toward lowering a firm’s premium than bidding on insurance policies each year. Emerging Issues a t some point, claims will be higher than what carriers take in in premiums. PAulA selvAggio selvAggio, teske & AssoCiAtes As green building design and building information modeling (BIM) practices become more integrated within the industry, PLI carriers say they are keeping a close eye on emerging trends. “BIM has probably not yet really emerged in terms of impacting professional liability,” says Robert Rogers, assistant vice president of Boston-based Lexington Insurance Company. “Many early adopters of BIM are using it like they would CAD or any other software. Professional liability issues surrounding BIM will change and become much more complicated as more projects exploit the true collaborative capabilities of the software and the lines between designers, contractors, suppliers and owners become blurred. This is at odds with the traditional approach of assigning clearly defined roles and responsibilities among the parties. As a result, the insurance industry will need to respond to this.” A few carriers reported small claims in the green building design area on this year’s survey, says Farrar. Still, not enough is known about the risks associated with such projects—much like BIM, where “they haven’t had any problems yet,” he says, “but they seem concerned about it.” Part of that uncertainty stems from an increasing reliance on technology. “When you look at new plans and know they’ve gone through the computer, you get the idea that it’s perfect,” says Farrar. But that’s not always the case. Issues such as software incompatibility or obsolescence generate increased risk. Software interoperability also is a potential trouble spot, says William Farran, practice leader at Travelers insurance company. Can records systems set up by the carrier, for instance, communicate effectively with data introduced by the client? If not, this might cause a problem. Integrated project delivery (IPD)—an emerging practice that incorporates all members of the project team from the early stages of design to completion—also poses potential new challenges for insurers. Though early input from several parties typically results in fewer conflicts at later stages when such problems are more expensive to resolve, traditional roles can sometimes become blurred and lines of responsibility unclear. “IPD is a particularly good fit for project specific professional liability insurance,” explains Rogers. “These policies can respond to liabilities arising out of the design team as a whole without the need to allocate liability to individual members. This mirrors the general structure of IPDs where liabilities are shared amongst the stakeholders.” BIM requires changes in January / February 2008 enGIneerInG InC. 29

Engineering Inc. - January/February 2008

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