Engineering Inc. - January/February 2008 - 30

T he bIM system makes it difficult to clearly define the lines between early schematic design, design development and construction documents. AlBert rABAsCA xl insurAnCe How Do you expect your rates to Change in 2008? 27% Unsure � � 27% Lower � 7% Increase � 40% Remain Flat Source: ACEC's 2007 Professional Liability Insurance Survey of Carriers Numbers might not equal 100 percent because they are rounded. workflow and creative processes and redefines the concept of “deliverables,” once thought of as the hard-copy version of the final plans. The paperless BIM system makes it “difficult to clearly define the lines between early schematic design, design development and construction documents,” explains Albert Rabasca, director of industry relations for the Design Professional Group, part of the larger XL Insurance. Rabasca says circumstances could dramatically change for engineering firms if, for example, the “deliverable” eventually becomes a computer-generated model of the project as opposed to a set of paper-based or digital plans. Despite his concerns, however, Rabasca says XL Insurance has yet to encounter any major problems as a result of BIM or IPD projects. Looking Ahead A/E firms, as a result, need to be diligent in their choice of carriers, says Beazley’s Hughes, particularly if they are considering future mergers or acquisitions. Beazley has seen firms hit with unanticipated claims and long-term exposures, which often are difficult to identify in the due diligence process. Such hits can affect a firm’s loss history for 10 years or more, she warns. Though the PLI market is stable now, Parsons says, unanticipated events such as a large-scale natural disaster or terrorist attack could cause prices to fluctuate. Though it’s unlikely that the recent troubles of the subprime mortgage market will affect the price of PLI, she says, interest rates could have an impact. If interest rates go up, for instance, the soft insurance market might last longer because carriers will want to take in premiums and invest. If rates go down, however, “it actually has the impact of making carriers have to price correctly,” which would mean increases from where rates are today. Mold, silica and asbestos do not pose the problems once expected, and very few firms exclude such claims today, adds Farrar. Few firms exclude terrorist events, either. In fact, says Farrar, “very little is excluded right now. It has been a noneventful year.” And that is about as good as insurance news gets. n Maureen Conley is a freelance business writer living in Maryland. Characteristics of Most Importance In your Premium Determination Process: 25 42 44 68 74 80 91 120 100 80 60 40 20 0 Annual Billings Type of Practice Claims History Type of Projects Firm Experience Location of Firm Location of Projects As with the engineering industry itself, Farran says, the biggest uncertainty facing the PLI market is “the anticipated shortage of labor in the engineering field with universities graduating fewer engineers.” He also sees potential fallout from recent infrastructure disasters, such as the eruption of steam pipes in Manhattan and the highway bridge collapse in Minneapolis, which could lead to “more inspection of our decaying infrastructure,” creating the possibility of higher exposures for insurers and A/E firms. 30 enGIneerInG InC. January / February 2008 Fifteen respondents ranked their choices from 1 to 8, with 1 being the most important and 8 being the least, for a total of 120 points. Lower scores are of higher importance in the premium determination process. Source: ACEC's 2007 Professional Liability Insurance Survey of Carriers

Engineering Inc. - January/February 2008

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