Engineering Inc - July/August 2017 - 33

Causes of Claims
Communication
Error or Omission of a
Technical Nature
Third-Party Claim
22%

Contract
Client/
Project Selection

21%

Project
Management

20%
20%

Scope of Services
13%

Other
0%

10%

20%

30%

terms are too one-sided to accept the risk, Stryker says. His firm
has taken on a risky project where it had a decent relationship
with the client or knew from the client's reputation that there
would be some avenue of redress should a problem occur. But
the firm still needs to be smart about putting the right team in
place, Stryker says.
Stryker values the risk management educational programs
offered by Rick Engineering's PLI carrier, including videos that
are easy to access. KPFF has its
own well-developed in-house risk
management program that Asher
says the firm "takes seriously and
practices with regularity," so it is
embedded in the firm's culture.
KPFF also encourages openness
and trust so that employees feel
safe raising a problem early-
before it becomes a claim, he says.

EZRA BAILEY / GETTY IMAGES

CLAIM EVALUATION
AND FREQUENCY

For XL Catlin, the initial focus
when a claim arises is whether an
insured is legally liable. Rabasca
says neither the insured nor the
carrier can settle a claim without the other's consent. James
Schwartz, U.S. A&E focus group
leader for Beazley, says the firm
begins the claims process with a
realistic evaluation of any liability
and exposure. The insurer evaluates that information along with
the cost to proceed to litigation
and the interests of the client.
"Often they want to fight, and
they don't appreciate what it
will take to do that," Schwartz

says. Ultimately, most cases are
resolved before trial, he says.
Though claims frequency has
51%
remained steady since the Great
Recession, severity is up, says
48%
Rabasca. The top three causes of
43%
claims remain communication
(51 percent), followed closely by
technical errors and omissions
(48 percent) and third-party
claims (43 percent).
There's one emerging issue
Schwartz is seeing: copyright
claims, caused mainly by people
who don't fully understand copyright protections. These often
40%
50%
60%
occur when the designer posts a
project photo they do not own.
"Don't use a photo unless you
know who took it and you have the right to use it," he says.
While claims frequency is stable now, Collins says firms may
begin to see an uptick as they take on more work. He urges
designers to look for a strong partner, focus on finding good people, investing in risk management and quality control procedures,
and exercise caution in project selection and contract review.
CARRIER PROGRAMS

"Many carriers
are unveiling
new risk
management
services, such
as contract
guides,
webinars,
newsletters
and other
educational
materials."
MARY LODWICK
STUCKEY INSURANCE AND
PROFESSIONAL LIABILITY
AGENTS NETWORK

"Many carriers are unveiling new
risk management services, such
as contract guides, webinars,
newsletters and other educational materials," says Lodwick.
Long-term insurers in the design
PLI market already have these
programs, and newer entrants
are joining in to compete in
the market, Lodwick says. But
she doesn't think design firms
are demanding these services
inasmuch as the most common
factors firms cite for changing
carriers are the ability to offer
higher limits and additional coverage benefits, such as first dollar
defense and lower deductibles.
Welbel says many insurers are
adding new offerings, such as
privacy coverage and crisis management, but they don't typically
lead to a change in carrier. "Those
features are nice, but they're usually not enough," he says.
"Carriers offering those additional coverage benefits that
address fee disputes, for example,
could convince a firm to switch
carriers," says Dino Fidanza,
JULY / AUGUST 2017

ENGINEERING INC.

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