Engineering Inc - July/August 2019 - 29

Reasons Firms Changed PLI Carriers
72%

Lower Premium
Changed Carrier Based on Advice of Broker

28%
18%

Better Policy Terms
Could Not Renew With Existing PLI Carrier

14%

Not Satisfied With Claims Handling

4%

Not Satisfied With Risk Management Programs

4%

Needed Higher Limits Than Existing Carrier Provided

2%

Not Satisfied With Pre-Claims Assistance

2%

Other

11%
0% 10% 20% 30% 40% 50% 60% 70% 80%

which tend to be riskier," he says. "We have a risk management
and business model that has worked for us for years, and we continue to follow it because it has been successful."
Another challenge facing engineering firms today is finding
engineers to help with their workload, according to Jeff Connelly, program manager for the ACEC Business Insurance Trust
and a broker at Greyling Insurance Brokerage, a division of
Epic Insurance Brokers & Consultants. That concern about the
shortage of engineers is shared by Collins, who urges firms to
focus on the project management skills necessary to manage the
growing workload.
Additionally, some firms are increasing training. Hanson is
educating employees through its carrier's risk management program, while concurrently training project managers and staff to
be sensitive to project risks and reinforce that Hanson's quality
program is part of the company culture, according to Messmore. J-U-B is also investing in project management training
for approximately one-quarter of its workforce, focusing on risk
management, project planning and how to mitigate issues early
before they develop into problems. In addition, J-U-B developed
standard scope of work as well as project planning templates to
ensure project managers do not miss anything and can better
manage their teams, according to Haener.
Collins points out two notable survey findings about risk
management: 21 percent of firms do not use their carrier's
risk management programs, and 81 percent do not have inhouse counsel or a full-time risk manager. Calling the use of
risk management services a "key indicator" of firms with better
claims history and profitability, Collins says, "Review of non-

standard contracts and continuing education are best practices
we see for designers."
CHOOSING A CARRIER

Overall, firms are happy with their PLI carriers-74 percent are
at least somewhat satisfied with pre-claims assistance, 64 percent
with claims handling and 72 percent with risk management programs. But perhaps the best indicator is that 92 percent of firms
stayed with their existing carrier. Price was a driver for half of the
26 firms that changed carriers.
Firms should consider the carrier's reputation and the longterm value of its services when purchasing PLI because, at some
point, you are likely to be sued, according to Collins.
"Firms that have claims learn quickly the importance of an
experienced claims staff," says Jackson. "Many clients will pay
a higher premium to go with a quality insurance company, as
opposed to a carrier that is new to the A/E market or that does
not have good claims service."
Strand values claims handling experience, the carrier's
expertise and its relationship with the firm, according to Bunker. These factors are followed closely by the pool of defense
attorneys available to the firm. Bunker adds that long-standing
relationships with these attorneys are crucial in the pre-claims
process. "If an issue evolves into a claim, it is important to be
able to call the claim representative, have frank conversations
and get the assistance we need," he says.
Clients that have good relationships with defense attorneys
should make sure they can use the same defense attorneys if they
switch carriers, Jackson says. And he encourages clients to stay

"Contracts are an important means of managing risk but are
becoming longer and more complicated, and owners are a little
more unwilling than in past to make changes."
JOE BUNKER
VICE PRESIDENT AND CORPORATE SECRETARY
STRAND ASSOCIATES, INC.

JULY / AUGUST 2019

ENGINEERING INC.

29
Engineering Inc - July/August 2019

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