Engineering Inc. - Winter 2020 - 33

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by trial rather than mediation, and this tends to raise both legal
and total claims in the case.
Some carriers are successful at winning those cases, but losses
still occur. One carrier, for instance, was successful in winning
a claim against a traffic engineer that involved two deaths and
one person with a brain injury; however, the legal fees to win the
case were $500,000.
Finally, mechanical engineering firms have also been in the
crosshairs of more claims, according to the survey. Water infiltration claims on schools, single-family residences, parking garages,
and hospitals represent a majority of the claims, and many
involve leaks and mold growth.

Have Your Rates Increased, Decreased or
Remained Flat Over the Past Three Years?

CONDITIONS OF BLAME

A boom in A/E business over the last several years has contributed to the growing frequency and severity of claims, according
to the survey.
PUA reports that before the recession, 25 percent of claims
were attributed to design errors. By 2011 when the market was
in recovery and business picked up, design errors made up 41
percent of claims. Today, design errors are reportedly the source
of 57 percent of claims.
Insurance carrier AXA XL has seen a noticeable increase in
Have Your Rates Increased, Decreased or
technicalRemained
errors in itsFlat
claims.
"Ourthe
claims
professionals
are tellOver
Past
Three Years?
ing us that these errors are not some vague notion of who is
responsible but, rather, fairly discrete and clear technical design
or specification errors," says Albert Rabasca, director of industry
relations, AXA XL.
While they do not yet have the data to fully identify the cause,
anecdotally it appears to be tied to the economy, the limited
availability of qualified engineers, and the inappropriate level of
team training and supervision for design and construction phases,
according to Rabasca.
"Basically, the quality control process is either lacking or not
drilling down to the folks who are on the ground," he says.
According to Farrar, design errors may be increasing because
A/E firms also are facing staffing problems that often lead to
inexperienced people working on complex tasks with less supervision and more senior people retiring, causing a decrease in
QA/QC review.
"During the last recession, a lot of engineers left the industry.
■ Increased 40% ■ Flat 60% Decreased 0%
Now this next generation is younger, and there is not that middle
Source: 2019
ACEC/AIA/AIA
Trust/NSPE
Professional
Survey
of CarriersCecchi
(10 of 15 firmsadds.
responding).
management
level
to help
guide
andLiability
teach
them,"
Poor contracts and poor communication between an A/E
firm and the project owner were listed again this year as major
causes of client claims. Even where a design error may be the
cause of the claim, good communication can minimize the
payout, Farrar adds.
PLI IN THE FORECAST

Weather-related concerns came to the forefront for the first
time this year as a source of potential future claims against
design firms. With 100-year storms occurring two or three
times in a decade, questions may arise over the standard of
care, according to Corbett.
"Future weather uncertainty could result in significant exposure for architects and engineers," Corbett says. "More claims

■ Increased 40%

■ Flat 60%

■

Decreased 0%

■

Source: 2019 ACEC/AIA/AIA Trust/NSPE Professional Liability Survey of Carriers (10 of 15 firms responding).

■

How Do You Expect Your Rates
to Change in 2020?

■ Increase 45%

■ Flat 36%

■ Flat/Level or Slight Increase 9%

Decrease 0%

■ Flat/Level or Slight Decrease 9%
Source: 2019 ACEC/AIA/AIA Trust/NSPE Professional Liability Survey of Carriers (11 of 15 firms responding).

around weather change will center on allegations that the architect and engineers should have anticipated that the code would
not be sufficient to protect the property from flooding. Right
now, we have building codes that are not being updated."
Crediting an expert on FEMA flood-proofing and other disaster projects, Rabasca suggests that when design professionals use
FEMA maps to determine flood elevations, those maps should
only serve as a starting point for design.
"Flood design is not just about elevation. The velocity, debrisimpact risk, rate of rise for the water, duration of flooding, and
WINTER 2020

ENGINEERING INC.

Engineering Inc. - Winter 2020

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