Engineering Inc. - Winter 2020 - 34

"Developing a long-term relationship with your insurance
carrier is especially important in the event your firm has a
period of claim activity."
JEFF CONNELLY
SENIOR VICE PRESIDENT
GREYLING INSURANCE BROKERAGE & RISK CONSULTING

wave heights are additional factors that might influence design
decisions. Accordingly, design professionals must also investigate
what is happening locally with climate change before design and
construction in order to lower their risk exposure," Rabasca says.
Furthermore, design professionals should be wary of signing certifications for flood-proofing, according to Rabasca.
"When a designer signs the certificate, in essence they are
warranting not only that they have designed to that requirement
but also that the contractor has constructed the building to that
requirement," he adds. In cases of recertification, Rabasca
further advises that "they must also ascertain that no
changes have been made to the structure since the
initial certification, which might jeopardize the
integrity of the original flood-proofing design
and construction."
CYBERSECURITY SPINS OFF

Design errors
are reportedly
the source of
57 percent
of claims

Cybersecurity coverage remains a
requirement for most firms, carriers
say, especially with the rise in ransomware
and its payoff demands.
But this year, nearly all carriers surveyed
recommended that A/E firms have a separate,
stand-alone policy for cybersecurity because standalone coverage is cheaper and often better than what PLI
carriers can offer.
Furthermore, any claims would not count against PLI
policy losses.
WITH GROWTH COMES OPPORTUNITY

With premiums at competitive rates and carriers adding new
extras and improved policy forms, A/E firms should avoid
shopping every year and instead acquire quotes every three to
five years.
"This should be done just to see what the market looks like,"
says Jeff Connelly, senior vice president at Greyling Insurance
Brokerage & Risk Consulting.
An engineering firm's coverage needs also may have changed.
For example, new services being offered by the firm that a carrier is not comfortable insuring, a complex project that requires
unique coverage, or a need for higher liability limits that the
current carrier cannot provide, Connelly adds.
If a current carrier is not as responsive when handling a claim,
that could mean it is time to take another look at the market.
"Developing a long-term relationship with your insurance
34

ENGINEERING INC.

WINTER 2020

carrier is especially important in the event your firm has a
period of claim activity," Connelly says.
While a lower premium is usually the goal of most firms, those
rates are often short-lived as carriers begin paying out on claims.
"Historically, newcomers try to drive down prices 10, 15, or
20 percent, and usually they are out of business in three to five
years because architects and engineers have losses," says Chris
Poole, principal at Poole Professionals Ltd. and president of the
Professional Liability Agents Network (PLAN). "People who
are usually coming in at a lower price point do not have the
established claims management staff or risk management
services, and inherently that drives up claim costs for
both the insurer and insured."
However, smaller firms without complex projects could still benefit from these newer lowcost carriers.
"Some in the last five years are very
good," says Mark Jackson, president
of a/e ProNet and founding partner of
JCJ Insurance. "Staff is very experienced
and comes from other A/E specialty insurance
carriers."
RISK MANAGEMENT ADVICE

The entire firm, from junior staff through senior executives,
needs to be sensitized to risk management topics, according to
Poole. For starters, everyone involved in a project should read
a contract before it is signed.
"It is the junior-level person who often commits the firm to
something or does not read the contract to understand that the
scope of services was limited in a particular area, but goes on
providing those services," Poole says.
Firms can also reduce their liability risk by working with
repeat clients and through better due diligence in selecting new
clients, according to Jackson.
"Firms that are more selective on who they work for and the
project type are going to have better results than those who just
go after the money," he says.
Ultimately, carriers want an engineering firm's business and
are offering broader coverages and adding services to assist firms
in lowering risk and improving claim outcomes. As quickly as
things change it, it makes sense to review a policy against others
being offered every few years. ■
Stacy Collett is a business and technology writer based in Chicago.

Engineering Inc. - Winter 2020

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