9
OPINION
Despite recent success, AEC firms may need to navigate headwinds to mitigate risk and sustain growth and profitability. Insurers signal rising risk for AEC firms
A lthough architecture and engineering firms continued to reap the benefits of opportunities stemming from gradual economic growth, many of their professional liability insurers have lingering concerns about the effects of inflation on claim expenses; exposures related to higher risk projects and design disciplines, as well as emerging risks from artificial intelligence.
Jared Maxwell
As a result, 71 percent of insurers participating in the Ames & Gough 2025 survey of 17 leading insurance companies providing professional liability insurance to architects and engineers in the U.S. are planning rate increases; 24 percent plan to hold rates steady, and one insurer expects to reduce rates. Among insurers raising rates, all but one plan modest increases of up to 5 percent with the other planning an increase of 6-10 percent. Here are 10 key findings and insights from the survey that shed light on the insurers’ concerns and may be helpful to architecture and engineering firms as they develop or refine their business and risk management strategies during the remaining months of 2025 and beyond: 1. Economic and social inflation remain huge challenges. Besides higher costs for construction materials, supplies and labor as leading to higher
damages and settlements, most insurers pointed to social inflation, particularly jury awards and litigation trends, as contributing to higher claim payouts. One insurer estimated claim costs are rising 3 percent to 5 percent annually. 2. Insurers continue paying multimillion-dollar claims. Nearly all insurers surveyed reported paying multimillion-dollar claims in 2024 with 82 percent paying a claim between $1 million and $4.9 million and one insurer reported paying a claim that exceeded $20 million. 3. Insurers watching high-risk disciplines. When asked to rank the top three disciplines for claim severity, 70 percent of the insurers surveyed cited structural engineering; the same percentage identified architecture, followed by civil engineering (59 percent).
See JARED MAXWELL , page 10
THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593
Made with FlippingBook flipbook maker