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Ten takeaways from the Ames & Gough survey of 15 leading insurance companies providing AEC professional liability insurance in the U.S. Update on professional liability insurance
T here’s no question the coronavirus pandemic is having a widespread impact on the U.S. economy, including the construction industry. To this end, any impact on AEC professional liability insurance with respect to insurers’ overall plans to pricing, capacity, or coverage remains to be seen. In the meantime, however, it may be instructive to look back and review their perspectives at the start of the year, prior to the outbreak of COVID-19 in the U.S.
2) Claim frequency and severity rose. Among insurers surveyed, 40 percent reported a worsening of their claims experience last year with most seeing losses increase as much as 10 percent. Many saw more claims related to certain project types, such as residential and infrastructure. Among disciplines, structural engineering was cited for having both high claim frequency and severity; architecture, mechanical engineering, and civil engineering also had higher severity. These outcomes were in contrast to past years, where generally favorable claims experience contributed to insurers’ profitability and rate stabilization. 3) Insurers planned targeted rate increases. Driven by concerns about deteriorating loss experience insurers were planning modest, albeit
Here are 10 takeaways from the Ames & Gough survey of 15 leading insurance companies providing AEC professional liability insurance in the U.S.: 1) Insurers had significant premium growth last year. With the U.S. construction industry generally healthy, billings for AEC firms were up, which contributed to premium growth. Other key factors driving higher premiums included design firms taking on greater risk, having poor loss experience and purchasing higher limits as required by their clients. Today, even though the coronavirus pandemic has stalled construction for the time being, demand for building is likely to remain when the crisis ends. Furthermore, added pressure on the federal government to pass major infrastructure spending may pave the way for a substantial recovery.
See JOAN DELOREY & JARED MAXWELL, page 12
THE ZWEIG LETTER APRIL 27, 2020, ISSUE 1342
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