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BUSINESS NEWS ARCHITECTS, ENGINEERS FACE ECONOMIC HEADWINDS IN 2022; STEEPER HIKES IN PROFESSIONAL LIABILITY INSURANCE RATES Even as the U.S. navigated a second year of the pandemic, most insurers providing AEC professional liability insurance remain concerned about their deteriorating claims experience and issues related to the pandemic. These factors are leading many insurers to seek more extensive and sizable rate increases, according to a new survey by Ames & Gough. As they look ahead in 2022, 81 percent of insurers in the Ames & Gough survey of 16 leading insurance companies are planning to raise rates with the remaining insurers seeking to hold rates steady. This year, insurers planning to raise rates are divided between those seeking modest increases of up to 5 percent and those planning increases of 6 percent or more. “Along with worsening claims experience, insurers have become increasingly concerned about the impacts of the pandemic both on their design firm clients and on the economy,” said Jared Maxwell, vice president and partner, Ames & Gough. “Besides worker shortages at AEC firms and supply chain disruptions affecting building materials, insurers are focused on how COVID-19 has elevated cyber risks and the potential for rising claim costs due to economic and social inflation, and prolonged litigation due to case backlogs in courts.”

Among insurers surveyed, 63 percent saw an increase in claim severity in 2021 and 31 percent experienced greater claim frequency. The majority of insurers surveyed also reported paying multimillion dollar claims in 2021, with one in four paying a claim of $5 million or more, including 13 percent of the insurers surveyed paying claims between $10 million to $19.9 million. Given the significant number of large losses, insurers surveyed shared lessons learned to help AEC firms avoid these outsized claims. Several pointed to the need for appropriate contractual scrutiny, including having a clearly defined scope of service, meaningful limits of liability protection, and a careful review of indemnification provisions. “In the current economic environment, project owners and their legal counsel are inserting onerous contractual language to transfer as much risk as possible to design firms,” said Cady Sinks, assistant vice president, Ames & Gough. “Besides carefully reviewing their potential contractual obligations before signing, AEC firms need to be thorough in their selection of projects, clients, and subconsultants. They also should stay focused on maintaining high standards for quality control and assurance.” Among insurers surveyed, 63 percent expressed concern about the impact of the “great resignation” on design firms

– in particular, the potential for worker shortages and increased claims. Insurers saw this trend exacerbating risks of design and technical errors, and project delays. They also pointed out the loss of institutional knowledge at AEC firms needed to keep projects on track and flag potential issues. With respect to their underwriting discipline and plans for rate increases, 77 percent of the insurers surveyed plan to target increases on what they consider higher risk projects, such as condominiums and schools; the same percentage will target higher risk disciplines, including structural engineering, architecture, and geotechnical engineering. Meanwhile, 38 percent plan to apply increases to firms operating in states considered high-risk or with generally adverse loss experience, including California, Florida, New Jersey, and Texas. Furthermore, 69 percent of the insurers surveyed are planning increases across their entire book of business. With design firms involved in more than 400 mergers and acquisitions in 2021, insurers cautioned those making acquisitions to practice careful due diligence, particularly in assessing the target firm’s legacy exposures. They also noted the need to focus on addressing employee concerns and conducting a thorough insurance program review.

personality and ability to communicate, collaborate, and to be responsive. To some, it might seem as though a site superintendent and project manager are responsible for many of the same things (i.e., planning, management, quality, reporting, etc.), but they aren’t. The site super is on-site from day to day, interacting with people across the trades, while the project manager is usually in an off-site office, handling more of the administrative matters which pertain to the project. Although a site super isn’t typically the first person thought of when it comes to a design and construction project team, there is little doubt they often contribute the most on an individual and continual basis and, for this reason, they earn the distinction of MVP. Roger Marquis is business development director at Liebhaber Company, a full-service New York City-based general contracting, construction management, and architectural millwork firm focused on high-end residential and hospitality projects. Connect with him on LinkedIn.

ROGER MARQUIS, from page 9

depth and breadth of knowledge and are involved with just about everyone on the project team throughout the project’s life span, more than most, superintendents are able to anticipate potential issues that might arise and know how best to navigate them to keep the project from being derailed. “Although a site super isn’t typically the first person thought of when it comes to a design and construction project team, there is little doubt they often contribute the most on an individual and continual basis.” Another characteristic which serves to differentiate site supers from others on the project team is their ability to instill a greater sense of harmony between all of those working on the construction site. This is where their knowledge and experience of the various trades comes into play, as does their

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