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TRANSACT IONS SOUTHWEST GEOPHYSICS MERGES WITH SCST TO ENHANCE AND COMPLEMENT SOLUTIONS SCST, Inc. announced a merger with Southwest Geophysics, Inc. Southwest Geophysics is a San Diego based firm specializing in geophysical data acquisition, processing, and interpretation. The firm has experienced accelerated growth over the past few years and will operate as a subsidiary of SCST. The merger presents both organizations the opportunity to expand geographically and strategically while simultaneously enhancing and complementing services already available to both client bases. “We are thrilled to welcome Southwest Geophysics into the SCST family. This merger will allow SCST to expand into new geographic

areas and bring a specialized service to our existing and future clients,” explained Neal Clements, CEO of SCST. “Their experience and reputation as an industry leader will continue to support our vision of providing the best technical solutions to the most challenging projects.” Established in 2004, Southwest Geophysics is comprised of skilled geophysicists providing state-of-the-art geophysical services; nondestructive and relatively unobtrusive subsurface investigations. Their innovative and cost-effective methods help reduce explorative costs and assist in mitigating against unexpected site conditions. The use of geophysics provides pragmatic data relating to structural, geotechnical, geologic, and

hydraulic conditions as well as subsurface infrastructure. “Southwest Geophysics is excited about the merger with SCST,” says Hans van de Vrugt, Principal Geophysicist at Southwest Geophysics. “We have a long-standing relationship working together for many of the same clients. This merger will allow us to collaborate and continue to provide our expertise across a broader range of clients across the United States.” Established in 1959, SCST is a professional engineering firm headquartered in San Diego with additional offices located in Los Angeles, Newport Beach, Fresno, Chicago, and Milwaukee.

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$10 million and $19 million. Along with the potential for large claims, contractual requirements by clients are driving design firms to purchase higher insurance limits. Today, many face requirements for limits of $5 million to $10 million, up from former standards that called for limits of $2 million to $3 million. “Whether a design firm is looking to maintain its current level of business or expand into new areas, an experienced insurance advisor can help them make sure they have the coverage and program structure required to address their evolving needs.” 6)Don’t overlook the need to maintain sound risk manage- ment. Even as the market for professional liability insurance remains competitive, A/E firms need to remain focused in their risk control efforts to mitigate claim activity. One key is to negotiate contracts that fairly allocate risk and limit uninsured exposures, which might involve making sure cli- ents know you won’t be covered for certain risks. Firms also should engage staff in risk management training through we- binars or seminars to help avoid claims or mitigate the risk. Given the continued competitive marketplace for professional liability insurance, design firms have the opportunity to make sure their insurance protection and risk management are aligned with their risks. Whether a design firm is looking to maintain its current level of business or expand into new areas, an experienced insurance advisor can help them make sure they have the coverage and program structure required to address their evolving needs. To obtain a complimentary copy of the Ames & Gough survey, PLI Market 2018: Insurers Maintain Growth, Profitability Against Headwind of Competition , email info@ amesgough.com. JOAN DELOREY, RPLU, CRIS, is senior vice president and partner at Ames & Gough. She can be reached at jdelorey@amesgough.com.

business interruption losses, social engineering fraud, cyber extortion, and network and data damage. 3)Know how new business and M&A transactions will im- pact your risk profile. Even under the current competitive market conditions, underwriters generally have continued to prudently evaluate exposures. For instance, while several factors might affect how they underwrite a particular risk, insurers now place more emphasis on an A/E firm’s project mix. This year, 88 percent of those surveyed identified type of project (e.g., condominiums, schools, transit, tunnel, water/ wastewater), as one of the top factors for raising a design firm’s PLI premium rates. So, firms expanding their business or engaging in mergers and acquisitions might consider how these initiatives could affect how underwriters perceive them and the impact on their insurance program and costs. 4)Be aware of risks insurers are monitoring as potential red flags. Insurers are carefully watching what they deem to be emerging risks. When asked about their top concerns, the most prominent were: evolving project delivery methods (e.g., design-build and public-private partnerships), cited by 82 percent; judicial rulings that may erode protections for design firms under state statutes (76 percent); innovation, such as new construction materials/methods (47 percent); and the use of BIM and technology (18 percent). “Given the continued competitive marketplace for professional liability insurance, design firms have the opportunity to make sure their insurance protection and risk management are aligned with their risks.” 5)Take care in assessing liability limits. Even as stable claims experience, reported by 76 percent of the insurers surveyed, is helping insurers maintain profitability and keep rates down, design firms still face the potential for catastrophic losses. When asked to provide the amount of their largest single professional liability loss paid in 2017, the majority (59 percent) of insurers surveyed paid a claim of at least $1 mil- lion or higher, including two insurers whose largest claim paid was between $5 million and $9.9 million and two between

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

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