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O P I N I O N
Stable and competitive
D esign firms in the process of renewing their professional liability insurance programs will find the marketplace generally stable and competitive even with the enduring uncertainty created by the COVID-19 pandemic. Design firms in the process of renewing their professional liability insurance will find the marketplace generally stable and competitive, even amid uncertainty created by COVID-19.
Meanwhile, many AEC professional liability underwriters generally are adopting targeted approaches to rate adjustments, focusing rate decisions on a design firm’s disciplines and project mix, as well as certain geographic regions associated with worsening claims experience or higher risk. Insurers also are carefully monitoring evolving and expanding exposures surrounding the COVID-19 “In this environment, design firms need to remain vigilant about their risk management measures, including practicing sound contract hygiene.”
There continues to be an abundance of capacity, which is creating downward pressure on rates. Nonetheless, more insurers are trying to achieve a rate increase between 5 percent and 10 percent on renewals. Although some insurers have targeted across the board rate increases on all renewals, accounts with a clean five-year claim record and/ or with lower risk practices and project types have seen any rate increases fall well below insurers initial targets. Overall, AEC professional liability claims experience began to deteriorate in 2019 with many insurers seeing greater claim frequency, higher severity, or both. Increases in claims correlate to the supply of the AEC workforce versus the demand in the construction industry. Should the increased pace of claims activity continue, the insurers will, at some point, require further rate action.
Jared Maxwell
Tom Marchetti
See JARED MAXWELL & TOM MARCHETTI, page 4
THE ZWEIG LETTER DECEMBER 7, 2020, ISSUE 1370
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