Minimize Risk - Maximize Performance
January 2015

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Results will be provided in future newsletters, articles and industry training sessions. 

2014 A/E Industry
& Risk Survey

Live Survey Link 

Current Survey Responses

Project Types:

Commercial/Office - 17%
Apartments - 16%
Schools/Colleges - 15%

Increase 10% - 21%
Increase 20% - 16%
Zero Change - 16%

Claim in the Last 3 Years
Yes - 50%

Cause of Claim(s)
Technical Error, Omission - 23%
Poor Communication - 18%
Poor client due diligence - 12%

Additional Causes of Claims
Aggressive schedules
Lack of PM Strength
Contractor Quality Control
HOA Condo claims at 10 year limit


Survey Documents & Reports 

 FREE documents, articles and checklists to assist your firm.

Free SmartRisk Documents

SmartRisk Client Documents

Industry specific reports, updated surveys, articles and helpful practice management guidance documents and checklists. Additional documents will routinely be added to this list.

SmartRisk Client Documents

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A/E Insurance Update & Selection Criteria


The Architect and Engineering (A/E) industry is making a recovery with many firms seeing an increase in annual revenue following the recession of 2008. At the same time we have more insurance carriers, between 50 – 60 insurance providers supporting this specialized insurance market compared to approximately 15 in 2007. The increase of carriers has advantages for A/E firms – more options with an enormous amount of insurance capacity (amount of available insurance). The disadvantages - selecting a carrier has become more difficult with wide variations and low cost providers looking very attractive.


A/E insurance is a specialized market and there can be significant differences between experience, expertise, policy features and services offered by carriers. Each year members of ACEC’s Risk Management Committee, along with AIA and NSPE members interview insurance carriers on program changes and industry trends. Article link: ACEC PLI Article


Quality Selection Process


A/E firms are cautioned and suggest they use the same evaluation process selecting an insurance carrier they would use for any other business partner. Firms should look well beyond premium - evaluating vital characteristics of an insurance provider. With the dramatic numbers of carriers in the market, many may have limited experience in critical areas.


Using a quality selection process cannot be overstated. When selecting an insurance provider, the best approach is using the same “quality selection process” when selecting consultants, or A/E's would like clients to apply when selecting project team members. You want a team to be selected based on their “capability” and “quality” not a “low-bid” selection process.


Selection Categories


Financial Stability: An important factor is financial strength and stability. Assess financial strength by A.M. Best Company, Standard & Poor’s, Fitch Ratings, and Moody’s Investors Services. Look for ratings - under watch, or have a positive or negative outlook.


Underwriting Staff: This is a specialized segment and there continues to be a limited pool of experienced, knowledgeable A/E underwriters. Knowledge of A/E firms and professional liability (PL) insurance is critical. Certain providers may have only one or two experienced individuals in the organization. Look beyond the product-line manager for underwriters with more than 10 years experience in the A/E PL segment. These are the individuals that will be making the decisions when underwriting your account.


Coverage Features: Insurance policy and coverage features can vary a great deal. Certain carriers specify coverage features while others indicate there policy offers more coverage with less stated in their policy language.
Do not just read the marketing material and brochures provided by the carrier.
It is important to work with an insurance professional to evaluate coverage language and specifically exclusionary features. Marketing material and policies may identify "highlights" in one section then they are removed or limit coverage in your policy.


Claims Management: Experience in the A/E PL marketplace is critical for claims managers along with the selection used for local panel counsel.
When things start going wrong, you want someone that knows the A/E business, in your local region to help handle a claim situation.
Look for an average of 10 plus years of experience. It is vital to inquire into a carriers claim management experience and practices. Inquire if the carrier allows you to selection counsel or is selection limited.


Pre-Claims Assistance: This service assists firms when things “may” be going wrong or when assistance or guidance is needed when no formal claim has been made against you. This is an important service option that should be offered at “no cost” to insured’s. The quality and capability of this service is based on the carrier’s claims experience and practices, which can vary widely. Inexperience can mean problems that lead to claims. Certain carriers have dollars limits or offer assistance at there discretion. Watch for carriers that do not seperate pre-claims assistance from claims. In these situations, pre-claims are identified on loss runs as claims. A BIG disadvantage for firms.


Risk Management Services: Claims and litigation are costly and time consuming. Before having to use an attorney, it is important to be knowledgeable of risk trends and incorporate strategies for mitigating liability exposures. Such programs indicate a provider’s commitment, knowledge, and interest in managing risk for insured’s. Programs vary widely with certain carriers offering extensive programs with others offering limited or no services, which should be at significant premium savings over full service providers.
Others offer premium credits if firms have implemented risk management practices offered by third parties.


Industry Feedback: Inquire and obtain feedback from other A/E firms and industry professionals. Some carriers have a reputation of being very good while others of being difficult to work with when a claim occurs, or automatically issue a reservation of rights (coverage may not apply) when a claim is filed.
Inquire if the carrier has a positive reputation for services and claims handling.
What is their renewal rate when firms have had a claim?
Does the carrier have an excellent reputation for claims handling?


Industry Timeframe: The length of time in the industry indicates a dedication and successful underwriting strategy. However the landscape is changing with newer entrants hiring experienced professionals from the long-term providers.
It is always a good practice to request information about underwriters and claims managers; experience, abilities, commitment and practices as indicated above.


Specialized A/E Insurance Agents and Brokers: One of the best practices for firms is working with an insurance agent that is specialized in the A/E industry. There are agents and brokers across the country that specializes in A/E insurance. Two retail agent networks that specialize in offering insurance across the country with agents supporting specific states and regions -  PLAN and AE ProNet. PLAN Link  and AE ProNet Link There are also wholesale brokers that specialize in the A/E market segment that can assist general retail agents. Two examples;  RPS Link and  CRC Link




A/E firms are advised to make risk management a priority that includes the selection process of your professional liability insurance carrier. Professional liability insurance is a vital part of any firms operations and should not be viewed as only a " line-item" expense. When selecting your insurance provider, ensure your use the same quality selection process you would use for any other business partner.

You are welcome to forward this newsletter to others who may be interested.

Thank you.

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SmartRisk is a leading risk and practice management consultancy for design and building professionals. Through firm specific risk assessments, training and consulting, services focus on improving overall performance, profitability and reducing insurance costs through tailored risk management solutions.

If you have any questions about our services, or would like dicusss how we could assist your efforts, please contact us.

Thank you,

Timothy J. Corbett, BSRM, MSM, LEED GA
Founder & President

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