issues & answers: architects and engineers...under writing courage takes practice. for over 50...

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ISSUES & ANSWERS:

ARCHITECTS AND ENGINEERS

Interviewed Inside:

Bob RogersAIG

Underwriting courage takes practice.

For over 50 years, we’ve built a legacy of expertise and market leadership.

From Main Street to Wall Street, we optimize solutions across an array of risks.

Let’s talk.

lexingtoninsurance.com/2019

The best

is

PROTECTIONEXPERIENCE.

Lexington Insurance Company and Western World Insurance Company are U.S.-based surplus lines insurers.

AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit www.aig.com. Products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Not all products and services are available in every jurisdiction, and insurance coverage is governed by actual policy language. Certain products and services may be provided by independent third parties. Insurance products may be distributed through affiliated or unaffiliated entities. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.

Lexington_December_2019_FINAL.indd 1 11/12/2019 10:37:12 AM

Issues & AnswersIssues & Answers

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BEST’S REVIEW • DECEMBER 2019

ISSUES & ANSWERS: ARCHITECTS AND ENGINEERS

Bob Rogers, global head of construction professional liability at AIG said Lexington Insurance Co. has underwritten architects & engineers PL for more than 45 years. Following are excerpts of an interview.

What has been happening in the architects & engineers (A&E) professional liability market?For more than a decade, the U.S. A&E professional liability market has been very stable. Capacity has remained consistent, though there has been some churn in the carriers. Terms and conditions have evolved to be mostly standardized among different carriers. Insurers seek to differentiate themselves with value-added services for their clients. At Lexington, we pride ourselves on our underwriting courage and claims expertise, coupled with our industry-leading risk management service. Outside of the U.S., the A&E market is quite different, particularly in London, where carriers have reacted to adverse underwriting results. Most non-U.S. markets have hardened in 2019 and seem likely to continue to do so.

Are there any emerging trends that impact the business of your insureds?The A&E market has tended to focus on risks specific to the design and construction industry including the increased use of design build contracting and the emergence of public private partnerships to deliver projects. These issues are certainly relevant to design clients and their underwriters, but collectively, we must also focus on the macro trends that are steering the broader casualty market: widespread increase in litigation, increasing tort costs, proliferation of “nuclear” verdicts, etc. It is certain that these trends have the same impact on architects and engineers that they do on virtually all other segments of the economy. At Lexington, we collaborate with our clients and brokers to mitigate and manage emerging exposure trends.

Have these trends impacted insurance industry results?Yes. In recent years, there have been several well-publicized settlements in excess of $100 million. Overall loss frequency has also increased sharply in recent years. Some designers have suffered from both frequency and severity. Each claim has its own story, but the macro trends that have impacted the broader casualty market have had the same adverse impact on A&E insurers. At Lexington, through the right balance of attachment, coverage, and limits, we provide comprehensive solutions to complex coverage challenges.

What is the most important thing for underwriters to consider?The key thing for underwriters to consider in a changing environment is risk selection. Experienced underwriters know the design disciplines and project types that have historically driven A&E claims. Prudent risk selection requires a synthesis of these historical drivers, recognition of emerging trends, and individual account metrics to make differentiated underwriting decisions. Lexington has underwritten A&E professional liability insurance for more than 45 years. We are fully committed to this industry and will continue the thoughtful underwriting that has been our hallmark.

Designing the Right Coverage

Bob RogersGlobal Head of Construction Professional Liability AIG

“At Lexington, we are individual risk underwriters and we will remain valued partners to the design community that we’ve served for so many years. We understand and insure risk.”

Underwriting courage takes practice.

For over 50 years, we’ve built a legacy of expertise and market leadership.

From Main Street to Wall Street, we optimize solutions across an array of risks.

Let’s talk.

lexingtoninsurance.com/2019

The best

is

PROTECTIONEXPERIENCE.

Lexington Insurance Company and Western World Insurance Company are U.S.-based surplus lines insurers.

AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit www.aig.com. Products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Not all products and services are available in every jurisdiction, and insurance coverage is governed by actual policy language. Certain products and services may be provided by independent third parties. Insurance products may be distributed through affiliated or unaffiliated entities. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.

Lexington_December_2019_FINAL.indd 1 11/12/2019 10:37:12 AM

View past Issues & Answers sections atwww.bestreview.com/issuesanswersarchive.asp