architects & engineers professional liability

Zurich North America

Architects & EngineersProfessional Liability

Zurich North AmericaDesign Professional


Overview

General Discussion on issues affecting A&e Professional Liability Insurance

Conditions that specifically affect the underwriting process for a&e professional liability

Why is it so important to understand these issues

Zurich’s response to market conditions


Market Overview-Primary Market

Domination by two companiesDPIC with plan agents, CNA with Pronet agents

Lack of senior technical underwriting knowledge

Lack of credible actuarial loss information Small firms represent significant catastrophic

loss exposure depending on area of practice Adverse selection process at work


Market Overview - Secondary Market

Excess and Surplus Companies

Highly Volatile -- over 20 insurers have entered and left in past 10 years

Only 3-4 stable providers remain Stability in some areas in question due to prior

growth in project insurance and large A&Es New entrants lack long-term commitment that

sophisticated A&Es require


Profitability Factors

Focus on annual insurance or new products Admitted coverage Liability is negligence-based as opposed to strict

or contractual Severity of claims further reduced by computer-

aided design developments and construction management practice

Statutory protection offered by most states for late and frivolous claims, statutes of repose or limitation, certificate of merit.


Recent Developments

Rates for A&E professional liability have been increasing for past 18 months

Rates for project insurance have at least doubled since last year

Policy forms, especially on project insurance, have tightened in coverage

Large segment of construction project owners prefer the owner’s protective product offering to mitigate exposures


Zurich North America’s A&EProfessional Liability Products

Owner’s Protective Professional Indemnity (OPPI)Offers same protection to project owners as project insurance by supplements underlying insurance instead of replacing primary coverage of A&e

Contractor’s Protective and Professional Indemnity Insurance (CPPI). Offers professional liability insurance to design builder in conjunction with OPPI coverage


Emerging Issues

Economic downturn in private-sector construction

Condominium and residential construction market litigation

Increased contractual liability exposure with use of new COAA proposed contracts

Mold New entrants to marketplace may repeat

mistakes of the past


Strategies for Survival and Growth

Employ best selection process Growth with new products and services Solidify existing broker/client relationships Capitalize on cross-selling opportunities Push for adequate rates on programs.

architects & engineers professional liability

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