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Broker Survey Shows Architects & Engineers Liability Rates Increasing in 2011

Source: Mark E. Ruquet,

Posted on 25 Feb 2011

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According to a just-published broker’s survey by Washington, D.C.-based insurance broker Ames & Gough, for the first time in years, a number of leading insurance companies offering architects and engineers professional liability insurance see rates increasing in 2011.

Ames & Gough said that higher claims frequency driven by the economy and elevated defense costs in the age of electronic discovery are among the factors fueling the change. The broker’s survey found that half of the major insurers of professional liability insurance for architects, engineers and construction professionals in the United States will seek rate increases this year. The other half said they plan to maintain rates for the year.

Ten insurers, which represents  about 70 percent of this A&E professional liability niche market, participated in the survey.

According to the survey, last year, 30 percent of these insurers saw rates decrease, while 40 percent said rates were flat. The remaining 30 percent experienced increases, some approaching double digits.

Ames & Gough, which places insurance for more than 900 architects, engineering firms and other construction professionals of all sizes, said that small architectural and engineering firms generally received decreases in premium rates in 2010, while larger firms were subject to premium increases driven by claims or larger reductions in exposures.

The broker noted that with construction volume down and reducing insured exposures, underwriters are seeking to catch up on reduced premium volume by charging higher rates.

Ames & Gough does not believe that the recent buyers’ market has ended, however, stressing that while the survey shows “a definite stabilizing” in the A&E professional liability market, also known as the A&E errors and omissions market, “there is very little to suggest any dramatic upward swing in rates.”

Dan Knise, Ames & Gough’s president and chief executive officer, said, “Recent renewals show that while the overall insurance market for architects and engineers professional liability coverage is stabilizing, newer players in this segment are still creating competition.”

“Smaller and midsize architectural and engineering firms are the ones seeing the greatest benefit,” he continued. “Still, firms thinking about changing insurers should carefully weigh the value of continuity and stability against the near-term opportunity for a lower premium payment,” he advised in a statement released with the survey findings.