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Architects & Engineers Professional Liability. Zurich North America Design Professional. Overview. General Discussion on issues affecting A&e Professional Liability Insurance Conditions that specifically affect the underwriting process for a&e professional liability

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Presentation Transcript

Architects & Engineers

Professional Liability

Zurich North America

Design Professional


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
Market Overview-Primary Market
  • Domination by two companies

DPIC 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
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
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
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 e professional liability products
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
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
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.