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Architects and engineers insurance rates expected to rise in 2013

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Architects and engineers insurance rates expected to rise in 2013

Many architects and engineers can expect another year of increased rates, according to a broker survey.

Of 13 insurers surveyed who account for more than 70% of the overall market for architects and engineers professional liability insurance in the United States, nine expect to obtain rate increases this year, while the remaining four expect rates to remain flat, according to a survey by McLean, Va.-based Ames & Gough issued Monday.

Of those insurers that plan to seek rate hikes in 2013, 33% expect to seek increases of 6% to 10%, while 56% plan increases of 3% to 5%, and 11% expect to ask for hikes of zero to 2%, according to the survey.

This year, as largely anticipated in last year's survey, 62% of insurers increased professional liability insurance rates in 2012, and the remaining 38% generally saw rates remain at previous levels.

Of the insurers increasing rates in 2012, 50% had rate increases of 6% to 10% or more, 38% had rate increases of 3% to 5%, and 12% raised rates by zero to 2%. The remaining insurers indicated their rates were flat on a year-over-year basis, and no insurers reported lower rates in 2012 versus the previous year, according to the survey.

“Although professional liability insurance premiums are rising for most architectural and engineering firms, the market is far from uniform in its pricing,” Ames & Gough President and CEO Dan Knise said in a statement.

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“We're seeing different dynamics at play, as some insurers reconfigure their portfolios to include more small firms and lure them with competitive pricing while raising rates for larger firms. Similarly, insurers just beginning to offer this coverage are being more aggressive on pricing when compared to longer-term players who've paid some claims.”

Meanwhile, available capacity has varied. Two insurers said they can provide up to $25 million in limits; two can provide up to $20 million; five will provide up to $10 million; and four will provide limits up to $5 million, according to the survey.

Copies of the survey, “PLI Market 2013: Insurers Adjust Rates, But Maintain Capacity,” are available by emailing info@amesgough.com.