Architects and engineers face flat to modest rate hikes in 2015
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Most professional liability insurers for architects and engineers anticipate flat or modest rate hikes this year, a broker's survey says.
Eight of the 14 insurers surveyed by McLean, Virginia-based Ames & Gough said they expect to obtain professional liability rate increases during 2015, while the remaining six see their rates remaining flat, according to the survey issued Wednesday.
“They consider this discipline necessary to offset the continued low-interest environment and recover from the premium rate decline of past years,” says the survey.
While the professional liability insurance market generally remains competitive, insurers are sharpening their focus on sound underwriting and carefully assessing the performance of their overall book,” Dan Knise, president and CEO of Ames & Gough, said in a statement.
“In this environment, many insurers continue to vie for relationships with smaller design firms, considered by underwriters as lower risk, and those with a good loss history and well-established and documented risk management programs,” Mr. Knise said.
The Ames & Gough 2015 Architects & Engineers Professional Liability Insurance Survey also found that 64% of the insurers had increased their professional liability insurance rates modestly in 2014, while 29% generally saw rates remain at previous levels, and one insurer lowered its rates.
A total of 43% of the insurers cited higher claims severity, but only 7% saw increased claim frequency. A total of 43% of those surveyed identified certain project types, such as condominiums, schools, and wastewater treatment and data centers, as causing more claims. In addition, 36% cited increased defense costs as an emerging cost driver for claims.
The 14 insurers participating in the survey account for more than 75% of the overall market for architects and engineers professional liability insurance in the U.S., according to the broker.
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