Architects and engineers professional liability rates on the rise

More than three-quarters of professional liability insurers for architects and engineers are seeking rate increases this year, with the remainder planning to hold rates steady, according to a report released Wednesday.

Eighty-one percent of the 16 insurers surveyed by McLean, Virginia-based specialty broker Ames & Gough are seeking hikes, according to the survey.

The survey found 31% of the insurers plan to raise rates across their entire book of business, while 38% said they will target increases on companies in states that are either historically considered higher risk or those with generally adverse loss experience. Some insurers pointed to California, Florida, New Jersey and Texas as states where rate hikes may be implemented.

“Along with worsening claims experience, insurers have become increasingly concerned about the impacts of the pandemic, both on their design firm clients and on the economy,” Jared Maxwell, vice president and partner, Ames & Gough, and co-author of the report, said in a statement.

“Besides worker shortages at A/E firms and supply chain disruptions affecting building materials, insurers are focused on how COVID-19 has elevated cyber risks and the potential for rising claim costs due to economic and social inflation, and prolonged litigation due to case backlogs in courts,” Mr. Maxwell said.

Among other survey findings, all insurers participating in the survey introduced rate hikes last year, with 56% reporting increases of up to 5%, with the remaining 44% reporting hikes of 6% or more, including 13% with rates that rose by more than 10%.

About half of the insurers indicated their overall claim experience in 2021 was the same as in 2020, with the remaining equally divided between those reporting better experience and those with worse claims experience.

Participants in the survey were: AIG/Lexington, Beazley,

Berkley Design Professional, Berkshire Hathaway Specialty Insurance, Everest, Great American Insurance Co., Hanover Insurance, Markel, PUA, RLI, Riverton/Hudson Insurance, Ryan Specialty Group, Sompo International, The Hartford, Travelers and Victor Insurance.