Architects and Engineers - This Could Be Big...

Whales: Giants of the Deep    Natural History Museum, NYC

On a recent trip to NYC six of us kids (OK, five "adult" kids) and our two year old grandson made a stop at the Natural History Museum. We wanted to see one of the newest exhibits, and the photo above doesn't really do justice to either one of two engineering feats - the whale itself or the exhibit created by the museum staff. This is an impressive display, and I can only imagine the difficulties encountered and problems faced by those creating the exhibit.

I'm constantly amazed at the ability of architects and engineers to successfully solve problems, especially unique or complex ones. Successfully solving problems is part of our jobs as insurance professionals and certainly part of your daily routine as an agent. Our goal is to equip you to be able to handle those challenges, and we have another tool to help you do just that.

One of our carriers successfully writing Architects and Engineers professional for decades has released a new policy form. This new version includes many coverage features that are beneficial to your customer. Some of these features appear on other forms, but few if any other carriers provide all of these on one form. We're pleased to be able to offer it to you.

Here are some of the high points:

Deductible Credits:  This form offers numerous deductible credits, and most carriers today only offer mediation deductible credits. Per American Council of Engineering bench marking - 45% of claims are settled by negotiation, 31% mediation, 7% arbitration, 3% trial and 6% other. This form provides incentives and the tools for handling claim situations quickly, and of course that's better for all parties involved. Chances are good your client may not even pay the deductible on this policy form. Credits as follows:

·        3X's Aggregate Deductible (competitors are "each and every")

·        LEED certified buildings (50% up to $25k)

·        Award-winning buildings (50% up to $25k)

·        Claims resolved through mediation (50% up to $25k)

·        Claims resolved through negotiation (75% up to $25k)

Supplementary payments: This form offers some of the broadest supplementary payments available in the market.

·        Loss of Earnings - $500 per day/up to $15,000

·        Regulatory and Administrative Actions coverage - up to $25,000

·        Subpoena/Record Request - up to $5,000

·        Professional License and Disciplinary Proceedings coverage - up to $50,000

Some additional features/benefits:

·        Claims Made (not Claims Made & Reported)

·        Pre-claims assistance 

·        Risk management services

·        Contract review services

Send new business to submissions@tuscano.com or call 800-442-8063 to obtain apps or additional information.

Architects & Engineers Insurance: Submissions

Here's a re-post from last spring. If you want to see other A&E related posts just select from the labels on the right side of the blog page...

When I was eight years old I thought I wanted to be an architect. I had a set of plastic girders and panels made by Kenner Toy Co, ingeniously called the "Girder and Panel Building Set". I made Cape Canaveral, or what I thought was the Cape. I tore that down and made a store, and then an office building, and who knows what else. As I got older I realized that I probably couldn't keep up with the math; Trig was about as much as I wanted to deal with. And by then I had discovered girls, sports and all manner of other distractions. While I didn't become an architect, I've never lost my fascination with buildings and their design, and I'm happy I can still be involved with this class of business as a broker.

Now that you know what I was thinking when I was 8, here are a few things you may want to think about when you are presented with an opportunity to write a business providing architectural or engineering services:

• Revenue is certainly an underwriting consideration, but you will also need to obtain construction values. Annual revenue numbers are pretty obvious, but for construction values occasionally I'll see a submission that either shows "average" values or a "max" value. Unless stated otherwise, what the underwriters are looking for is the annual total value of all of your prospect's construction projects for at least three years, i.e. the "next" 12 months, the recently ended 12 mos and the 12 mos prior to that.


• "Design-Build" firms. If your client is also involved in the building process, the carriers will need a breakdown of revenue between "design only" and "design-build" operations. Even if there's a very small percentage of "build", get the info anyway.

• New in Business. Just like with any other class, if they're just starting an A&E operation, in addition to the app you'll need resumes for the principals. If they want to include names and descriptions of projects they worked on at a previous firm, that's fine, but don't have them send an electronic portfolio of everything they've done since college. If an underwriter really needs more info to qualify the risk they'll ask for it.

• Change in ownership and/or operations. If a new owner takes over you may have a chance to get your foot in the door, especially if something about risk characteristics change. If they're now doing structural engineering and they've never done that before, the current carrier may be forced to non-renew or drastically alter pricing and terms. If they've just been given a contract for a job out of the country, the current carrier may not be willing or able to extend coverage. Find out if anything has changed or is about to change.

• Specific Projects. Sometimes an architect or engineer will not have any professional liability (PL) insurance coverage and will be asked to bid on one project that requires evidence of PL coverage. As you would expect you'll need a full app and full details of the work they are going to do regarding this project to be able to arrange coverage.

• Specific Client Excess. Similar to "specific project" coverage, but in this case one client of the A&E firm is requiring higher liability limits than the firm currently carries. Details of the project will be needed to underwrite this exposure, including name of client, services being rendered, the primary limit of liability and what carrier is writing that layer. A premium indication will be provided subject to review of the primary policy wording.

• Competition/Other Carriers. Find out what carrier is writing the coverage currently. If it's an exclusive program for an association it will be tough to beat their pricing and it may save you some time and energy. If it's a surplus lines carrier you'll obviously want to figure out why (claims, areas of practice, location, etc) and make every effort to obtain terms from an admitted company. I've recently seen a couple of situations where the client of the A&E firm is requiring a minimum AM Best rating, and that may require the client to change carriers.

There are quite a few other considerations, but these are some of the more common ones. Let us know if you need more information or need to discuss a specific situation.

Winning - Adding and Amending Coverage

The anniversary of the 1980 USA v Russia Olympic Hockey win is February 25th. This photo is from the post game celebration when the USA defeated Russia to advance to the gold medal game. Russia's team was expected to win, and the USA victory was punctuated by Al Michael's television call "Do You Believe In Miracles?!"

There's no doubt that it's a still a tough market, and "winning" is not easy, but it's still a great time to write E&O and Professional liability insurance.

Rates are still very competitive, and while it's possible that rates will increase at some point, right now there are numerous markets that are still aggressively seeking business.

Keep in mind it's not just rates that will help you write new business and retain renewals. Carriers are still revising their policy forms, usually to broaden coverage. If a carrier has not recently revised their wording, there's a good chance that they have one or more endorsements that will amend/improve coverage in certain key areas.

The most recent example I can offer is a submission for an engineering firm. This particular client was aware of a situation one of his competitor's experienced, where there was a need for defense for an issue that was brought by a regulatory authority. That engineer had to hire an attorney and the process cost the engineering firm nearly six figures.

Several of our carriers offered this coverage at varying sub-limits, but our best pricing originally didn't include the coverage. We were able to negotiate that coverage into the policy at a sub-limit of $25,000 per incident, $50,000 per policy period, and the deductible does not apply. The policy and the negotiated coverage helped our client win the account.

I'll give some other examples of coverage options in future posts, but if you have questions about what might be available for your client please call or email. We'll do all we can to help you win on your next opportunity.

Changes

Being around our first grandchild has made me once again realize how much things can and do change. He's growing fast physically and so are his motor skills. It's awesome to watch. And he's really cute too...

The market is ever changing, and recently we've seen a few of those changes in the area of architects and engineers.

Over time one admitted market has slowly but surely taken themselves out of the mix on most risks in Florida, especially since so much work in Florida involves condos. Another admitted carrier is getting less and less interested in this class and it's being reflected in their rates - upward of course. A third is non-renewing their book on risks with less than $5 MILL in revenue.

In a stroke of great timing or good fortune, or both, our options just got a little broader. In a number of states (unfortunately not in Florida) we've added another new admitted market for Architects and Engineers accounts. That gives us five options now that are admitted (four in Florida), and an even greater number of excellent non-admitted carriers complement that list for risks that don't fit on the admitted side.

Keep in mind that there are a number of ways to write these accounts, especially if your client is being pressed to carry higher limits for a specific project or client, or if they are looking at a short term project involving new exposures. We also have markets for those closely related to this class, including draftsman, engineers and consultants. Minimum premiums on smaller A&E accounts at lower limits can be as low as $1500, though most come in higher than that.

Architects and Engineers: Unique Coverage

The photo at the right is of Independent Presbyterian Church in Savannah, Georgia. An example of a type of neo classical structure, it was re-built after the previous structure burned in 1889.

In an architects and engineers policy wording, there are a number of coverage sections and elements that are a little different than other professions. If you're aware of the coverages provided and additional options available you may be able to land an account because your competition isn't familiar with coverage, or perhaps isn't able to offer these extensions. It's certainly worth a look.

Not every policy will include all of the following, and some policies may be able to be endorsed to include one or more of these coverages. In no particular order of importance:

1. ADA, FFA and OSHA supplementary payments. These coverages reference the Americans with Disabilities Act, the Federal Fair Housing Act and the Occupational Safety and Health Act. If an architect or engineer renders services and the result of their design or engineering work violates one or more provisions of the act(s), the insurance company will reimburse the insured's legal fees. This is only for legal fees, not fines or penalties, and it applies when an administrative or regulatory action is brought against the insured. Limits are usually in the $25,000 to $50,000 range, and typically these limits are in addition to the policy limits and the deductible doesn't apply.
2. Pollution coverage. It may be included, but check the wording as there's no true standard for this. Some policies are "silent" so there's no specific exclusion and no specific coverage wording either. Some will define the coverage they will provide and it will be very specific, and still others will include the coverage but at a lower sub-limit, possibly $250,000.
3. Innocent Insured coverage. Instead of having the coverage "added" this is a situation where one of the usual policy exclusions does not apply. That exclusion is for dishonest, fraudulent and criminal acts, and will not apply to Insureds who are not involved in the excluded activity, provided they report such acts to the carrier as soon as they are aware of such activity.
4. Optional Extended Reporting Period (ERP). Every policy should have such a provision to allow the insured to add time to report claims should they decide not to buy coverage going forward. The length of time varies from one to five years, and a few carriers offer unlimited ERP. The longer the term of ERP the more premium your client will pay. This coverage extension is frequently not considered when purchasing a policy, but perhaps should be in the event the principal(s) are considering retirement at some point in the near future. Some policies will include a free ERP option if the insured retires provided they have been insured by the same carrier for a specified period of time, usually not less than three years. Others may also include a limited time of free ERP if the insured is disabled or dies during the policy period. If you're inclined to talk with other clients about life or disability insurance you should be talking with an A&E firm about the same issues.
5. "Attendance at Proceedings" supplementary payments - this isn't solely found in A&E policies but its worth noting. This coverage will provide additional limits for costs the insured may have to incur as a result of appearing at a hearing or trial or similar event at the request of the insurance company. Amounts per day are $250 and up, and the aggregate during the policy is usually $5,000 to $10,000 but can be higher. Check the policy, but usually these limits are in addition to the policy limits and no deductible applies.
6. Mediation credit. If a claim is resolved by mediation the policy deductible is reduced by a set percentage, usually 50%, and is usually subject to a maximum reduction, most commonly $25,000.

If you're not sure which additional coverage might be available, check the policy or make sure you ask your broker or underwriter.

Architects & Engineers Insurance: Submissions

When I was eight years old I thought I wanted to be an architect. I had a set of plastic girders and panels made by Kenner Toy Co, ingeniously called the "Girder and Panel Building Set". I made Cape Canaveral, or what I thought was the Cape. I tore that down and made a store, and then an office building, and who knows what else. As I got older I realized that I probably couldn't keep up with the math; Trig was about as much as I wanted to deal with. And by then I had discovered girls, sports and all manner of other distractions. While I didn't become an architect, I've never lost my fascination with buildings and their design, and I'm happy I can still be involved with this class of business as a broker.

Now that you know what I was thinking when I was 8, here are a few things you may want to think about when you are presented with an opportunity to write a business providing architectural or engineering services:

• Revenue is certainly an underwriting consideration, but you will also need to obtain construction values. Annual revenue numbers are pretty obvious, but for construction values occasionally I'll see a submission that either shows "average" values or a "max" value. Unless stated otherwise, what the underwriters are looking for is the annual total value of all of your prospect's construction projects for at least three years, i.e. the "next" 12 months, the recently ended 12 mos and the 12 mos prior to that.


• "Design-Build" firms. If your client is also involved in the building process, the carriers will need a breakdown of revenue between "design only" and "design-build" operations. Even if there's a very small percentage of "build", get the info anyway.

• New in Business. Just like with any other class, if they're just starting an A&E operation, in addition to the app you'll need resumes for the principals. If they want to include names and descriptions of projects they worked on at a previous firm, that's fine, but don't have them send an electronic portfolio of everything they've done since college. If an underwriter really needs more info to qualify the risk they'll ask for it.

• Change in ownership and/or operations. If a new owner takes over you may have a chance to get your foot in the door, especially if something about risk characteristics change. If they're now doing structural engineering and they've never done that before, the current carrier may be forced to non-renew or drastically alter pricing and terms. If they've just been given a contract for a job out of the country, the current carrier may not be willing or able to extend coverage. Find out if anything has changed or is about to change.

• Specific Projects. Sometimes an architect or engineer will not have any professional liability (PL) insurance coverage and will be asked to bid on one project that requires evidence of PL coverage. As you would expect you'll need a full app and full details of the work they are going to do regarding this project to be able to arrange coverage.

• Specific Client Excess. Similar to "specific project" coverage, but in this case one client of the A&E firm is requiring higher liability limits than the firm currently carries. Details of the project will be needed to underwrite this exposure, including name of client, services being rendered, the primary limit of liability and what carrier is writing that layer. A premium indication will be provided subject to review of the primary policy wording.

• Competition/Other Carriers. Find out what carrier is writing the coverage currently. If it's an exclusive program for an association it will be tough to beat their pricing and it may save you some time and energy. If it's a surplus lines carrier you'll obviously want to figure out why (claims, areas of practice, location, etc) and make every effort to obtain terms from an admitted company. I've recently seen a couple of situations where the client of the A&E firm is requiring a minimum AM Best rating, and that may require the client to change carriers.

There are quite a few other considerations, but these are some of the more common ones. Let us know if you need more information or need to discuss a specific situation.