smoothsailing_engineeringinc

Design firms preparing to purchase or renew professional liability insurance ask the same few questions every year.

How will my professional liability premium be calculated? Will my professional liability premium go up? Should I change professional liability insurance companies?

One helpful resource to answer these questions is the 2015 Professional Liability Insurance Survey of Carriers, a report published annually by the ACEC along with a companion analysis in Engineering, Inc. that includes insight from insurance companies and other experts  This year, the title of the article says it all: 2015 was “Smooth Sailing” for the professional liability insurance industry, and that means good things for architects and engineers.

“The ACEC Risk Management Committee worked with the American Institute of Architects, the AIA Trust, and the National Society of Professional Engineers to survey 18 carriers.” With construction spending higher than it’s been in years and expected to rise, the number of insurance companies providing professional liability insurance to architects and engineers is also growing. New markets increase the competition for more established companies, and keep rates stable, which means Eric Moore, President of a/e ProNet and Vice President of Moore Insurance Services, is optimistic.

“Nonrenewal is about the only reason Moore would suggest changing carriers” this year. “If you do see a claim, a carrier you’ve been with a few years is less likely to drop you, he says.”

Also quoted in the article are representatives from several of the top-tier professional liability insurance carriers, like a/e ProNet sponsors Travelers, Beazley, and Victor O. Schinnerer, as well as Tim Corbett of SmartRisk, a performance management consultant for the design and construction industry, who has written for a/e ProNet many times.

You can read a digital version of this article in the January/February 2016 issue of Engineering, Inc.

As always, if you have any questions about this report or the professional liability market, please contact your local a/e ProNet broker today.

poetry_foundation_building

Chicago architecture firm and a/e ProNet client John Ronan Architects is one of seven finalists for the design of the Obama Presidential Library, which will be built on Chicago’s South Side. The remaining seven firms hail from all over the world, so it’s exciting that at least one “local” architect made the cut. John Ronan Architects may be best known for the dramatic Poetry Foundation building in Chicago. Best of luck to the team!

Shout-out Credit:

Mike Welbel
M.G. Welbel and Associates
650 Dundee Road, Suite 170
Northbrook, IL 60062
Phone: 847.412.1414
mwelbel@mgwelbel.com

PNN_1511In what attorney Brian Stewart calls a “disturbing trend,” more and more project owners design professionals to procure separate questionnaires from their insurance brokers. These “broker-verification questionnaires” are meant to re-state or re-affirm the limits, exclusions, etc. of the relevant insurance policies to the project.  If you’re an architect or engineer who has met push-back from your broker on this issue, our November 2015 issue of ProNetwork News explains why:

I:  The Problem with Broker Verifications

The use of broker-verification questionnaires has been a growing trend seen most commonly in the context of construction insurance… Historically, a broker has satisfied this requirement through the production of a certificate of insurance or, if necessary, a copy of the policies themselves which demonstrate that the insured had the applicable coverage.  However, a number of project owners have recently been refusing to accept certificates alone and are requiring brokers to complete a questionnaire and verification, with the understanding that a failure to complete the questionnaire will cost the broker’s client the job.

The increasingly frequent use of such broker-verification questionnaires raises a number of legal issues for the broker.  The first issue deals with the broker’s authority to interpret the underlying policy between the insurer and the insured and whether a broker has the authority to confirm in writing whether a specific policy meets the requirements, not of the contract between the Owner and the insured but rather the requirements contained in the broker-verification questionnaires.  The second legal issue deals with the effect of a conflict between the underlying policy and the language of the questionnaire.  Specifically, what is the legal consequence when a broker completes a questionnaire that potentially contains conflicting language from the actual policy?  Finally, this opinion will analyze what risks and liabilities a broker is exposed to when completing  a questionnaire that contains language that is in conflict with  or amends, modifies, expands, etc. the underlying policy.

II:  Principles of Contract

Insurance is a matter of contract governed by the rules of contract. Unlike the ordinary commercial contract where the parties seek to ensure a commercial advantage for themselves, an insurance contract seeks to obtain some measure of financial security and protection against calamity for the insured.

Being a voluntary contract, as long as the terms and conditions made therefor are not unreasonable or in violation of legal rules and requirements, the parties may make it on such terms, and incorporate such provisions and conditions as they would see fit to adopt.  The rights and obligations of parties to an insurance contract are determined by the language of the contact and the insurance policy is the law between the parties unless the contractual provisions are contrary to public opinion or law.

III:  Role of the Broker

An insurance broker provides a professional service for the insured, its client and goes to the insurance market to determine what policy or policies best fit the needs of its clients.

Relevant distinctions exist between an insurance agent and an insurance broker.  Whereas an agent generally represents a particular insurance company, an insurance broker generally represents only the insured. Consequently, an insurance broker owes a duty to the insured and not the insurer. Continue reading “The Down-Low on Broker-Verification Questionnaires”

drone

They offer a bird’s eye view of construction sites. They provide breathtaking photographic opportunities for architects looking to showcase their work. And they’re fun to fly. However, while they may be intriguing tools for architects and engineers, drones open up the design firms that use them to many possibly unanticipated risks. These days, obtaining a drone is as simple as stopping at your local WalMart, but all drones are not created equal, nor are all drone pilots equally skilled and certified.

Victor O. Schinnerer’s Risk Management Blog recently offered an overview of this issue. Should your design firm use a drone in your administration of contracted services? Read on:

“Professional service firms have to be aware that the use of drones is not a simple transition in the process of observing the work on a project site. As with web cameras, drone cameras often produce far more images than are used in the evaluation of a project. If not properly denoted in a contract, the scope of the firm’s services could include the use of all the available images as part of the firm’s duty to observe and evaluate the project as part of construction contract administration duties.

“Additionally, while licensed drone operators are undoubtedly careful about having general liability insurance that protects others from their negligence in aerial activities, and follow the FAA’s rules and guidelines, many firms using drone photography are doing so as amateurs. Turning hobby activities into commercial uses is likely to be unlawful, dangerous, and uninsured.”

Continue reading Drone use can put firms at risk beyond their knowledge by Frank Musica

pronetengineeringscholarshipAttention engineering students! This year, a/e ProNet has partnered with the American Council of Engineering Companies (ACEC) to offer a brand new scholarship:

The a/e ProNet Engineering Scholarship
Award: $2,500
Deadline: March 7, 2016

Eligibility

Students must be entering their junior, senior, fifth, or master’s degree year, in the fall of 2016 to qualify for the general scholarships. In addition, a student must be a U.S. citizen pursuing a Bachelor’s or Master’s degree in engineering or in an accredited land-surveying program to qualify.

Bachelor’s students must be in an ABET-accredited engineering program; Master’s students must either be in an ABET-accredited Master of Science (MS) engineering program, or have a Bachelor of Science (BS) degree from an ABET-accredited engineering program.

You can find the ACEC Scholarship Application here.

For more information, visit the ACEC website’s scholarship page.

The scholarship will be administered by the ACEC, and a/e ProNet member Mark Jackson of JCJ Insurance Agency in Orlando, Florida will serve as our representative on the committee. Good luck to all applicants!

PNN_1411Which is better, more or less documentation in your project file after the job is complete? Despite recent advances in technology, document retention has become a difficult, expensive and complex proposition. Computers have changed design professionals’ work flows and methods, greatly increasing efficiencies, but also exponentially multiplying the volume of data; e-mails, attachments, drawing revisions, text and voice messages, not to mention folks are still sending faxes and letters, actual paper ones. All of this adds up and can become an unmanageable mess, even for the best of us.

Making decisions now about which project documents to keep and which to discard is like trying to pick who will win the Super Bowl in the year 2024. You never know which ones will be the most important until you are right in the middle of a claim. Experience and common sense tell us that there are certain documents that, no matter what, are probably safe bets to come in handy down the road. You may also be required by law or contract to keep certain records for certain time frames.

This article will offer suggestions on those categories of critical project documents necessary to defend claims, and which ones are better off being discarded as a matter of course after project completion. The question ultimately is framed as “what to keep and for how long?” Of course, these are only suggestions, and you should discuss implementation of any document retention program with your chosen legal and accounting advisors in your specific jurisdiction. Further, this article only addresses retention of construction project documents and not corporate, HR or tax records.

“Age of Discovery”

Modern construction projects, with all this data, are subject to modern lawsuits. These lawsuits are conducted by increasingly younger, tech savvy and sophisticated lawyers who sometimes make the litigation more about the discovery effort than about the facts of the case. Parties are allowed to submit detailed and specific “requests for production of documents” once in the lawsuit, or issue subpoenas to non-parties. State and federal court discovery rules could require parties to turn over copies of all information they have in their possession related to the project. Continue reading “Document Retention: More Paper or Paper-Less?”

american_road

America’s federal highway system–once a source of great national pride–is disintegrating. Why? For one thing, it’s been 20 years since the Federal Gas Tax was last raised. President Ronald Reagan increased the tax to just over 18 cents a gallon, reminding the American people that the federal highway system required an ongoing source of income for maintenance. The Highway Trust Fund–where the Federal Gas Tax is collected–provides funding for road, bridge, and mass transit projects across the country. Today, it’s running out of money. Should this tax be raised?

It’s an important question, and if you’re not sure where you fall on the issue, here’s a fun place to start…

Intelligence Squared US hosted a debate in October wherein a panel of four experts, two on either side, addressed this motion: Raise the Federal Gas Tax to fund infrastructure.

“There are many arguments for a leaner fund, among them, the idea that scaling back the program would force government to prioritize projects and eliminate waste. But proponents of the tax say that it still plays a vital role in supporting infrastructure, and that perpetual shortfalls have led to construction delays and uncertainty. Should Congress raise the federal gas tax?”

Listen to the podcast for free either on the website or download via iTunes.

PNN_1505Many design firms attend risk management training sessions and implement certain practices based on an industry trend or project claim. Other firms may only concentrate on contracts and insurance coverage’s as a risk management strategy, which only addresses a portion of an effective risk management program. As they say – “you cannot manage something that is not measured.” With that said, the first question should be:

How effective is your risk management program?

An excellent method in answering that question is determining a design firms risk profile. Similar to how an insurance carrier underwrites and creates a premium for every design firm, each firm also has a different risk profile based on their unique characteristics:

 

 

• Background
• Staffing
• Experience
• Services
• Claim activity
• Project types
• Clients
• Geographic region
• Risk Management
• Business Practices
• Other features

Another way of thinking of a risk profile is similar to a physical examination performed by a doctor. The doctor will examine each individual in similar areas such as – blood pressure, blood work and physical evaluations in determining someone’s overall health. A risk profile does the same thing in assessing key categories of risk for a design firm. When I have evaluated “higher performing design firms” the first step they apply is an assessment. With this information, higher performers make decisions for improved performance and risk reduction to ensure effective practices are applied for meeting the business needs of the firm, clients, and projects.

Industry Risk and Relevance to Your Firm

One important point for managing risk is assessing the softer side of a design firms practice – business and practice management efforts. These areas routinely drive a majority of claims and litigation against design firms, approximately 60 – 75%. Do all design firms apply the same business and practice management efforts? Obviously the answer is no. Design firms apply various methods, techniques, practices, etc., with some more effective than others. With that said, a one-size fits all risk management approach is not very effective in addressing the specific needs of any design firm. Continue reading “How Effective is Your Risk Management Program?”

We’re excited to see some a/e ProNet clients among the winners at the recent 2015 Indiana Design Awards.

ONE 10 STUDIO Architects

IrvLofts_6Honor Award – New Construction
(Project cost greater than $1 million)

Project Name: 5855 Irvington Lofts (Indianapolis, IN)

Jury Comments:

This project uses economical materials judiciously and successfully. The minimalist language makes for striking architecture that does not look like affordable housing; the same reductivist approach is beautifully expressed in the highly disciplined floor plans as well. Generous expanses of glazing open up the interiors, making spaces feel larger than they are, and accent colors provide a vibrancy to the design both inside and out.

CityFarmhouseMerit Award – New Construction
(Project cost less than $1 million)

Project Name: City Farmhouse (Bloomington, IN)

Jury Comments:

The taut restraint exhibited in the design of this project transforms the farmhouse vernacular into a contemporary residential icon for the community. The simple, well-balanced composition, culminating in a corner-wrapping porch stepping down to grade is exceptional. Interiors are surprisingly open and light. Though obviously painstakingly designed, this project appears completely un-self-conscious and rooted in authenticity.

 

 

Axis Architecture + Interiors

Jarden_Fleck_07Honor Award – Interior Architecture
(Project cost greater than $1 million)

Project Name: Jarden Home Brands (Fishers, IN)

Jury Comments:

This was a beautiful presentation, and was consistent with the attention to detail, and vibrant color and texture present throughout the design. The jury appreciated the process drawings, and was taken with the imaginative use of the client’s products in the design. Floating ceilings simultaneously celebrate building systems, filter natural light, and define spaces in a minimal, interesting way. This looked to us like a wonderful place to work.

Taxman_Fleck_02Citation Award – Interior Architecture
(Project cost less than $1 million)

Project Name: Taxman Brewing Co. (Bargersville, IN)

Jury Comments:

his project was also very well presented, beginning and ending with contextual photos that helped the jury appreciate the importance of the immediate environs. A taut, industrial aesthetic is judiciously deployed, complementing the earlier industrial architecture, while tastefully accenting the client’s products. The result is a space that feels exciting, contemporary and authentic.

Read about all the winning projects and architects of 2015 on the AIA Indiana website.

Shout-out Credit:

Holly L. Gill, CIC
Agent, Professional Liability
Walker & Associates Insurance
317-759-9320 (office)