For the last few sunny days, a/e ProNet members from across the country have gathered in Scottsdale, Arizona for our annual Spring Meeting (March 1-3). a/e ProNet brokers are independent. Technically, we operate as competitors. Membership is by invitation only. We come together voluntarily as recognized leaders in our industry, meeting the insurance needs of architects and engineers. Our combined premium volume, experience, and national reach make our meetings an attractive target for insurance companies, premium finance companies, and other professionals. With our two annual meetings, we keep our fingers on the pulse of the insurance industry and advocate for our clients.

The Spring Meeting

The purpose of our Spring meeting has changed over the last three decades. Invited representatives from the companies and industries mentioned above present to the group on educational topics. This year, attorney David Ericksen of Severson & Werson in San Francisco also organized a series of five panel discussions:

  • Non-Traditional Project Delivery Methods
  • Cyber Communication Conundrums
  • The Prime/Sub Team: Roles, Responsibilities & Risks
  • Contract and Claims Connections
  • Material Transparency & Building Green

Ericksen staffed these panels with underwriters, claims adjusters, etc. from companies like Victor O. Schinnerer, AXIS, Hanover, RLI, Beazley, and several other a/e ProNet sponsors. The panel environment increases the awareness of each company regarding their competitors’ products and services. As well, it gives our members a quick, comprehensive understanding of the market’s overall perspective on these issues. Continue reading “a/e ProNet Holds Annual Spring Meeting in Arizona”

Chicago - a/e ProNet Fall Meeting Location
a/e ProNet meets in Chicago each autumn

This week, a/e ProNet’s membership will gather in Chicago for the annual fall meeting (September 28-30, 2016). It’s an opportunity for the members to exchange insights about the climate of the design industry, broadening each broker’s individual knowledge base.

Established in 1988, a/e ProNet represents a combined annual professional liability premium volume exceeding $300 million. For this reason, representatives from the top tier professional liability insurance providers are eager to present to the group.

What Happens at the Meeting?

A dozen insurance companies are scheduled to present this fall, including: Beazley, Victor O. Schinnerer, Liberty, Travelers and Arch. These presentations update the membership on regional and national insurance trends. Hearing about real life claims scenarios, legal precedents and new policy/endorsement offerings equips our members to do their jobs well. The underwriters are eager for feedback on their programs and changes. a/e ProNet’s members actively advocate for their own clients during this portion of the meeting.

Members will also attend a reception one evening at the Driehaus Museum, just off Chicago’s Miracle Mile. This exquisitely restored 19th century mansion is a must-visit for lovers of Gilded Age architecture and art. Representatives from major design industry organizations, like the AIA and NSPE, are also invited to attend.

To close the conference, Douglas J. Palandech, Esq. of Chicago law firm Foran Glennon will present on the Fiduciary Liability Exposure of Design Professionals. These presentations often turn into articles for one of ProNet’s publications. Don’t miss out! Follow us on Twitter and/or LinkedIn for updates.

Are Hackers a Threat to My Design Firm?

Hackers make headlines daily with targets ranging from major Swiss banks to Minecraft users to German nuclear power plants. But what are the risks to architects and engineers?

keyboard

Professional Liability carrier Victor O. Schinnerer urges design professionals to Take Cyber Liability Exposures Seriously in a recent blog post:

Cyber liability problems that have disrupted firm operations often are based on one of three vectors:

— insiders who are dissatisfied or recognize their ability to tap firm assets and use that access for harm or personal profit;

— past employees who either take digital assets with them or to enact revenge against their former employers corrupt firm systems and information; and

— hackers who know that confidential project data is vulnerable and hold digital information hostage until a ransom is paid.

Hackers Can Wreak Havoc on a Firm

Although internal threats cause many cyber liability breaches, a malicious outsider is one of the greatest fears of professional services firms. A hacker could cause data inaccessibility through alteration or destruction. A firm would lose intellectual property and no longer be able to meet contract objectives and deadlines. Attackers who gain access to a firm’s data can encrypt it using ransom-ware and extort payment to regain access to information. Firms that do not properly preserve digital assets through robust back-up systems often have no alternative but to pay the ransom.

Construction projects today are increasingly dependent on digital technology. The adoption of BIM and the increasing use of digital technologies in designing, constructing, and operating buildings and infrastructure are transforming the way the industry works. The concept of collaborative work through the sharing and use of detailed models and large amounts of digital information requires that parties be aware of vulnerability issues and take appropriate control measures. Improper access controls could lead to an attack severely disrupting progress on a project, causing delays or remedial work that could lead to significant claims from owners, lenders, or other stakeholders. And if confidential information on the structure or systems of projects is accessed by unauthorized parties, the safety of the owners and users of the buildings or infrastructure could be put at risk.

It is possible to insure against these vulnerabilities. Schinnerer’s Cyber Protection Package is one example of such coverage. Here are a few others:

Give your local a/e ProNet broker a call to discuss your options today.

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.

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

ConstructionTradeContractors

The appropriate classification of employees is a frequent source of confusion for design firms, usually coming up around the renewal of a firm’s Workers’ Compensation policy. It is an issue ripe with risk on an Employment Practices level. Recent court rulings in Arizona and Utah have resulted in construction firms paying hundreds of thousands of dollars in back wages, damages, and penalties.

As explained on the Schinnerer Risk Management Blog:

In an age of rising benefit costs and other constraints on the operations of professional service firms, some firms are turning to a range of tactics to reclassify workers to take them off the formal payroll and, therefore, lower their costs and administrative burdens. However, doing so may subject the employer to state and federal employment law fines and penalties.

All this is happening against the backdrop of a broader shifting of risk from employers to workers, who are shouldering an increasing share of responsibility for everything from health insurance premiums to retirement income to job security. While the future might present a model where everyone is truly an independent contractor and neither those actually providing services nor those using the services have any continuing or controlling interest in each other, such a situation does not currently exist and any firm that thinks it can avoid employment responsibilities, tax obligations, or employment practices liability needs to carefully consider alternatives to hiring workers.

Regulators and courts have increased their scrutiny of the relationship between business entities and independent contractors. Alleged misclassification of workers has been one of the primary battlegrounds of this shift, leading to high-profile lawsuits.

For decades, some professional service firms have shifted work from employees to independent contractors to cut their overhead and labor costs and, at times, to qualify for special government procurement assistance. Often, this has been accomplished by relabeling workers and slightly altering the conditions of their work. And some professional service firms have simply ignored regulatory and tax guidance and “informally” used the services of professionals and clerical workers as “consultants” or “leased personnel” or “temps.”

Now, however, businesses—including design firms and construction contractors—are turning to other kinds of employment relationships, such as setting up workers as owners of limited liability companies (LLCs) in an attempt to shield the businesses from tax and labor statutes. In response, some state and federal agencies are aggressively clamping down on such arrangements, passing local legislation, filing briefs in workers’ own lawsuits, and closely tracking the spread of what they see as questionable employment models.

Visit the Schinnerer Risk Management Blog to continue reading.

If you have questions about the appropriate classification of your employees prior to your next workers’ compensation renewal, contact your local a/e ProNet broker. We’re happy to help!

DesignBuildRisk management best serves design professionals when it’s put in place prior to the acquisition of risk. Not damage control strategies, but damage avoidance strategies. In the case of design-build projects–arguably some of the riskiest in the business–this preemptive management of risk should include a number of questions asked by all parties involved. Among those questions: How should the design-build project be structured?

At Victor O. Schinnerer’s most recent Annual Meeting of Invited Attorneys, Jonathan C. Shoemaker, of the Lee & McShane law firm, answered this question and others based on his own research “on the contractual and professional risks of participants in design-build projects.”

According to Shoemaker, there are many ways “to structure design-build teams, including teaming agreements, joint ventures, partnerships, and newly-formed companies owned by the design-build team.” The following is an excerpt from a post on the Schinnerer website:

[Shoemaker] defines the organization of a design-build team as either a vertical relationship (e.g., a traditional prime contractor/subcontractor organization) or a horizontal relationship. And he points out that the vast majority of design-build teams are contractor-led, with the design firm serving as a subcontractor to the contractor.

According to Shoemaker, a horizontally structured relationship is where a contractor and a design firm come together to form a joint venture, a partnership, or a new company to provide fully integrated design-build services. He defines the most common horizontal structure, the joint venture, as “a business undertaking by two or more persons engaged in a single defined project.” A joint venture structure typically includes:

joint control over the joint venture’s decisions (as opposed to the prime contractor having control);

liability for the joint venture’s losses (as opposed to liability for only the design professional’s losses);

and profit sharing (as opposed to only the profit earned under the design agreement).

Shoemaker also examines the risks to the design professional on a design-build project and discusses how the risks vary depending on the design firm’s involvement.

Visit the Schinnerer website to read the entirety of the post.

beazleypro_summerissueOne of the several excellent insurance companies a/e ProNet works with has a new risk management resource for their professional clients: Beazley Pro.

We think our readers will be most interested in the Claims Corner; three scenarios, three discussions, three lessons learned. An example of a claim outlined in the Summer 2013 issue…

Engineer granted rare summary judgement

Facts:  After sustaining serious injuries in a fall in a sports facility parking lot, the plaintiff sued the property owner, who in turn filed a third-party action against our insured, an engineer. This suit against the engineer alleged that deficiencies and code violations in his design of the facility’s parking lot (specifically its handicap access ramp and lighting) were to blame for the fall. A site visit revealed that the lighting and lighting tower location in the parking lot were not as the engineer had specified. During deposition, the paving contractor affirmed that he used the engineer’s plan for pricing only, not for construction. Hence, there was no causal connection between any design deficiencies in the engineer’s plans and the plaintiff’s serious fall and injuries. Counsel moved for summary judgment, which was granted in full. Continue reading “A New A&E Resource: Beazley Pro Inaugural Issue”

In 2013, Professional Liability insurance provider Victor O. Schinnerer will host independent subject-matter experts for four webinars, all geared toward Architects, Engineers, and other Design Professionals:

Computer-aj_aj_ashton_01.svgEmployment Liability Issues in a Recovering Economy

February 13, 2013, 1:00 – 2:00 pm eastern

Thomas L. McCally, Esq., Carr Maloney, P.C., Washington, DC

Design firms face various types of employment liability issues during the normal course of business. However, the downturn and subsequent recovery of the economy have brought these issues to the forefront of concerns for design firms. An attorney expert in litigating design firm employment practices claims will discuss the issues firms need to recognize as the economy improves and firms prepare to staff-up for the recovery.

Business Models and Financial Opportunities in a Recovering Economy

April 10, 2013, 1:00 – 2:00 pm eastern

Michael O’Brien, ASA, Rusk, O’Brien, Gido + Partners, Washington, DC

From funding sources to procurement procedures, the financial environment for professional services has significantly changed since the pre-recession economy. Both in the public and private sectors, the rules, risks, and routes to financial success are different. Professional services firms need to adjust their business plans to remain viable and to benefit from the opportunities in a recovering economy. Specializing in solving the business management and ownership challenges of consulting firms, our expert will share thoughts on the needs and responses of firms in the new service environment.

Technology Risks for Design Professionals

September 11, 2013, 1:00 – 2:00 pm eastern

David J. Shannon, Esq., Marshall, Dennehey, Warner, Coleman, Goggin, Philadelphia, PA

Technology risks associated with the business operations and professional services of design professionals is not new. However, the increased use of building information technologies and collaborative delivery methods, such as integrated project delivery, may increase the exposure of firms to traditional technology risks, as well as introduce new risks. Join our discussion with an attorney expert in technology risks to learn what exposures design firms need to be aware of and how to manage those exposures.

Insurance and Legal Questions for the Collaborative Design Team

October 9, 2013, 1:00 – 2:00 pm eastern

Rebecca H. Farnum, Esq., Thompson & Bowie, LLP, Portland, ME

Building information modeling and integrated project delivery provide a platform through which all members of the design and construction team collaborate. As with all new technologies and delivery methods, there are important questions the collaborating team should ask to identify and respond to legal and insurance issues in the open transfer of information in a contractual arrangement of shared risk and reward. Our expert will discuss what types of questions the team should ask before formally entering a collaborative agreement.

Visit our website to download the full PDF version of the 2013 Victor O. Schinnerer webinar schedule.