Insurance rates trending lower, survey says

By Plant Engineering Staff November 30, 2006

Professional liability insurance premiums for engineers and architects are predicted to flatten out or even decrease over the next 12 months, according to a recent survey of 14 A/E insurance companies.

The nationwide survey %%MDASSML%% carried out by NSPE’s Professional Engineers in Private Practice and the risk management committees of the American Institute of Architects and the American Council of Engineering Companies %%MDASSML%% compiled information relating to coverage, exclusions, claim trends, and the insurer’s history, among other issues.

Among the survey’s key findings:

  • Through the first two quarters of 2006, the market accumulated a record surplus of $405.5 billion. As these surpluses continue to rise, it’s estimated that premiums will continue to decrease.

  • Insurers are continuing to focus on more stringent underwriting of the risks for each of their potential insureds. Those who are considered higher risk could experience higher rate increases or difficulty finding coverage.

  • Frequency and severity of claims experienced in the A/E industry has remained fairly stable and in some cases decreased, also contributing to the stabilization of the rates.

  • Downward pressure on premiums is being driven by carriers trying to enter the market or build their book of business by offering lower rates.