Emerging A&E Claim Issues-Emerging A&E Claim Issues Recording

Video Transcription

Video Summary

Daniel Bulow, Managing Director of Willis Architects and Engineers (A&E) Division, presented a comprehensive overview of emerging risks and claim trends in professional liability insurance for architects and engineers. Drawing from a broad industry survey with input from 12 leading professional liability carriers, he highlighted key issues shaping the A&E risk landscape.<br /><br />Bulow emphasized that while claim frequency has remained fairly stable—averaging one claim in four firms—the severity and cost of claims are increasing, often taking two to three years to resolve. He stressed the critical importance of thorough documentation, prudent contract negotiation, and proactive risk management practices to mitigate exposure. Complex project types such as condominiums, infrastructure, hospitals, and design-build projects present heightened liability risks, with design-build especially linked to costly claims due to underbidding and insufficient design assessment.<br /><br />Emerging risks include climate change impacts, cyber threats, staffing shortages, social inflation, and disruptions from COVID-19. Climate change is driving more MEP-related claims, while cyber exposures are escalating due to vulnerabilities in remote work environments. Bulow advised firms to maintain strong contracts with fair risk transfers, guard against uninsurable indemnities and guarantees, and leverage insurance features like pre-claim assistance to report issues early. He also recommended mediation over arbitration for dispute resolution and cautioned on the risks of private equity ownership influencing firm risk profiles.<br /><br />Ultimately, Bulow advocated for firms to adopt rigorous go/no-go decision processes on projects considering client, contract, team, and financial factors. Firms investing in robust risk management tend to be more profitable and better positioned to navigate today’s challenging insurance marketplace.

Keywords

professional liability insurance

architects and engineers

claim trends

risk management

contract negotiation

documentation

complex projects

design-build

emerging risks

climate change

cyber threats

staffing shortages