In today’s insurance marketplace there are many general agents willing to sell professional liability coverage to design firms. Architect & Engineer Specialist, Mark Amirault, Partner with Klein Agency (FRP Professional Risk Practice), A Foundation Risk Partners Company, states that when one is presented with a proposal, the design firm must ask is that general agent really the best option?
“Too many times insurance is looked at as a commodity where the lowest price will always win out,” said Mark. “With so much at stake – reputation, profitability, and peace of mind – why would a design firm have the ‘buyer beware’ approach and not partner with an insurance agent that specializes in coverage for design firms?”
“Similar to design firms, a specialized Architect and Engineer (A&E) agent can provide the level of service and expertise that is demanded by those that pursue excellence.” Mark shares the FRP viewpoint that in no way should the general agent be discredited in what they do, but one needs to understand the limitations of a generalist when working with design firms. When deciding if an insurance agent is a generalist or specialist, keep in mind the following five points:
- Does the agent have market presence?
- Does the agent show an understanding of the design profession?
- Does the agent have resources available to their insureds?
- Does the agent provide risk management services?
- Does the agent recognize the continuing education requirements of a design professional?
Market Presence
Since insurance is based on the law of large numbers, market presence is a must for any insurance agency. By compiling a book of business of similar accounts, the specialized agency has access to the premier A&E carriers, and with this expertise gives the agency pricing leverage. Insurance carriers are typically hesitant to work with agents that do not send them a lot of business, which might lead to non-preferred pricing. As a specialized agent with market presence there is the ability to work more closely with an assigned underwriter to get the best pricing for all of their accounts. This market presence allows the A&E agent to compare the pricing of multiple carriers and to have a better understanding of why a premium is offered.
Design Profession
During the initial conversation with an insurance agent, the design professional should have a feeling that the agent has an understanding of the design profession. Almost any agent will know the basic terms of architecture and engineering, but an A&E specialist will have a more detailed understanding of the intricate services within the design industry. This understanding plays a key role in pricing an account, since some classes of business and services performed carry lower rates than others, the agent must present the account to the underwriter with that knowledge. The specialized agent will review the exposures annually and take the time to complete the professional liability application together, thus leaving the professional more time to devote to clients and projects.
Available Resources
Available resources can take on many different facets for the design professional. Some examples of these resources could be access to and the offering of journal articles or case study information. Another example is a peer-to-peer opportunity that the A&E agent offers a client to ask specific questions to another professional who has knowledge of a certain type of project. One instance of this arrangement could be a land surveyor performing a boundary survey for a cemetery, and being unsure of the potential liabilities associated with this site. By having another surveying client that specializes in this service, the A&E agent can put the two surveyors in contact with one another to discuss the finer details of the work, and specific proposed contract language.
Risk Management Services
When offering risk management services, it is important for an A&E agent to understand the potential liability for the design firm and how to lessen that exposure. If the design firm is presented with a potential error (that could reasonably turn into a claim) the design firm can be reassured when the A&E agent provides knowledge on how to respond and defuse the situation. A specialized agent does not always have to rely on the insurance carrier for resolution of potential claims, therefore, one call allows the design professional to move forward and not wait for days to hear from an insurance adjuster.
Continuing Education
As more States trend towards mandatory continuing education for design professionals, it can be beneficial to work with an A&E agent that has access to C.E. resources at their disposal. This can be in the form of free C.E. classes, carrier presentations, webinars, and risk management workshops for individual firms. Not only does this help the design professional meet his/her education requirements, some carriers even offer premium credits for participation in the classes. In addition, a specialized agent will be able to offer classes at the firm’s location, at local chapter meetings, or state sponsored seminars.
When analyzing the insurance options, the design professional needs to be thorough and aware that there are limitations to the general agent. Insurance does not need to be seen as the necessary evil, but more of a tool for running a successful firm. The specialized agent will give that peace of mind that the firm’s interests are understood and properly insured.
Learn more about putting these professional risk management recommendations into action by reaching out to Architecture & Engineer Specialist, Mark Amirault, here.