© 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GO Yellow 2 R= 213 G= 206 B=...

© 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GO

CONSULTING ARCHITECTS OF ALBERTAAnnual General Meeting October 29, 2013

Jill EaglesonExecutive Claims ConsultantXL Insurance, Design Professional

1


Classification of Causes

• The XL Insurance Risk Drivers research highlights the interrelationship between technical and non-technical factors that contribute to an A/E firm’s risk exposure


Classification of Causes

• Technical

Error and/or omission of a technical nature which resulted in a loss prevention file or claim

• Non-technical

Breakdown in project or practice management processes which contribute to a loss prevention file or claim being made


Top 4 Non-Technical Risk Drivers

Negotiation and Con-tracts

Client Selection Project Team Capabili-ties

Communication0%

5%

10%

15%

20%

25%

30%

35%

40%

13%16%

24%

27%

6%

23%25%

39%

Percentage of Claims Affected – 2001 (beige) v 2012 (blue)


ARCHITECTS

Who Sues Architects?

3%

18%

16%

63%

2%

11%

16%

72%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

Contractor or Subcontractor

Non-Contracting 3rd Party

Project Owner

% of Claims Count

% of Claims Dollars

© 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GO 6

JILL’S TOP TEN TRENDS


1. Delays/Extras/overruns – WHO IS TO BLAME

• These claims might be made

by owner or contactor

• Will often be substantial;

multi million dollar claims not

unusual.

• Tighter margins; higher expectations

Typical allegations:

1. Errors and omissions in design

2. Late responses to shop drawings and RFI’s


Loss Prevention Tips

1. Client Selection and Education

2. Budget is adequate

3. Project Selection

4. Adequate Fees

5. Set Realistic Expecations


Trend 1 ½ IT’S NOT EASY BEING GREEN

Loss Prevention Tips

• Are owner‘s expecations realistic?

• Appropriate contract language

• Your firm‘s expertise


2. More technical mistakes being made

WHY IS THIS? POSSIBLE ANSWERS

• Too much work

• Not enough time

• Sense of urgency

• Insufficient training and continuing education opportunities

• New techology

• Bottom line impact on fees

10


3. CONTRACT ISSUES

• Unreasonable terms and conditions being imposed. Examples:

1. Indemnity and hold harmless

2. Standard of Care; fiduciary

3. Set off & withholding of fees

4. Absence of Limitation of Liability; no waiver of consequential damage

11


Contracts – Tips

• Use your firm standard form agreement; failing that, professional association

• Consult with insurance advisors and legal counsel

• Create awareness within your firm and always carefully review agreements prior to execution


4. WRITTEN COMMUNICATIONS

Good & bad

• Exercise caution; formalize communication when necessary

• Your RFP; friend or foe?

13


5. Small projects/fees generating large claims

Remember! Risk vs. Reward

• Due diligence

• Client selection


Small Projects – Loss Prevention

• Same level of due diligence required

• Always have a written agreement

• Be aware of scope creep and doing things for free.


6. Design Build and P3 Projects

• These non traditional project delivery methods are becoming more common

• Different risks, different risk management

• As always due diligence is critical

• Careful review of contracts required


7. Fee Issues; Accounts receivable

• Client Selection (consider retainer)

• Procedure to collect

• Contract provisions re: payment

17


8. Condominiums

• Continue to be risky projects in terms of liability claims

Highly leveraged

Low fees for design

Low bidder

Unsophisticated purchasers/owners

Developer and contractors likely judgement proof when the claim is made


Condominiums – Loss Prevention

• Project and Client Selection

• Quality contractor in place?

• Appropriate contract

• Appropriate fee


9. Field Observation Services

• This should always be part of your scope of service

• Appropriate intervals

• Done by the right people

• Appropriately documented


10. Consolidation and Competition

• Jumbo firms

• More competition


QUIZ – 6 QUESTIONS – TRUE OR FALSE?

1. Requesting financial information from a potential client is unprofessional and almost a guarantee to lose the account

2. One of the best things about doing projects for public agencies is their creditworthiness. They always pay their bills

3. Virtually all professional liability insurance policies cover the indemnifications clients commonly request.


Questions – continued

4. Condominiums are relatively low risk projects because a simple design can be repeated throughout the project.

5. Most claims against architects and engineers are filed w-i 6 months of project completion.

6. Threatening to sue a client for overdue fees is a good way of getting paid


THANK YOU

Questions?

24


About XL Group plc

• XL Group plc, through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world.

• XL Group plc’s insurance companies offer property, casualty, professional and specialty insurance products globally. Businesses that are moving the world forward choose XL as their partner. To learn more, visit xlgroup.com/insurance.

• XL Group plc‘s reinsurance companies are among the world’s leading reinsurers. They offer products that include aerospace, property, casualty, marine and specialty. The world’s top insurers choose XL to help move their businesses forward. To learn more, visit xlgroup.com/reinsurance.

• We are the organization clients look to for answers to their most complex risks and to help move their world forward. To learn more, visit xlgroup.com

25

http://www.xlgroup.com/insurance

http://www.xlgroup.com/reinsurance

http://www.xlgroup.com/


Legal DisclaimerUS

26

•In the US, the insurance companies of XL Group plc are: Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Insurance Company of New York, Inc., XL Select Insurance Company, and XL Specialty Insurance Company. Not all of the insurers do business in all jurisdictions nor is coverage available in all jurisdictions. •This presentation is intended for informational purposes only and does not constitute legal advice. For legal advice, seek the services of a competent attorney.

•Any descriptions of insurance provisions are general overviews only. THE INSURANCE POLICIES, NOT THIS PRESENTATION, FORM THE CONTRACT BETWEEN THE INSURED AND THE INSURANCE COMPANY. Insurance coverage in any particular case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy, and the facts of each unique situation. No representation is made that any specific insurance coverage would apply in the circumstances outlined herein. Please refer to the individual policy forms for specific coverage details. All coverages are subject to individual underwriting judgments and to state legal requirements.

XL Group is the global brand used by XL Group plc’s insurance subsidiaries.

© 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GO Yellow 2 R= 213 G= 206 B=...

Documents

Transcript of © 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GO Yellow 2 R= 213 G= 206 B=...