Adverse severity claim trends reported by most professional liability (PL) carriers continue without any signs of improvement.
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Rate predictions: Architects & engineers
Trend
Range
Favorable risks rate predictions
Professional liability
0% to +5%
Property
Flat to +5%
General liability
Flat to +5%
Auto
+5% to +10%
Workers compensation
Flat to +5%
Umbrella
+5% to +10%
Management liability
Flat to +5%
Cyber
+5% to +10%
Challenging risks rate predictions
Professional liability
+5% to +15%
Property
+10% to +20%
General liability
+10% to +15%
Auto
+20% to +30%
Workers compensation
+5% to +10%
Umbrella
+10% to +15%
Management liability
Flat to +5%
Cyber
+10% to +15%
The volatility in the A&E professional liability marketplace over the past 24 months should continue to stabilize in 2025. Capacity restrictions remain in place, but rates are mostly stable. Adverse claim trends persist alongside a continued reduction in A&E PL carriers’ willingness to underwrite certain risks.
While some A&E PL insurers are indicating premium increases across their entire book of business to offset claim severity trends, certain insurers are taking a strategic underwriting approach that will target high-risk projects or specific market segments. Third-party bodily injury claims on large infrastructure projects remain a difficult risk to manage, and some carriers have reduced their appetite for risks that take on these exposures.
While restriction in capacity was limited to select insurers in 2024, additional carriers are starting to follow suit to limit their exposure to increased claim severity trends. Most carriers are offering A&E PL limits up to $5 million; however, the number of carriers providing coverage up to $10 million is limited. Decreased capacity has created a need for additional limits through excess carriers at an additional cost.
Firms can expect an increase in cost to insure single projects by securing specific job excess (SJX) coverage and/or project specific professional liability (PSPL). Consult with your insurance broker to determine all options and potential costs well in advance of start of construction
Some A&E PL insurers are concerned about the constriction in the project specific professional liability (PSPL) market on large projects as a result of increased claim activity surrounding design-build exposures — specifically public infrastructure projects with fixed price contracts and third-party BI exposures. In the event PSPL coverage is not available or cost prohibitive, these project exposures would bring heightened exposures to the A&E PL insurers’ underlying PL policies.
Design firms with an adverse loss history or high-risk disciplines/project types (structural, geotech, condos, roads/highways) can expect a greater level of underwriter scrutiny to continue. Firms can expect underwriters to look closely at their commitment to specific risk management practices, including negotiation of fair and insurable contracts and education of their staff on managing A&E PL-related risks.
Claim severity trends continue and were the primary driver for rate increases in 2024. Insurers note social inflation; including rising claim costs, a backlog of litigation, length of time to settle, supply chain disruptions and the rise in bodily injury claims as primary factors.
For more information, the recently completed 2024 WTW A&E Professional Liability Carrier Survey Report on emerging claim trends and risks in the design profession is based on an extensive survey of senior claim managers from eleven leading A&E PL carriers.
Claim severity continues in 2025. Social inflation continues to be recognized as a leading contributor to the increase in claim severity fueled by aggressive plaintiffs’ bar and concerning trend of litigation financing.
The cost and time to settle a PL claim are increasing, with most noting it takes on average two to three years or more to settle a matter.
Third-party bodily injury claims and design-build/alternative project delivery are the two leading factors behind a continuing trend of severity claims on roads and highway/infrastructure projects.
Design firms need to maintain a strong focus on risk management. WTW A&E has created several risk management education programs to help our clients address these emerging risks and minimize their exposure to costly claims and client disputes, including our Emerging A&E Risks and Claim Trends webinar and OnDemand programs.
While the property landscape has continued to trend favorably, carriers began 2024 by refocusing their attention to deteriorating results across their casualty books. The challenges in the casualty space follow persistent trends, such as social inflation and third-party litigation funding, which have added significant pressure to insurers’ liability reserves.
Social inflation — Social inflation continues to challenge the liability market as the amount of litigation and size of verdicts have increased dramatically. Carriers are struggling to accurately project these losses in this legislative landscape and, in turn, are focused on claim management tactics and limiting capacity on challenged classes.
Challenging risks — Clients with large fleets, adverse loss experience, and/or fleet makeups outside of private passenger vehicles continue to see a hard market with limited capacity and an increase in cost for that capacity. The introduction of fleet telematics and other vehicle safety and driver training initiatives have become a risk management norm for insureds with large fleets to better the marketing of their risk.
Umbrella/excess — We expect that the pressures impacting the primary casualty lines (social inflation, adverse reserve development, etc.) will have continued commensurate effect on umbrella/excess conditions as these trends persist.
Overall, firms should prepare for a challenging insurance landscape and work closely with their brokers to navigate the market effectively.
Disclaimer
Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
