The first quarter of 2023 brought ill winds to the post pandemic recovery. Namely, continued stubborn inflation, potential recession, and banking instability in both the US and Switzerland. Similar uncertainty has been experienced in the construction professional liability market. While we are seeing improvements for the designers in London insuring markets for their annual programs, US domestic markets for designers remain challenged for larger risks — particularly when project specific coverage is sought.

Why is there a bifurcation between designers’ insurers domestically and in London? And why is the constructors’ market for professional coverage not acting in a similar manner?

To begin with, the London insurers began remediating their portfolios in the latter part of 2018 due to heavy claim losses. Lloyd’s of London in fact identified that the design and construction professional liability had become one of the most challenged coverage lines in the market.

North American domestic insurers in the design space followed a similar path, beginning with the severe strain of project coverage and eventually a stiffening of the market terms for annual programs.

Professional coverage for contractors has most recently also shown signs of constraint due to payment of significant claims via Rectification, Protective and of course direct claims by Owners.

In summary, the issues are the same between London and domestic markets – North America is simply eighteen months to two years behind.

Contact

The Professional Services Practice at Aon values your feedback. To discuss any of the topics raised in this article, please contact Michael Earp, Mark J. Peterson or Bob Rogers.





Michael Earp
Architects & Engineers Practice Leader
Chicago







Mark J. Peterson
Managing Director and Design & Construction Firm Practice Leader
Omaha







Bob Rogers
Managing Director and Design & Construction Firm Practice Leader
Omaha