Consulting Engineers insurance

What will insurers looking for in order to assess the Professional Indemnity risk?

With regard to Consulting Engineers insurance, underwriters will want to consider a number of different areas when underwriting a Professional Indemnity exposure for an engineering type discipline:

• Company size – This can be established in two ways, the gross annual income of the company & the number of partners/directors/employees.
• Qualifications and experience – As with all professions, insurers will want to see a CV that shows that an engineer is suitably qualified and/or experienced to carry out the work undertaken on behalf of their client.
• Type of work carried out – Underwriters will be particularly interested in finding out if the engineer is involved in any high risk exposures, such as work on safety critical systems/ work on bridges/ mines/ tunnels/ underpinning or piling contracts as an example.
  • Civil engineering – Civil engineers are involved in all aspects of the design and supervision of the construction of roads, drainage, airports, tunnels, bridges, water supply and sewage systems. They employ the latest concepts in computer-aided design (CAD), construction project scheduling and cost control.  This is considered as medium to high risk work by professional indemnity underwriters.
  • Structural engineering – Structural engineers are involved in designing and making buildings, bridges and frameworks or structures so that they can resist the forces to which they may be subjected. The role of a structural engineer today involves a significant understanding of both static and dynamic loading, and the structures that are available to resist them.  This is considered as high risk work by professional indemnity underwriters who will charge what they see as a proportionately higher premium for the risk.
  • Mechanical Engineering – The work of mechanical engineers varies by industry and function. Large numbers of mechanical engineers do research, test and design work, while others work in maintenance, technical sales and production operations. Anything that is mechanical or must interact with another machine or a human being is within the broad scope of the mechanical engineer.  This is often seen as lower hazard work by professional indemnity insurers.
  • Geotechnical engineering (soil and foundation work) – Geotechnical engineering is the branch of civil engineering concerned with the engineering behavior of earth materials. Geotechnical engineering is important civil engineering, but is also used by, military, mining and petroleum or any other engineering concerned with construction on or in the ground. This work is considered very high risk by professional indemnity underwriters as the potential for consequential loss has produced some very large claims pay outs in this particular field of engineering.
  • Electrical engineers – Electrical engineers design new products, write performance requirements and develop maintenance schedules. They also test equipment, solve operating problems and estimate the time and cost of projects.  This is seen as a moderately low risk discipline by professional indemnity underwriters.
  • Heating, ventilation and air-Conditioning engineering (HVAC) –   Heating ventilation and air conditioning system design is seen as a relatively low risk discipline by Professional Indemnity underwriters.
• Contract sizes – There is a direct relationship between the size and complexity of the job and the exposure.
• Claims experience – A poor claims experience is often a reflection of the quality of the company’s work, experience, staff & internal risk management. The premium for such a risk is likely to be heavily loaded by an underwriter when considering terms for such a risk.
• Retroactive exposure – Does the business have an exposure to claims arising from past work, whether in the current business or a previous company.
• Overseas exposure – Does the practice carry out work for overseas clients.