Concerned that skyrocketing professional liability insurance, claims and deductibles might bring down their profession, structural engineers are banding together to combat the threat.
The first formal step was the launch of a risk management program. The goal is to reduce claims, better defend against claims, and, ultimately, reduce insurance premiums. We are going to reach down to the lowest level of practicing engineers to raise the level of practice, said Edward Bajer, director of the Council of American Structural Engineers, Washington, D.C., at the first RMP convocation, held Nov. 5-6 in Reston, Va. It is planned as an annual event. This is no quick fix, he cautioned.
RMP, a CASE program, is intended to reduce the cost and frequency of claims against structural firms by enhancing risk management, loss prevention and claims management techniques. The immediate goal is to change the way we practice on a firmwide level, said Nils V. Ericson, principal of The Di Salvo Ericson Group, Ridgefield, Conn., and chairman of the RMP steering committee. The global effect we would like is to raise the level of practice.
Rates continue to fluctuate wildly and firms, in many instances, are unable to obtain multiyear policies. As the first step toward a remedy, RMP is looking at how it would partner with insurance companies. Potentially, RMP firms might get a premium rebate, said Ericson, adding that pricing change would take longer to implement.
Structurals feel particularly vulnerable. Risk of a claim against a structural firm is nearly three times that of other engineers, according to insurer Victor O. Schinnerer & Co. Inc., Chevy Chase, Md. And the severity of claims against structurals has been creeping upward. Last year, the average cost per firm for defense and indemnity of paid claimsabout $230,000was almost 30% higher for structurals than for other engineers. On the bright side, the ratio of the frequency of claims to billings peaked in 1996 and has improved fairly steadily. Click here to view claims chart
Although RMP is a CASE program, it is a direct consequence of the efforts of leaders of the three structural groups (ENR 2/10/03 p. 12). RMPs 10-person steering committee includes representatives of CASE, the Structural Engineering Institute, which hosted the convocation, and the National Council of Engineering Associations, Chicago.
The situation is considered very serious for the structural profession because fees are such a small fraction of the overall job. Because of joint and several liability laws in many states, even if a firm is minimally responsible for a claim it can be held fully responsible. Also, licensed professionals who stamp drawings are even more vulnerable because plaintiffs can sue them personally.
Speakers emphasized the point that better communication with clients and better risk awareness can result in a reduction in claims. Many also pointed to poor coordination of design drawings as a culprit for eventual claims. Speakers cautioned attendees to beware of scope creep.
To aid in this, in 2003, CASE published A Guideline Addressing Coordination and Completeness of Structural Construction Documents. It has sold 15,000 copies.
The justice system is not going to change, said Samuel J. Muir, a lawyer with Collins Collins Muir & Traver, South Pasadena, Calif., which defends designers. Muir advises engineers to better manage exposure through aggressive internal and external management, limitation of liability in contracts, larger fees and self-regulation of the profession.
Structurals are a small part of the insurance business. They worry that if they dont unite to clean up their collective act, there may be a time when they cant even buy insurance. Think about what it would be like if no one offered us any, said one speaker.