Spring 2016

 
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THE PUA PERSPECTIVE:


OUR INAUGURAL ADVISORY COUNCIL

 

Earlier this month, PUA held our first ever Advisory Council where we hosted ten of our top producers for three days of fun and discussions in Chicago, IL. These meetings provide an opportunity for our partner agents to share their feedback on our program and join us in discussions regarding how we can improve. It is also an opportunity for our agents to stay abreast of market news and trends; network with other agents; learn about new products that we are developing; and help to shape our future products to ensure their clients' needs are met. Our agents also spend time with the people that they work with at PUA, as well as with executives from NSM Insurance Group and Arch Insurance Company.

Geof McKernan, CEO of NSM Insurance Group, kicked off the 3-day meeting with a presentation that included an overview of our parent company and our values. We also engaged in an in-depth analysis of PUA’s admitted architects & engineers program with Arch, as well as other programs that PUA manages. Our agents also had an opportunity to hear from representatives from our Carrier, Rich Hartman and Valerie Ford, and from the Director of Claims at NSM Insurance Group, Dave Gagliardi.

Kent Holland of Construction Risk, LLC served as our keynote speaker and spoke about risk management for this niche industry. In addition to presentations from our speakers, our agents had the opportunity to participate in some break-out sessions and underwriting activities. First, the attendees had the opportunity to take a detailed look at our proprietary rating model. The producers were able to see our actual rating model and how different factors affect risk acceptability and pricing. The attendees also took part in an underwriting challenge during which the producers were broken into groups and asked to underwrite two sample risks. They presented their solution and we chose a winning team to take home gift cards. We also had a break-out session that focused on the Ideal Program.

The 1st annual PUA Advisory Council was well received by our producers and the overall consensus was that the meeting was highly engaging and informative. We expect for it to double in size next year as our program continues to grow.

 
 
 
 
 

RISK MANAGEMENT


PREVAILING PARTY CLAUSES IN CONTRACTS

 

Did you know that risk management services under our Arch A&E and Design/Build Contractors program are outsourced to Kent Holland, J.D. and Construction Risk, LLC? Construction Risk, LLC is a nationally recognized construction risk management firm with a practice dedicated to risk management consulting services for design and construction professionals. When you work with PUA, your clients have access to expert, industry-best risk management services including:

    4Pre Claims Assistance

    4Contract Review

    41-800 Toll Free Hotline

    4Webinars/Seminars/Workshops/Training



Kent’s Contract Negotiation Tip of the Month:


Generally, you should try to avoid including prevailing party clauses in contracts, but if your contract must include one, be sure to define the term “prevailing party”. Many contracts include a clause in the disputes provision of the agreement stating that the “prevailing party” shall be entitled to recover its attorneys fees from the other party. The problem is twofold. Of utmost importance is the fact that professional liability policies do not cover attorneys fees that an insured design professional is required to pay only as the result of a contractual liability clause, such as the prevailing party attorneys fees clause.

The second problem is that the term “prevailing party” is undefined and ambiguous in its meaning. Courts can interpret it to mean anything they deem appropriate. It is even possible for a party to recover less than 10 percent of its claim and be awarded 100 percent of its attorneys fees as the “prevailing party.”

Since the prevailing party attorneys fees clause may create uninsurable losses, the preferred course of action is to strike this clause from design professional contracts. But if the project owner refuses to strike it, and the design professional is willing to assume the risk of these uninsurable attorneys fees, then at a minimum, the term “prevailing party” needs to be carefully defined.

In order to avoid confusion, never agree to a prevailing parties attorneys fee unless you add a definition such as the the one below. Note that there are numerous ways to draft a definition and different percentages can be used at the option of the parties.

Here is an example definition: “Prevailing party” shall be defined (1) as a claimant that is awarded net 51 percent of its affirmative claim, after any offsets for claims or counterclaims by the other party, and (2) as a defendant/respondent against whom a net award of 50 percent or less of a claimant’s claim is granted. In claims for money damages, the total amount of recoverable attorney’s fees and costs shall not exceed the net monetary award of the Prevailing Party.


This article is published in ConstructionRisk.com Report, Vol. 18, No. 4 (April 2016).


Kent HollandAbout the author: J. Kent Holland, J.D. is founder and president of the firm, ConstructionRisk, LLC, providing risk management services for PUA and Arch Insurance Group, as well as to owners, design professionals, contractors and attorneys on construction projects. He is publisher of the ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  

 
 
 
 
 

THE ADDITIONAL INSURED CONUNDRUM

 

One of the most common mid-term policy change requests we see is a request to add an additional insured to a professional liability policy. Such a request is often driven by a contractual requirement whereby the attorney that wrote the contract does not understand professional liability insurance.



To put it simply, this is a GL request and not a PL request. A PL policy covers the named insured for their negligence in rendering or failing to render professional services to its third party clients. The third party clients are not performing professional services and if they are, we did not sign up to cover those services. Further, if we were to add a third party client as an additional insured, any claims by them would potentially be excluded via the insured v. insured exclusion.

The solution is to educate the project owner and their attorney, and to get the additional insured requirement removed. This is generally a difficult task, so for a more detailed discussion on the Additional Insured conundrum, we turn to Kent Holland, Jr., JD of Construction Risk, LLC and his article titled "Why a Project Owner Isn’t Made an Additional Insured Under a Design Professional’s Errors and Omissions Policy".

Click here to download the full article.


 
 
 
 
 

OTHER LINES SPOTLIGHT

 

Did you know that PUA can write excess limits? We currently offer this on the following lines of insurance:


4Architects & Engineers PL

4Design/Build Contractors PL

4Miscellaneous PL


Quick facts about our excess limits offering:


4We have up to $5MIL limit capacity with Lloyds of London

4We can write excess limits over our or another carrier’s primary policy

4We can limit coverage to a specific project or specific client to keep costs down

4Minimum premium starts at $5,000 per MIL for full excess limits OR $2,500 per MIL for specific project or client excess limits.



If you’d like to pursue an excess limits quote from PUA, please forward (1) a copy of the primary policy, (2) a copy of the application that was completed for the primary policy and (3) current loss runs. If you are looking to limit coverage to a specific project or client, we will also need a completed specific project or client supplemental application
 
 
 
 
 

UPCOMING WEBINAR

 

calendar.jpgMark your calendars for Wednesday, July 13th from 12 p.m. - 1 p.m. for a webinar that we will host in conjunction with our partners at Arch Insurance Company and Construction Risk, LLC. The webinar will address cases impacting design professionals & design-build firms and the key risk management lessons learned.

Stay tuned for more information and a registration link later this month.

 
 
 
 
 

PUA'S RECENT SUCCESSES

 

Here is a snapshot of some of our recently written accounts. PUA is able to write architecture and engineering firms with billings under $20M and design/build/contractors firms with contract revenues under $150M.


4Landscape Architect in CA ($1.4M in billings) that previously did condo work and had two condo claims from 2012 with over $400K incurred, but no claims in past 3 years. We liked the services and believe condo claims are in the past since they no longer do that work. Policy: $2M limit and $25K deductible for $36K.


4Civil Engineering firm in TX ($2.8M in billings) that recently added a structural engineer on staff.  The policy was with another carrier, but the form had a structural engineering exclusion so coverage had to be moved mid-term. It was a well-run firm with no prior claims. The new structural engineer was very qualified and structural will be a small % of total billings with no prior acts exposure. Policy: $2M limit and $10K deductible for $21K.


4Small Architect in CO ($100K in billings) that does 50% private dwelling and 50% commercial project types with no claims. Policy: $1M limit and $5K deductible for $4K. This was a MIN premium risk.  


4Construction Management Firm in SC ($11M in billings) that does 90% roads and highways and 10% bridges, with no prior claims. Policy: $3M limit with $100K deductible for $67K.


4Structural Engineering Firm in NY ($250K in billings) that does varied project types and had no prior claims. Policy: $1M limit with $10K deductible for $10K with Lloyds.


4Electrical Design/Build Firm in WI ($10M in revenues) that does 100% commercial type projects and had no prior claims. Design/build work accounts for 20% of their revenue with remaining from contracting services. Policy: $1M limit with $5K deductible for $6K using regular A&E form w/ contractors professional liability endt.


4At-Risk CM Firm in OH ($125M in revenues) that does commercial/retail type projects and had 1 claim CWOP. $17.5M of its revenue comes from CMAR.  Policy: $5M limit and $75K deductible for $49K premium. Protective indemnity and rectification coverages offered for an AP but not taken.


Send us a submission and become a success story!


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Professional Underwriters Agency (PUA)
www.puainc.com
Contact: Sandip Chandarana, Director of PUA
Call us: 630-572-0600
Email us: sandip@puainc.com
Copyright © 2016 PUA, all rights reserved.

 


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