Our Holmes Murphy Architects and Engineers (A&E) team knows the importance of arming you with information so you can more quickly and swiftly respond to emerging trends in the design world. As a result, we’ve begun more closely analyzing the real-time claims data we have on hand and plan to share them with you quarterly. By using this data, our goal is to not only validate industry assumptions with real-world evidence, but also to translate the information into actionable solutions to help you proactively prevent future claims.
For purposes of this blog, I’ve condensed the information to key insights; however, if you’d like to see our comprehensive report, please click here.
Claims and Pre-Claims
During 4th quarter 2024, our clients reported a total of 23 claims and 33 pre-claim assists, averaging approximately one report per business day. This highlights the importance for A&E firms to choose carriers based on the reputation of their claims-handling teams. Design professionals are significantly benefiting from the pre-claim assistance provided by their carriers. Discussions with our leading carrier partners reveal that 80 percent of pre-claim matters do not escalate into full claims. This emphasizes the value of design professionals seeking expert guidance in managing these often-delicate situations.
Revenue and Size of Firms
Contrary to the national assumption that small firms rarely face claims, our data indicates they are not exempt from conflicts. Additionally, our findings show that larger firms, with revenues exceeding $100 million, are often targets for substantial and complex claims.
Quality Control Claims
Initially, we anticipated that third-party injuries would be the primary source of new claim reports. However, our data reveals a higher frequency of issues related to quality control.
Claims are often triggered by economic damages resulting from errors and omissions in the design process. While preventing third-party claims can be difficult, the positive takeaway is that firms can have direct influence over quality concerns through the implementation of quality assurance and quality controls (QA/QC) programs to ensure compliance with the standard of care.
While quality control claims outnumber third-party disputes, our data shows that the severity of these claims can be staggering. This severity trend is having an impact on professional liability pricing and availability in the marketplace.
Geographic Breakdown
One other item we’ve begun analyzing is “where” claims are happening. This geographic breakdown will allow us to monitor activity by state over time. Data related to loss prevention files is also reflective of Holmes Murphy’s proactive approach to loss prevention and mitigation.
We’re Here to Help
For more information or to discuss these findings in greater detail, please reach out to a member of your Holmes Murphy team. We’d be happy to discuss further with you.
