This article is synopsized and reprinted by
the AIA with the permission of the authors and a/e ProNet.
The selection of a professional liability broker
is as important a decision as selecting your business partners. Your broker
is the person who should be delivering some of the most relevant services
regarding risk management and your insurance. A poorly selected broker
may be ill-equipped to advise you on the risks of professional practice.
A well-selected broker will be as important to your practice as your attorney
or your accountant. Most importantly, you are paying for the services
of your broker when you purchase your professional liability insurance.
What a good broker can do for you
One of the best services that your broker can offer is risk-management
advice. You should talk to your broker throughout the year, not just at
renewal time. Your broker can give you sound advice about why one carrier
or type of coverage is more advantageous to the way you do business than
another. Throughout the policy year, a good broker will listen to your
questions and your business plans, and advise you on the best way to manage
your risks. He or she can help you understand why certain project types
are more or less risky than others and can help you identify the tools,
products, and services that are available to manage those risks.
Your broker is your advocate in the insurance marketplace and must have
a thorough knowledge of the industry, applications, how best to answer
the questions on the applications, and how best to communicate those answers
to the underwriters who set your premiums. A good broker will know about
the state of the market, who the underwriters are and what they are looking
for, and how to present your firm in the best possible light.
It is not just this knowledge that is important,
but the skill and attention to detail with which it is utilized on your
behalf. A good broker will be experienced with both hard and soft marketshe
or she will have been down this road before. The value of the advice you
receive about companies, coverage, and premiums depends upon this experience.
Loss prevention support
You should be able to look to your broker for valuable assistance in reviewing
and negotiating your professional service agreements. Your broker is not
a substitute for competent legal counsel but is a source of information
and guidance on issues of risk and responsibility. He or she can give
you a good risk management perspective and will know what the maximum
limits of fairness are. She can even help you understand how to negotiate
fair risk allocation into your agreements.
If you receive a claim or a summons, you need to rely on your broker,
who should be able to differentiate between claims that are likely to
be significant to the underwriters and those that will not. Further, your
broker should know what clients, contractors, attorneys, and insurance
company claims representatives expect and help you through unfamiliar
territory. He or she will be able to help you to understand the process
and the potential issues and timeframes and assist you in getting back
to business as quickly as possible.
What to look for in a good broker
Look for a specialist in architects' professional liability insurance.
Search for a broker capable of responding effectively to the unique requirements
of your firm. You have a reasonable right to expect knowledge, expertise,
and exceptional service. A specialist probably does not spend time selling
homeowner's insurance or developing ocean marine business but works hard
at providing services to design professionals and dealing with the markets
that insure them. A specialist is careful to maintain relationships of
mutual respect and trust with underwriters, knowing that the quality of
those relationships is essential to being able to serve you well. A specialist
broker will have many of your friends and colleagues as clients and will
value your professionalism and your business.
A specialist broker understands what you do every day and how you go about
doing it. Because good brokers understand the difficulty in balancing
sound business practices against the imperative of quality, they can help
you reconcile the two without compromising either. A specialized broker
will understand the decisions that you have to make on a daily basis in
your particular business. The broker will also understand how his or her
advice will be applied to your practice and will help you learn to make
informed risk management decisions.
A commitment to the
A specialist broker will give back to the architectural community by his
or her involvement in activities of professional associations, service
on committees, risk management seminars, and contributions to professional
publications whenever possible. Not only will a specialist broker be involved
in the design community, he or she will have regular contact with lawyers
on both sides of disputes and with professional society committees and
staff. He or she will know the accountants and consultants who specialize
in the field. This involvement benefits you in that the broker can maintain
and expand his or her own knowledge and better understand how allied professions
will affect your risk management plans.
A broker's ability to make independent, reasoned judgments and give you
advice is paramount to his or her success. The broker's advice is valuable
to your risk management strategies. Select a broker whom you know you
can trust and in whom you have confidence.
Asking the right
The task of searching for a quality, specialized broker is easier than
you think because the universe that such brokers travel in is relatively
small. Don't start looking just before a renewal or anniversary date.
It may take some time to find a broker with whom you feel comfortable.
Ask your colleagues who their broker is.
Ask your local AIA component for the names of brokers who have
contributed their time to the organization.
Ask attorneys, accountants, and marketing consultants if they know
a specialized broker.
When you have a list of brokers to interview, here
are a few questions to get you started.
What gives you the knowledge and expertise to be a specialized
broker? What are your staff's qualifications?
How committed are you to the A/E industry? How much of your business
is A/E and how much of your time is devoted to this industry?
What services do you offer? If called upon, are you prepared to
make presentations on our behalf to risk managers and attorneys who represent
How much of your personal time can we expect to be devoted to meeting
How extensive are your contract review and negotiation services?
How do you propose to strengthen our understanding of these issues?
How successful have you been in the past?
Which of my colleagues do you serve and whom would you offer as
With which professional liability insurance companies do you do
business and why? How did their underwriters behave during the last hard
market and how do you expect them to behave in the future? Is there anything
about your relationship that could affect the independence of your advice
Are there insurers with whom you do not do business and why?
How do you stay abreast of developments, pricing, relative financial
condition of the insurers, and underwriting guidelines in the marketplace?
How extensive is your involvement with professional associations?
What do you contribute to my profession?
What, specifically, can you do to help us control our professional
liability insurance costs? What other considerations are important to
us and why?
You do not need to inquire about the candidates'
understanding of your professional practice. Their responses and their
questions to you will tell you everything that you need to know. Their
understanding of your needs and concerns will be evident in everything
that they say to you.
Choose wisely. Your broker can be your best friend
as you sort out your professional liability insurance options.
Copyright 2001 The American Institute of Architects.
All rights reserved.