‘A one-stop shop for professional liability exposures’

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The AE/CP market is evolving – and one firm is keeping up with the pace

MANY CONTRACTORS, design/builders, and construction managers may not be aware that their general liability policies may not provide adequate coverage in the Architects, Engineers, and Contractors Professionals (AE/CP) space. Thankfully, specialty policies were developed to plug the gaps in the CGL policy, and Jim Bechter, director, underwriting operations at NAS Insurance Services, Inc., operating as Tokio Marine HCC – Cyber & Professional Lines Group (CPLG), a member of the Tokio Marine HCC group of companies based out of Houston, Texas, outlined the development and scope of his company’s professional liability coverage within the AE/CP division. He described an evolving insurance coverage and risk management approach for specialized professions – including design professionals, contractors, and science professionals such as wetland biologists, archaeologists, and consulting university professors, to name a few.

Tokio Marine HCC – Cyber & Professional Lines Group, doing business as NAS Insurance Services, LLC with the CA license #0677191, is headquartered in Encino, CA, and is a member of the Tokio Marine HCC group of companies based in Houston, Texas. For more information about Tokio Marine HCC – Cyber & Professional Lines Group, please visit www.tmhcc.com/pro.

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‘We’re excited to offer excess over other carriers. We can help our insureds and their brokers meet their contract requirements to carry higher limits up to $5 million, for example’

Steven Hansen, CPLG

“Thirty-five years or so ago, we started writing architects and engineers professional liability,” Bechter told Insurance Business, explaining that the initial focus back then was on providing insurance for design professionals against allegations and claims of negligent performance of professional services. By the early to mid-1990s, the rise of the design-build project delivery changed the market, expanding liability exposures to contractors who began to take on both design and construction responsibilities. “Contractors had exposure for both designing and constructing, meaning they needed coverage for allegations of negligence in their professional services regardless of whether such professional services were provided by their own employees or due to their subcontracting of such professional services to architecture, engineering, and specialized consulting firms,” Bechter explained. “This shift led to the creation of contractors’ professional liability, which was designed to plug the gap not adequately covered by commercial general liability policies and basic architect and engineer professional liability policies.”

Similarly, during this time, there was a growth in the use of firms providing construction management services. The construction management or project management role on these construction projects led to CPLG tailoring professional liability coverage to deal with these exposures – with Steven Hansen, vice president, head of AECP at CPLG adding that construction managers are a class of business they cover. “We look at both construction management agency, meaning the eyes and ears out there on the job site on behalf of the owner or other parties, as well as construction managers at risk, where they’re acting as both the

Trevor Saccente, underwriting manager at CPLG, highlighted another shift in contractor professional liability, specifically regarding faulty workmanship. “Over the past few years, our brokers have asked for coverage related to faulty workmanship, since traditional contractor professional liability policies don’t cover errors in basic workmanship, such as wiring or electrical panel errors,” said Saccente. To stay competitive and meet client needs, CPLG introduced a “rip and tear,” or faulty workmanship coverage, specifically designed for smaller, artisan contractors who benefit from this protection most since they were excluded from many policies.

‘We identified a need in the marketplace to provide sexual molestation coverage as endorsed in our Contractors Professional coverage forms. Many school districts contractually require anyone stepping on a campus to carry this type of coverage’

Trevor Saccente, CPLG

Rapidly evolving policies

How contractor professional liability is changing

Published Feb 10, 2025

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construction manager and the contractor. That’s certainly an area where folks don’t know they have an exposure, but they do. We try to tailor the coverage for construction management to the nature of services.” Indeed, the extent of the coverage doesn’t stop there. CPLG has been offering coverage for pollution-related claims tied to professional services and contracting activities for years now, an addition that Hansen described as essential. It aligns with the industry-wide trend to incorporate environmental liabilities and pollution-related exposures into their insurance offering, especially as regulatory pressures mount and projects become more complex. Another notable expansion of coverage in recent years has been the rise of network security, privacy, and cyber-related risks, areas where CPLG identified evolving risks for architects, engineers, and contractors. This addition addresses third-party claims stemming from data breaches or security incidents, allowing architectural and engineering firms to be better protected against digital vulnerabilities that have become more frequent and severe.

New Sexual Misconduct & Molestation Liability (SMML) coverage

CPLG has positioned itself as a responsive provider in a competitive landscape, tailoring coverage to the evolving demands of architects, engineers, and contractors while proactively addressing new and emerging liabilities. A prime example, according to Saccente, can be seen in its new Sexual Misconduct & Molestation Liability (SMML) coverage, which was created to address a specific liability need in construction work on school campuses. “We identified a need in the marketplace to provide sexual molestation coverage as endorsed in our Contractors Professional coverage forms,” Saccente stated. “Many school districts contractually require anyone stepping on a campus to carry this type of coverage. We developed an SMML endorsement so that the insured, in many cases, doesn’t have to get a separate policy or seek coverage elsewhere to fulfil their contractual requirement.” By offering sexual misconduct and molestation liability with options to increase coverage when necessary, CPLG enables contractors to respond faster to bid requirements.

At CPLG, their dedicated underwriting team is also able to provide competitive quotes on an excess basis. As Hansen explained, there aren’t many markets offering excess, so it positions CPLG to help policyholders who aren’t receiving the higher limits from their primary carrier in order to meet their contractual or risk management needs. “We’re excited to offer excess over other carriers. We can help our insureds and their brokers meet their contract requirements to carry higher limits up to $5 million, for example.”

Now offering EXCESS to other professional liability carriers

For Saccente, it’s the team’s extensive underwriting experience in very specific fields that gives CPLG that

‘One of our strengths is longevity in the market’

much-needed competitive edge – as well as a long-standing presence in the sector, which instils confidence. “One of our strengths is longevity in the market,” added Hansen. “We’ve been underwriting for over 35 years and have a lot of experience – we’ve seen a variety of exposures, claims, and creative needs, and really do understand the architects, engineers, construction mangers, contractors, and scientists. We provide financially strong A++ rated insurance coverage, and we write in all 50 states.” Not only that, but all claims staff are attorneys who understand the law and what each specific case is about. In addition to an excellent claims staff, CPLG has pre-claim assistance and offers contract review services as a benefit of being a policyholder. Their pre-claim assistance program strategically partners the policyholder with panel council who can provide assistance before a matter becomes a claim. Hansen underscored the comprehensive nature of their many offerings: “And, it’s in line with our goal, to serve as a ‘one-stop shop for professional liability exposures,’ which span design, construction, and science-related services.” CPLG further supports this mission, providing additional coverage in areas such as cyber liability, employment practices, and healthcare. “Our underwriting staff is well positioned to help solve the insurance needs our brokers come across each day,” Hansen concluded.

About Tokio Marine HCC

Tokio Marine HCC is a member of the Tokio Marine Group, a premier global company founded in 1879 with a market capitalization of $73 billion as of June 30, 2024. Headquartered in Houston, Texas, Tokio Marine HCC is a leading specialty insurance group with offices in the United States, Mexico, the United Kingdom, and Continental Europe. Tokio Marine HCC’s major domestic insurance companies have financial strength ratings of A+ (Strong) from S&P Global Ratings, A++ (Superior) from A.M. Best, and AA-(Very Strong) from Fitch Ratings; its major international insurance companies have financial strength ratings of A+ (Strong) from S&P Global Ratings. Tokio Marine HCC is the marketing name used to describe the affiliated companies under the common ownership of HCC Insurance Holdings, Inc., a Delaware-incorporated insurance holding company. For more information about Tokio Marine HCC, please visit www.tokiomarinehcc.com.

Sexual misconduct and molestation insurance gives organizations protection against sexual misconduct and molestation claims. CPLG’s policy covers allegations of sexual abuse, molestation, or mistreatment or maltreatment of a sexual nature, as well as allegations of negligent employment, investigation, supervision, training or retention of, or failure to report to proper authorities a person who committed abuse or molestation.

Sexual misconduct and molestation insurance

An insight into the global and regional AEC landscape

The global AEC market was valued at $10.05 billion in 2023 – with that number projected to rise to $24.36 billion by 2032, according to EMR Claight.

The commercial insurance industry contributes nearly $15 billion to Canada’s GDP, provides approximately 115,000 jobs, and generates $8 billion in labour income, according to Insurance Bureau of Canada.

Limits up to: $1 million each victim / $2 million aggregate ($1 million / $2 million if required by written contract) Minimum premium: $5,000 Minimum deductible: $5,000

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