WASHINGTON, D.C. —” While the overall insurance market for architects and engineers professional liability insurance generally remains stable, a number of leading insurance companies offering this coverage expect to raise premium rates in 2011. A new survey by Ames & Gough finds some insurers planning to seek premium rate increases of as much as 10 percent on average for both renewals and new business.

According to the Ames & Gough survey of 10 leading insurance companies providing architects and engineers professional liability insurance in the United States, the insurers are split in their planning with half expecting to maintain current rates and half expecting to seek increases. Interestingly, however, none said rates will go down in 2011. This represents a shift in the market for the first time in several years.

Among insurers planning rate increases, the expectations ranged from the low single digits to 10 percent or more. On a combined basis, the insurers in the Ames & Gough survey account for roughly 70 percent of the overall U.S. market for this coverage. For small and mid-sized firms, the overall picture with respect to premium rate adjustments is somewhat different.

“Recent renewals show that while the overall insurance market for architects and engineers professional liability coverage is stabilizing, newer players in this segment are still creating competition. Smaller and mid-sized architectural and engineering firms are the ones seeing the greatest benefit,” said Dan Knise, president and CEO of Ames & Gough. “Still, firms thinking about changing insurers should carefully weigh the value of continuity and stability against the near-term opportunity for a lower premium payment.”

The Ames & Gough survey also found capacity to be stable. For any individual qualified insured firm, 20 percent of the insurers can provide as much as $25 million in limits, 30 percent can provide a maximum of $10 million to $20 million, and 30 percent can provide up to $5 million. The available capacity is consistent with historical levels, and with the ability of multiple insurers to participate on any individual insured program, it’s possible to secure coverage upwards of $50 million when necessary.

“While availability of limits is not an issue for design professional firms, the more vexing challenge is to determine the right limits to carry,” said Mike Herlihy, executive vice president and partner in the Ames & Gough Boston office. “Historically, most architects, engineers, and other construction professionals have used a formula that relates limits to their annual billings. Some larger firms now carry a ‘split’ limit with their aggregate limit being a multiple of the per claim limit. Insurance brokers and advisors with extensive benchmarking data can be helpful on these matters.”

Ames & Gough also asked the insurers to look back at what transpired in 2010, finding that 40 percent kept their rates flat on average, while 30 percent reported lowering rates. Another 30 percent generally increased rates with rate hikes for some insured design firms reaching double digits. By a large margin (80 percent), insurers cited recent claims experience as the most significant factor among underwriting considerations, followed by type of work or service (60 percent), type of project (40 percent), and historic loss experience (40 percent).

To obtain a complimentary copy of the Ames & Gough survey, “PLI Market 2011: Smooth Sailing, But Watch for Shoals Ahead,” e-mail info@amesgough.com.