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Designing Risk Management Success in the Growing Fields of Architecture and Engineering
For brokers, architectural and engineering firms (A&E) present a unique opportunity.
Thanks to technological advancements, increased infrastructure spending and a demand for sustainable design, architecture and engineering services are on the rise. Last year, the industry was valued at more than $376 billion and it’s expected to grow at a compound annual growth rate of 4.9% between 2024 and 2030.
These companies need insurance policies and are looking to partner with brokers and carriers who can cater to their specialized needs.
“We recently conducted research to better understand the pressures faced by engineers and architects and learned that material cost inflation, supply chain disruption and labor shortages top the list.” said Ariel Kipp, architects and engineers segment lead, Travelers. “My father was an engineer, so I have a wealth of respect not only for the profession but for how much it’s changed over the last 20 years.”
Talent Shortages Present Safety and Liability Concerns
Ariel Kipp, Architects and Engineers Segment Lead, Travelers
As the architectural and engineering sectors grow, they contend with one challenge common in many industries: talent shortages. Highly skilled architects and engineers are retiring, and there aren’t enough new workers to take their place.
“After seeing several years of decline in students entering these fields, it seems like enrollments are on the upswing,” Kipp said. “However, there are still gaps to fill given the number of estimated job openings between expected growth and attrition.”
New employees may not have the skills needed to manage some of the liabilities architectural and engineering firms face. If a new employee is inexperienced at handling environmental risks inherent to certain job sites, they may inadvertently expose their companies to pollution lawsuits.
“If the firm lacks the knowledge to handle potential issues, such as contaminated soil spilling into a nearby water source, it could lead to a pollution incident,” Kipp said.
New employees also present safety concerns. Travelers’ 2024 Injury Impact Report found that 35% of all workers’ comp claims are from first-year employees. Architects and engineers are particularly vulnerable because their jobs often involve both office and onsite work.
“In this industry, it’s not uncommon for an employee to find themselves donning a hard hat and steel-toed boots at some point in the workday,” Kipp said.
“Implementing a strong safety culture and considering whether employees, especially new workers, are adequately trained for working on job sites is crucial.”
Safety concerns extend to drivers traveling from the office to a job site as well. Over the past three years, A&E firms had a 33% increase in motor vehicle accidents, Travelers found.1
Distraction and inexperience could increase the likelihood of an accident, but there are other considerations too. Another driver on the road could put them at risk, for example.
“As with any other job-related activity, it’s essential to understand if the employees operating these vehicles are properly trained,” Kipp said.
Customers can take steps to reduce their risk – such as checking driving records and addressing unsafe behavior as well as providing both safety education and accident preparation – but even with these precautions, accidents can still happen.
Theft and Other Unique A&E Risks
As they drive to and from job sites, architects and engineers are often hauling high-valued materials and equipment. They might have drones for surveying in their back seat or a seismograph to check the motion of the earth at a particular site. These tools can be costly, making them an alluring target for thieves.
“Any unattended equipment has the potential to be stolen,” Kipp said. “Taking proper security measures to protect valuable property, such as attaching alarms to items that need to be left in a vehicle, is critical to reduce the risk of theft.”
Some tools might be covered under a standard insurance policy, but architects and engineers may need to purchase specific coverage for others — like boats or dive equipment used to assess water-based project sites. Inland marine policies, in particular, can help protect larger assets a company may have.
Site location matters, too. As Kipp explained, “railroads have unique characteristics that require a different level of coverage compared to standard policies.” Architects and engineers may need to purchase railroad protective liability policies to ensure they’re covered.
A Carrier with a Long History of Supporting A&E
As risks facing architects and engineers continue to evolve, working with brokers who seek out knowledgeable carriers with a wealth of historical experience in the sector can help them better protect against these exposures.
Travelers has an extensive history writing policies for architects and engineers. They understand the sector’s dynamism and the risks it faces as it continues to grow.
“We take great pride in our long-standing focus on the architects and engineers industry. We have been dedicated to serving this sector for decades, and as the industry experiences rapid growth, we are committed to being there for firms every step of the way,” Kipp said.
Within the company, Kipp leads a national advocacy group that connects colleagues across the country and drives comprehensive insurance solutions aligned to each customer’s risk.
“Our deep understanding of the trends impacting the A&E industry – such as inflation challenges, evolving workforce dynamics, and environmental and technology practices – allows us to react quickly in support of our customers,” Kipp said. “By staying attuned to the needs and challenges of A&E firms, we strive to be their trusted partner for where they are today and where they’re growing tomorrow.”
To learn more, visit: https://www.travelers.com/business-insurance/architects-engineers.
1 Travelers claim data: 2020-2022, mid-sized architectural and engineering firms.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Travelers. The editorial staff of Risk & Insurance had no role in its preparation.
