As the Flint water negligence trial of two engineering firms began Feb. 15 in federal court in Ann Arbor, Mich., the legal proceedings served as another symbol—and perhaps one of the most costly—of lawsuits that may generate big insurance claims and are driving steadily higher liability coverage premiums for architects and engineers.

Rocked by more multimillion-dollar claims under professional liability policies, insurers say they raised premiums in 2021 and plan to seek larger rate hikes in the future, especially from higher risk disciplines such as structural and geotechnical engineering and architecture, reports Ames & Gough, the Washington, D.C.-based brokerage.

The firm surveyed 16 insurers, finding that slightly more than half said they raised rates modestly up to 5% in 2021, with the remainder raising them from 6% to more than 10%.

More than half of the surveyed firms reported that their "claim severity" was worse in 2021 than the prior year.

Premium rates need to increase to keep pace with inflation in claims costs, one insurance executive told Ames & Gough.

“The past 10 years has seen substantial claims inflation in the A&E space, probably in the range of 3-5% per year,” said Jim Schwartz, A&E Focus Group Leader for insurer Beazley. “During the same time period, premium rates have been stagnant, and rates charged by A&E firms have not grown at nearly the same pace as claim costs."

In its survey results, Ames & Gough also learned that one in four of the insurers paid a claim of $5 million or more, almost four out of 10  paid a claim of between $1 million to $4.9 million and that slightly more than one in 10 "made staggering payouts" of $10 million to $19.9 million.

Mergers and acquisitions among architecture and engineering firms can also trigger more claims when there are culture clashes or breakdowns in quality control, survey respondents told Ames & Gough.

Social trends have also driven the cost of claims—including increased lawsuits, some funded by litigation funding firms that earn a chunk of the proceeds in successful verdicts, and large emotion-driven jury damage awards in plaintiff-friendly legal decisions.