Timing is everything

RLI enters design professionals liability market at an opportune moment

By Dennis H. Pillsbury

A soft market, a bad economy; there couldn’t be a better time to enter a new market, right?

Well, RLI believes that this is a perfect time to enter the architects and engineers professional liability market.

And the A+ rated carrier has brought in two experts in the field to jumpstart the new program—Louis Leonard “Lenny” Waldhauser IV, who joined from NIP Group, where he was president of the retail division, and Paul Dietrich, who joined from ACE USA, where he was vice president, professional risk. Lenny will lead the new operation as vice president. Paul will also be a vice president. The new division will be named RLI Design Professionals.

Lenny’s career in the professional liability field started some 18 years ago at his father’s agency in Maryland, where he cut his teeth on lawyers professional liability, an agency specialty. From there, he went to Victor O. Schinnerer, one of the leading A&E underwriters in the country. He moved up to become head of distribution at Schinnerer and then moved to XL, where he met Paul who was heading up their A&E effort.

“Paul and I went to ACE in 2003 to help establish their professional lines small and middle market effort,” Lenny says. “Soon after that, I joined NIP Group but kept in touch with Paul. We talked about how to leverage our joint experiences. I got to meet a large number of A&E firms at NIP and learned what they needed.”

Paul points out, “Lenny has tremendous experience on the distribution side as well as underwriting, while I am technically degreed and have expertise in the technical, risk management and underwriting sides. It made for a perfect fit if we could find the right home.” He continues, “My career started at NUS Halliburton, where I helped with remediation of hazardous waste sites. I then took that expertise to ECS in 1988, which was acquired by XL in 1999. I had developed an expertise in pollution and professional liability for remediators.

“From this,” Paul adds, “I branched out into other related professional liability lines and became the product officer for contractors and architects and engineers, after I helped launch those lines of business for XL. As Lenny mentioned, we went to ACE in 2003. Late in 2008, we entered discussions with RLI about launching a Design Professional program that would be different. We really wanted to be involved with a sustainable, long-term program.”

Paul is a longstanding member of PLUS (Professional Liability Underwriting Society), is a founding member of that group’s Mid-Atlantic Chapter, and is a member of the American Institute of Architects.

“RLI is the right company,” Lenny adds. “It has always been a long-term niche player in the markets it chooses to enter. It also offers tremendous financial strength and an excellent reputation on the claims side.”

Why now?

Both Lenny and Paul believe that the A&E market should experience stability this year as the government begins pouring money into infrastructure improvements. “Most projects start with a design documents developed by design professionals,” Lenny points out.

“So this probably will be one of the earliest beneficiaries of any infrastructure spending,” Lenny adds. “Twenty percent of GDP is aggregated government spending, and that may approach 25% as the economic stimu-lus package takes hold. Much of the planned $1 trillion in federal spending alone will go toward infrastructure.

“With the government accounting for much of the growth,” he observes, “that also guarantees that most projects will require an RFP process. Government RFPs require design professionals to maintain insurance with a highly rated insurer. Many government entities are moving away from the low bidder only by including weightings for the financial rating of an insurance carrier. Design firms will benefit from having their insurance with an A+ carrier.”

“And let’s not forget that this industry produces around $1 billion in premium today, so there’s room for another niche player that has the right product to include expert claims handling and value-added risk management services even if the expected growth isn’t realized immediately,” Paul says.

He continues, “The economic turmoil should result in a flight to quality. And that clearly is one of the strengths of RLI.”

The RLI program will target small to mid-sized design professional firms, primarily those under $7.5 million in gross receipts. That comprises nearly 90% of all design firms.

“These are firms that care about risk management,” Paul maintains. “They can’t afford to have a loss and are looking for an insurance partner that can help them mitigate or eliminate losses. Our program will include a robust risk management program that will complement our underwriting expertise. RLI also offers an expertise in handling claims quickly and effectively.”

Paul continues, “Architects and engineers have an affinity with the insurance product. Their product also is intangible, and they understand that what they really sell is their service and their expertise. They understand the value of relationships based on trust and integrity.”

Looking for agents that fit

“We are looking to work with brokers and agents who value RLI’s focus on underwriting integrity and value-added service,” Lenny says. “We are looking to work primarily with retail brokers that have a good book of A&E business, as well as independent agents who want to develop business in that area. There are approximately 160 brokers who control more than half of this $1 billion industry, and we have solid relationships with most of these brokers. By the same token, as a part of RLI’s “Different Works” philosophy, we want to work with other producers who have a value proposition that meshes with our business development and market strategies.” *

For more information:
RLI Design Professionals
Contact: Lenny Waldhauser
Phone: (410) 299-7155
E-mail: lenny.waldhauser@rlicorp.com