NSPE-Commended Professional Liability Insurance Program

What is commendation? 

Since 1957, the National Society of Professional Engineers and the American Institute of Architects  have "commended" the professional liability insurance program provided by CNA Insurance through underwriting administrator Victor O. Schinnerer & Company. The term "commendation" is generally defined as "praise" or "approval."

For  many years, the Professional Liability Committee (PLC) of NSPE's Professional Engineers in Private Practice has conducted an extensive and ongoing examination and evaluation of the professional liability insurance market. The committee's goal is to encourage reliable and affordable professional liability insurance for all eligible licensed NSPE members offering professional engineering services directly to the public.

The professional liability market has a long history of being extremely cyclical with peaks and valleys in terms of insurance company market participation, coverage availability, premium cost, claims frequency, severity and other factors. For these reasons, the PLC believes that commending a program that is a market leader provides a long-term benefit to NSPE members and their companies.

It has been important to the PLC to commend a program that has withstood the test of time, providing quality service and reliable paying claims, even during unfavorable economic times.

How does the PLC measure commendation?

Several years ago, the PLC established written criteria for its commendation program. These criteria are regularly updated by the PLC to reflect changes in the market. The key components of the criteria include the following:

• world-wide coverage and claims service throughout the US and its territories;
• commitment by virtue of its participation in the market for a significant number of years;
• approval to do business in each state and U.S. territory;
• an A.M. Best rating no lower than A- and a financial size category of XI or greater;
• available coverage to all NSPE members' firms;
• ability to make changes in the program only after providing notice to the PLC, explaining the rationale and providing an opportunity for good faith discussion;
• provision of sufficient financial information to the PLC to broadly judge the costs, rates, loss experience, and underwriting results;
• establishment of a verifiable mechanism to return excessive premium to policyholders;
• provision of an ongoing loss prevention and risk management program for policyholders; and
• maintenance of expert legal counsel for policyholders to defend against claims.

The PLC recognizes that insurance affordability and price are frequently considered when selecting a professional liability carrier. At the same time, based upon 50 years of experience, the PLC believes that price stability can only be achieved when pricing is realistic and closely tied to claims frequency, severity, and other critical time-tested underwriting criteria. Efforts by some carriers to "buy market share" or "cherry-pick the market" for short-term financial advantage have only created market instability. It has even resulted in financial insolvency for some insurance carriers, leaving the insured with little or no coverage for the premiums paid.

Why is commendation important?

NSPE's commendation has been an extremely important factor in influencing the programs and activities of the commended carrier Schinnerer/CNA, as well as the programs and activities of other professional liability insurance carriers. Schinnerer/CNA is currently the largest professional liability insurance program for professional engineers and architects, and as the market leader its actions  have a strong influence over competing insurance companies. Schinnerer/CNA's continuing commitment to meeting NSPE's commendation criteria helps keep the standards by which other professional liability insurance companies offer insurance at a very high level.