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:

  1. That the insurance carrier be able to provide worldwide coverage and quality customer and claims service anywhere in the United States, DC, and preferably US territories, and
    possessions;
  2. That the insurance carrier have a demonstrated commitment to the professional liability
    market for architects and engineers, and have provided continuous professional liability
    coverage for a significant number of years;
  3. That the insurance carrier be approved for surplus lines or preferably licensed (admitted) in
    each state, DC, and US territories and possessions and possess a policyholder's rating no
    lower than "A-" and a financial size category of XI or greater in the latest A.M. Best ratings;
  4. That insurance be available to all NSPE members' firms with satisfactory experience and
    performance records;
  5. That the insurance carrier make no changes in the program or in the terms or rates of its
    practice policies without:
  • furnishing timely prior notice to the NSPE;
  • explaining the rationale for the proposed changes; and
  • providing a reasonable opportunity to the NSPE to respond to the proposed
    changes, and to engage in good faith discussions to influence a final decision on the changes.
  • That, in all other matters of mutual interest, the insurance carrier will consult with the NSPE,
    give due consideration of the NSPE's comments and expertise, and collaborate with the
    NSPE in reaching appropriate resolution.
  • That the NSPE be given sufficient financial information (in substantially the same form as
    set forth in Appendix A) to judge the overall cost structure, overall rate structure, loss
    experience and underwriting results of the program, and the opportunity to verify such
    information;
  • That the insurance carrier have a verifiable mechanism to return excessive premiums for
    NSPE member policyholders;
  • That a comprehensive, proactive loss prevention/risk management program be provided to
    all NSPE member policyholders; and
  • That panel counsel with A/E defense expertise be provided to all NSPE member
    policyholders.
  • 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.