On the surface, the future of consulting engineering looks bright. Total spending on new construction continues to rise. In Ontario, for example, five mega-projects are expected to reach completion this year, including the Gordie Howe International Bridge (pictured).

Yet, despite some optimistic figures, industry leaders are apprehensive. U.S. tariffs may have a chilling effect on business investment in Canada, at the same time as other potential risks to an engineering firm’s bottom line, from skilled labour shortages and a challenging claims environment to insolvencies across the construction industry. Uncertainty is high and resilience may be in short supply.

Consulting engineering firms that can demonstrate adaptability and flexibility will be positioned to come out ahead in terms of profitability. One crucial—and sometimes volatile—factor is insurance pricing to secure appropriate insurance coverage.

The following is a forecast for ratings for the remainder of 2025:

Professional liability

Flat to down 5%. While the claims environment is deteriorating, insurers are largely in growth mode, so we are seeing them deploy new or additional professional liability capacity. This is leading to increased competition and driving down rates.

The market softening will be more evident for certain engineering disciplines and in the small to mid-market business segment. Higher-hazard disciplines and project types will continue to attract additional scrutiny from insurers. There is a more limited number of insurers that have the appetite and expertise to handle the primary exposures for larger consulting engineering firms, which means they are likely to see less competition and downward pressure on rates.

It is also worth noting that with their increased appetite for new business, we are seeing more insurers enter—or re-enter—the single project professional liability space, which has been very limited in the past five years.

Liability

Flat to down 5%. Carriers are looking to diversify their business, so terms and pricing are flexible and competitive.

Tariffs may have a chilling effect on business investment.

Excess liability

Flat. These policies have remained relatively stable, although firms with significant exposures may face difficulty.

Commercial property

Flat to down 10%. Most segments are seeing rate reductions, but many properties are not insured for full rebuilding costs. Firms should check to be sure they have appropriate coverage.

Catastrophic perils

Flat to up 5%. An increase in catastrophic weather events is pushing some rates higher, especially in areas known for climate change issues.

Environmental

Flat to down 10%. Insurers are looking to broaden their client base, but are also tightening their coverage requirements and renewal restrictions. It is particularly important here to pay attention to the details before adopting a new policy.

Directors and officers

Flat to down 10%. As long as there is competition for business and sufficient capacity, these policies remain competitive.

Cyber liability

Flat to down 10%. The cyber market is improving, with increased coverage options available, so rates remain competitive.

Most commercial property insurance segments are seeing rate reductions.

Best practices

As consulting engineering firms look to successfully navigate roadblocks, it is important to understand the right ways to counter risks. The following are some best practices to consider:

1. Invest carefully in technology to improve productivity.

With so many technology solutions promising to aid in productivity, it is crucial to consider them while still staying wise to their dangers. Issues with privacy and quality abound. Cybercrime is a real risk to the industry and very few engineering firms are truly prepared to protect their businesses.

Develop a cybersecurity response plan to explore technology-related risks. Don’t forget to train all employees to spot red flags and avoid costly mistakes. Then your firm will be well-positioned to benefit from technology’s productivity promises.

Higher-hazard disciplines will attract additional scrutiny from insurers.

2. Invest in people for stronger engagement.

Consulting engineering firms looking to enhance employee well-being and productivity should place some focus on personal insurance. Personalized benefits are a strong way to differentiate one firm from another and drive employee engagement and retention.

Firms that take the time to develop a customized workforce solution can ensure they are providing the kind of coverage their employees truly want and need, from child care to education to mental health supports.

3. Invest in finding the right broker.

Take the time to find an experienced specialty broker who can identify appropriate insurance options and alternative risk transfer options for your business. Specialty brokers are especially useful for reviewing contract language to minimize liabilities.

New and evolving project delivery methods have implications for insurance programs. If you are working on a very large project, for instance, the broker may become even more important, as risk management becomes increasingly complex with each additional partner that joins the project team. With this in mind, project-specific insurance can protect the rest of the firm from a major incident.

Scott Belton is vice-president (VP) of professional liability at global insurance brokerage Hub International. His team provides risk management and insurance solutions to Canadian professional services firms and technology companies, as well as advice and actionable insights on professional liability, errors and omissions, cyber and privacy liability, directors and officers liability and commercial insurance. For more information, visit www.hubinternational.com.

This article originally appeared in the July/August 2005 issue of Canadian Consulting Engineer.