NJSPLSNJSPLS

The Character and The Character and Nature of Claims Nature of Claims

Against Land SurveyorsAgainst Land Surveyors

Ed Pagan, Jr., Esquire

Pagan Affiliates LLC

ed@paganaffiliates.com

Richard N. Hartman

Construction Risk Management Consultants LLC

rhartman@marquisagency.com

THE MARQUIS AGENCY

&

VICTOR O. SCHINNERER/ CNA

The Marquis Agency

900 Rt. 9 North, Ste. 503

Woodbridge, NJ 07095-1003

www.marquisagency.com

Present:

February 8, 2008

2

What is a Claim?What is a Claim?

3

Any written demand received Any written demand received by an Insured seeking remedy by an Insured seeking remedy and alleging liability or and alleging liability or responsibility on the part of responsibility on the part of the Insured or persons for the Insured or persons for whose conduct the Insured is whose conduct the Insured is legally liable.legally liable.

4

What is a Pre-Claim?What is a Pre-Claim?

5

The Insurance Company will The Insurance Company will pay for all costs or expenses pay for all costs or expenses the Insurance Company the Insurance Company incurs until the date a incurs until the date a ClaimClaim is made as a result of is made as a result of investigating a circumstance investigating a circumstance reported by the reported by the InsuredInsured..

6

Where and by whom do Where and by whom do they come from?they come from?

7

Insurance Company Claims Insurance Company Claims StudiesStudies

Important claim data to assist Important claim data to assist Surveyors in assessing and Surveyors in assessing and analyzing client and project analyzing client and project

risksrisks

88

Frequency of Claims by Frequency of Claims by Claimant Identification Claimant Identification

(1997-2006)(1997-2006)

Client

General Contractor

Third Party Property DamageSpecialty Contractor

Other

18%

11%

2% 3%

66%

99

Claims by Project TypeClaims by Project Type(1997-2006)(1997-2006)

Frequency= Reported ClaimsSeverity= CNA dollars Spent

Houses/ Townhouses

Land/ Site Develop

Highways

Retail/ Restaurants

Office Bldgs/ Banks

Schools/ Colleges

Condos

0%

5%

10%

15%

20%

25%

30%

35%

1010

Residential Projects:Residential Projects:Claims by Problem Area Claims by Problem Area

(1997-2006)(1997-2006)

Frequency= Reported Claims

Severity= CNA Dollars Spent

Boundaries/ Easements/

Trespass

Construction Stakeout

Site Preparation

0%

10%

20%

30%

40%

50%

1111

Commercial Projects:Commercial Projects:Claims by Problem AreaClaims by Problem Area

(1997-2006)(1997-2006)

Frequency= Reported ClaimsSeverity= CNA Dollars Spent

Construction Stakeout

Boundaries/ Easements/

Trespass

Site Preparation

0%

10%

20%

30%

40%

50%

1212

Reported Claims Per 100 Reported Claims Per 100 FirmsFirms

198

4

19

86

198

8 19

90

199

2 199

4

19

96

19

98

20

00

200

2

200

4 200

6

Nu

mb

er o

f Cla

ims

0

4

8

12

16

20

1313

Claims Frequency Per 100 Claims Frequency Per 100 FirmsFirms

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

0

3

6

9

12

15

1414

Cumulative Percentage of Cumulative Percentage of ClaimsClaims

(1997-2006)(1997-2006)

Prior0-1 Year After

2-3 Years After

4-5 Years After

6-7 Years After

8-9 Years After

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1515

Percentage of Claims Closed Percentage of Claims Closed with Indemnity Paymentwith Indemnity Payment

1997 1998 1999 2000

2001 2002 2003

2004

2005

2006

30%

34%

42%

46%

50%

38%

1616

Percentage of Claims Closed Percentage of Claims Closed with Defense Payment Onlywith Defense Payment Only

1997 1998 1999 2000 2001 2002

2003 2004

2005

2006

0%

5%

10%

15%

20%

25%

30%

35%

17

What causes claims?

18

Strategies for avoidanceStrategies for avoidance

19

Early warning signsEarly warning signs

20

Root Causes of Claims:Root Causes of Claims:

21

Root Causes of Claims:Root Causes of Claims:

ClientClient

Scope of ServicesScope of Services

FeeFee

22

Root Causes of Claims:Root Causes of Claims:

CommunicationCommunication

Innate desire to pleaseInnate desire to please

23

Root Causes of Claims:Root Causes of Claims:

Lack of Mutual Lack of Mutual understandingunderstanding

Reliance on information Reliance on information furnishedfurnished

24

Strategies for AvoidanceStrategies for Avoidance

25

Strategies For Avoidance:

How do we Limit or Avoid the How do we Limit or Avoid the Potential for Claims?Potential for Claims?

26

Business Steps for Avoidance:Business Steps for Avoidance:

Step by Step Guide to:Step by Step Guide to:1)1) Protect the interests of your Protect the interests of your

firmfirm2)2) Identify root causes of claims Identify root causes of claims

and early warning signsand early warning signs

27

STEP 1STEP 1

What does the owner/ What does the owner/ client want?client want?

28

STEP 2STEP 2

Why does the owner/ Why does the owner/ client want it?client want it?

29

STEP 3STEP 3

When does the project When does the project need to be completed?need to be completed?

●●Is this schedule realistic?Is this schedule realistic?

30

STEP 4STEP 4

What information does What information does the owner/ client have the owner/ client have that is necessary for that is necessary for

the surveyor to perform the surveyor to perform its services?its services?

31

STEP 5STEP 5

Do we have the Do we have the capability/ capacity to capability/ capacity to complete this project?complete this project?

32

STEP 6STEP 6

Is the fee/compensation Is the fee/compensation adequate/appropriate to properly adequate/appropriate to properly perform the services and assume perform the services and assume the risks we’re being asked to the risks we’re being asked to assume?assume?

Do we have all of the information Do we have all of the information to answer this question? to answer this question?

33

STEP 7STEP 7

Memorialize these Memorialize these understandingsunderstandings

Leads to development of a Leads to development of a ContractContract

Scope of servicesScope of services Fee w/specified payment Fee w/specified payment

provisionsprovisions

34

The Surveyor, the The Surveyor, the Attorney, the Claimant Attorney, the Claimant

and the Claimand the Claim

35

PHASE 1PHASE 1

Initial Notice of a ClaimInitial Notice of a Claim

36

A Step By Step Guide for A Step By Step Guide for you to follow to:you to follow to:

1)1) Protect the interests of your Protect the interests of your firmfirm

2)2) Understand and take Understand and take advantage of the coverage and advantage of the coverage and services afforded by your services afforded by your professional liability policy and professional liability policy and insurerinsurer

37

1.1. STAY CALM STAY CALM

38

2. 2. Accept all letters and Accept all letters and correspondence correspondence withoutwithout comment or argumentcomment or argument

39

3. 3. DO NOTDO NOT admit liability admit liability and and DO NOTDO NOT attempt to attempt to

place blameplace blame

40

4.4. Gather Gather ALLALL information/ information/ Develop a chronology of Develop a chronology of

events from start of project events from start of project up to initial notice of claim.up to initial notice of claim.

All principals and staff All principals and staff members involved in the members involved in the

claim should be prepared to claim should be prepared to document the circumstances document the circumstances surrounding the allegations.surrounding the allegations.

41

5. 5. Contact your BrokerContact your Broker- Discuss matterDiscuss matter

- Start to understand coverage Start to understand coverage and services available to and services available to

your firmyour firm

42

6.6. Send Information to BrokerSend Information to Broker

Send basic information only – Send basic information only – more detailed information more detailed information will be sent to insurance will be sent to insurance company and attorneycompany and attorney

43

The written report to your The written report to your insurance company should insurance company should

include the following:include the following:

Your firm’s name and addressYour firm’s name and address

Brief narrative description of Brief narrative description of the allegation against youthe allegation against you

Name of person or entity Name of person or entity making the claimmaking the claim

44

The written report to your The written report to your insurance company should insurance company should

include the following:include the following:

Amount of demand, if knownAmount of demand, if known

Any lawsuit papers or legal Any lawsuit papers or legal proceedingsproceedings

45

The written report to your The written report to your insurance company should insurance company should

include the following:include the following:

Contract with client for the Contract with client for the projectproject

Any other documents or Any other documents or correspondence, including correspondence, including newspaper accountsnewspaper accounts

46

The written report to your The written report to your insurance company should insurance company should

include the following:include the following:

NOTE: If the Claim/ incident involves a NOTE: If the Claim/ incident involves a traumatic situation (ie: structural collapse or traumatic situation (ie: structural collapse or serious bodily injury etc.):serious bodily injury etc.):

-Take photographs of claim site if possible-Take photographs of claim site if possible Amateur photos taken promptly are more Amateur photos taken promptly are more

valuable than professional ones taken at valuable than professional ones taken at a later date.a later date.

-In addition provide:-In addition provide: Date, Time, and Location of the situation.Date, Time, and Location of the situation.

47

7. 7. Broker sends Broker sends Information to Information to

Insurance CarrierInsurance Carrier

48

PHASE 2PHASE 2

The Claim, The Insurance The Claim, The Insurance Carrier & ClientCarrier & Client

49

1. 1. Remain CalmRemain Calm

50

2.2. Insurance Carrier/Claim Analyst Insurance Carrier/Claim Analyst will contact youwill contact you

- Discuss what to expect from Discuss what to expect from carriercarrier

- Discuss choice of defense Discuss choice of defense counsel to represent your firm counsel to represent your firm with insurance carrier/ claim with insurance carrier/ claim

analystanalyst

51

3. 3. Insurance Company will Insurance Company will assign defense counselassign defense counsel

ALWAYS REMEMBER THAT ALWAYS REMEMBER THAT DEFENSE COUNSEL REPRESENTS DEFENSE COUNSEL REPRESENTS YOU AND YOUR FIRM, NOT THE YOU AND YOUR FIRM, NOT THE

INSURANCE COMPANYINSURANCE COMPANY

52

4. 4. Tell claim analyst you Tell claim analyst you have the chronology of have the chronology of

events events

Complete chronology with Complete chronology with documentationdocumentation

53

5. 5. Write down all Write down all questions you want to questions you want to discuss with defense discuss with defense

counselcounsel

54

6. 6. Send questions to Send questions to defense counsel before defense counsel before

meetingmeeting

55

7. 7. Prepare for meetingPrepare for meeting

Have copies of all contracts/ Have copies of all contracts/ professional service professional service

agreements, correspondence, agreements, correspondence, and memoranda available to and memoranda available to

give to defense counselgive to defense counsel

56

Underwriting ImpactUnderwriting Impact

57

Underwriting ImpactUnderwriting Impact Loss Run & Loss Ratio – losses paid Loss Run & Loss Ratio – losses paid

over 5 and 10 year time periods over 5 and 10 year time periods compared to premium paid over compared to premium paid over same time periods.same time periods.

Losses Paid is sum total of:Losses Paid is sum total of: Indemnity PaidIndemnity Paid

Expenses PaidExpenses Paid

Total Reserves – open claimsTotal Reserves – open claims