Architect, Engineer Claim Costs Climb Sharply
Victor's data shows average claim severity in its U.S. architect and engineer liability portfolio rose sharply across the past decade.
Updated on Nov. 5, 2026 in Construction
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Average claim severity in Victor's U.S. architect and engineer professional liability portfolio rose 62% in nominal dollars between 2006-2015 and 2016-2025, while claim frequency in several segments stayed flat or declined. Inflation-adjusted, the U.S. increase was about 19%.
Why it matters
Rising severity means each professional liability claim costs more to resolve, driven by defense expenses, indemnity payments and allocated loss adjustment expense. For the U.S. construction market, the trend increases the cost of design and engineering risk across projects nationwide.
Approximately 32% of U.S. A&E claims from 2016-2025 were expense-only, generating nearly $220 million in defense and allocated loss adjustment expense. Construction input prices rose more than 45% between February 2020 and February 2026.
The players
Victor
Victor is an insurer whose architect and engineer professional liability portfolio supplied the claims data underlying this analysis.
Design-Build Institute of America
The Design-Build Institute of America is a trade organization that promotes design-build project delivery in the United States.
The details
Victor's analysis attributes higher costs to defense expenses, indemnity payments and allocated loss adjustment expense, with settlement dynamics and joint and several exposure pushing payments above a firm's proportional share of fault. Victor paid approximately $28.2 million in indemnity on closed U.S. claims where the insured's assessed liability was under 50%.
Timeline
- 2006-2015: Baseline decade for the claim severity comparison.
- 2016-2025: Comparison decade showing the 62% nominal severity increase.
- February 2020 to February 2026: Construction input prices rose more than 45%.
- 2028: The Design-Build Institute of America projects design-build will reach 50% of U.S. construction spending.
Market Landscape
Social inflation averaged 5.4% annually in the U.S. from 2017 to 2022, compared with economic inflation of 3.7%, and the professional liability severity rise follows that pattern. Projects above $1 billion represented more than 18% of U.S. non-residential construction dollars in a recent 12-month period, concentrating exposure in large design-build work.
Higher professional liability costs can flow into design fees and insurance premiums that affect project budgets for owners and contractors. Firms and project owners may see tighter risk allocation in contracts as claim costs rise.
The takeaway
Rising claim severity makes contractual risk allocation and firm-level liability management more consequential for construction project costs. Project teams should review professional liability coverage and contract indemnity terms when budgeting new work.
What happens next
The Design-Build Institute of America projects design-build will account for 50% of U.S. construction spending by 2028.
Further reading
Explore more construction industry coverage to see how liability and cost pressures affect U.S. building projects.
Source note: This article includes information reported by Risk & Insurance.
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