The high net worth (HNW) specialty insurance market is a lucrative and developing segment of the insurance industry. According to the U.S. Census Bureau, 25 percent of Americans hold 74 percent of the country’s wealth, and this number is rising. Amassing this wealth takes hard work, determination and time, and the demand for HNW specialists will grow as these individuals become more affluent.
Proof of increased prosperity is highlighted by the fact that an estimated one of every 10 homes in the U.S. is worth at least $1 million. Since 2008 alone, the quantity of million dollar homes in America has escalated by four million. As fortunes flourish, there is an opportunity for prosperous clients to enter the specialty market for the first time — paving the way for a massive opportunity for insurance brokers and agents.
Understanding a Lifestyle and Gaining Access
The affluent individual, in general, has many unique exposures that come with their lifestyle. Becoming an expert in this area requires knowledge of their way of life and experience in asking the right questions to ensure proper coverage.
Annual risk assessments are imperative and set the stage to find answers to questions about net worth, assets, collections and perhaps the purchase of a summer cottage. Brokers and agents may find more coverage is placed in standard markets than should be.
For brokers not working with specialty carriers every day, getting approval – or even access – can be difficult. HNW carriers want to work with firms who have expertise to underwrite policies properly. Brokers looking to properly insure HNW clients should partner with dedicated experts who understand the needs of wealthy clientele.
It Takes Time
High net worth coverage is not as simple as one phone conversation. It takes time and relationships to build networks.
Once a broker understands the insurance marketplace and what is available from a coverage, service and risk management perspective, learning the client’s risk tolerance is a subsequent hurdle. The broker or agent should work with a trusted specialty insurance underwriter to tailor coverage and pricing to meet clients’ pre-requisites.
HNW exposures can be similar to commercial exposures, as both may need to insure multiple locations, in-home employees and non-profit work. The main takeaway is this cannot be a one-size-fits-all approach.
Developing relationships with other professions that serve HNW individuals will provide a better understanding of exposures. Networking with lawyers, accountants and financial advisors can aide in the process. Make a point to ask these professionals what clients request of them. Not all professions can see a liability exposure. A lawyer may be aware of employees on staff and the need for workers’ compensation or disability coverage. A seasoned high net worth specialist can provide additional value, recommending employment practices liability insurance to cover legal costs related to sexual harassment, wrongful termination or discrimination cases – whether they are legitimate claims or not.
Having conversations with various professionals and offering valuable advice in high net worth insurance will build trust and showcase expertise, which can open the door for future client recommendations. Being introduced through a reliable source can lower the barrier to entry. High net worth clients spend years building amazing wealth and legacies that need to be protected. Due to the high amount of exposures, brokers need to be educated on all liabilities and dig deep to find the best coverage, working with trusted partners to guide them through the process. As the wealth in America and across the globe increases, so will the need for more high net worth specialists.
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