Expertise and relationship-building are especially important when securing insurance coverage for high-net-worth individuals. In the dynamic high-net-worth (HNW) homeowners insurance space, independent agents and brokers can stand out with their advice and guidance.
High-value home insurance is designed for high-net-worth individuals with luxury homes and expensive valuables and assets. Unlike traditional homeowners coverage, high-value policies can offer guaranteed replacement costs, non-depreciated cash settlement options, deductible waivers, broad liability coverage and flexible coverage limits.
“It’s a market that greatly benefits from agents and brokers,” said Ana Robic, division president of Personal Risk Services at Chubb. “The advice and counsel, really, of an independent agent, to ensure that a high-net-worth individual and family has the coverages they need to protect their uniquely valuable possessions. So, it’s a spot in the marketplace that really requires that intermediary.”
Major insurance companies are making notable moves in the high-net-worth space.
Chubb earlier this year announced that on the consumer side, core high-net-worth segments were up 12.5% during the fourth quarter of 2022.
Meanwhile, American International Group entered a binding memorandum of understanding to form an independent managing general agency — falling in line with AIG’s previously announced intention to move its high-net-worth business to non-admitted paper and other capital providers.
In an interview with Insurance Journal, Ross Buchmueller, president and CEO of PURE, predicted that the concentration of wealthy living in places like Palm Beach, Florida, and Malibu, California, will mean that a small number of insurers can’t satisfy all the need or opportunity for high-net-worth coverage. He imagines “more people coming in to play in this space, but probably, selectively, expensively on a non-admitted basis.”
That’s just a prediction; Buchmueller doesn’t believe the HNW space should drift to E&S. He stressed he believes the high-net-worth space is and should be an admitted environment, though he did acknowledge there is a purpose for non-admitted policies in certain cases.
‘Very Dynamic’ Market
Robic said the HNW homeowners insurance space is currently a “very dynamic” market. On one hand, carriers are expanding or entering, while others are retrenching and reconsidering. As a result, “there’s great opportunity to provide value if you’re an agent or broker, with advice and guidance to these high-net-worth clients or prospects,” she said.
“They’re not accustomed to a market like this,” Robic said of high-net-worth individuals navigating an insurance market characterized by greater scarcity of options and increased pricing. “And instead of going to Google to figure out what solutions might exist, this is a much better hand-holding experience with an educated agent or broker.”
While the purchasing and building of high-end custom homes is growing, Lacey Garrison Strom, EVP and director of private client practice at Heffernan Insurance Brokers in California, said “we are seeing a shrinking insurance marketplace due to catastrophic risk and a massive increase in the cost of reinsurance, which carriers typically purchase for homes of a replacement cost higher than $10 million.”
She said the current HNW marketplace will have the ability to tailor programs that are both beneficial to the carrier and the client.
“Relationship building is the most important factor here,” she said of the HNW space. “The better the relationship a broker has with their underwriters, the more pre-underwriting a broker does on their own, and a broker that is brutally transparent will receive terms more consistently and faster than their competitors.”
Opportunity for Independents
The demands of serving demanding people require a sense of independence — and brokers who thrive in the space do so by working well for their clients, Buchmueller said. He added that’s more important today than ever.
“The fierce independence of our brokers is really one of our great assets,” he said.
Insuring policyholders who own elaborate art collections, jewelry and boats requires deep valuation and protection knowledge. When Chubb writes new lines, for example, risk consultants inspect homes so closely they’ll use infrared cameras to assess cold spots.
PURE continually updates its loss prevention technology and wisdom, and has 77 full-time risk management professionals and engineers who know how to value luxury properties, identify exposure and prevent loss.
Giving people more value for much more expensive insurance is key.
High-net-worth agents and brokers do a lot more than simply repair and replace for policyholders. They’re expected to share opportunities regarding predicting and preventing — helping clients avoid losses altogether.
“I think currently, we think there’s opportunity in the high-net-worth homeowners market,” Robic explained. “Where brokers and agents can work with the high-net-worth carriers to demonstrate the value that certain targeted insurance products have to those that are being underserved by standard markets.”
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