Expertise and relationship building are especially important when it comes to securing insurance coverage for high net worth individuals. In the dynamic home insurance industry for high net worth individuals (HNW), independent agents and brokers can stand out for their advice and guidance.
High-value home insurance is designed for wealthy individuals with luxury homes and expensive valuables and assets. Unlike traditional homeowners coverage, high value policies can offer guaranteed replacement costs, cash settlement options with no amortization, deductible waivers, extended liability coverage and flexible coverage limits.
“It’s a market that greatly benefits agents and brokers,” said Ana Robic, president of Personal Risk Services at Chubb. “Advice and advice, really, from an independent agent, to ensure that a wealthy individual and family have the coverages they need to protect their uniquely valuable assets. It is therefore a place in the market that really requires this intermediary.
Major insurance companies are making notable moves into the high net worth space.
Chubb reported earlier this year that on the consumer side, major affluent segments grew 12.5% in the fourth quarter of 2022.
Meanwhile, American International Group has entered into a binding memorandum of understanding to form an independent managing general agency, in line with AIG’s previously announced intention to shift its wealth business to non-admitted paper and other service providers. capital.
In an interview with Insurance Journal, Ross Buchmueller, president and CEO of PURE, predicted that the concentration of wealthy people living in places like Palm Beach, Florida, and Malibu, California, will mean that a small number many insurers will not be able to meet all the needs or opportunities for coverage for the wealthy. He imagines “more people coming to play in this space, but probably, selectively, expensively on an unadmitted basis”.
It’s just a prediction; Buchmueller doesn’t think the HNW space should drift into E&S. He emphasized that he believed the high net worth space was and should be an admitted environment, although he acknowledged there was a purpose for non-admitted policies in some cases.
“Very dynamic” market
Robic said the HNW home insurance space is currently a “very dynamic” market. On the one hand, carriers expand or enter, while others retreat and reconsider. As a result, “there’s a great opportunity to provide value if you’re an agent or a broker, with advice and guidance to those high net worth clients or prospects,” she said.
“They’re not used to a market like this,” Robic said of wealthy people navigating an insurance market characterized by greater scarcity of options and rising prices. “And instead of going to Google to find out what solutions might be out there, it’s a much better hands-on experience with an educated agent or broker.”
As the buying and building of high-end custom homes expands, Lacey Garrison Strom, executive vice president and private client practice director at Heffernan Insurance Brokers in California, said, “We are seeing a shrinking of the insurance market due to catastrophic risk and a massive increase in the cost of reinsurance, which carriers typically buy for homes with replacement costs over $10 million.
She said the current HNW market will have the ability to adapt programs that are beneficial to both the carrier and the customer.
“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 a broker does pre-underwriting on their own, and a broker who is brutally transparent will receive terms more consistently and faster than their competitors.”
Opportunity for freelancers
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 this is 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 in-depth knowledge of valuation and protection. When Chubb writes new lines, for example, risk consultants inspect homes so closely that they 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 assess luxury properties, identify exposure and prevent loss.
It is essential to give people more value for much more expensive insurance.
Wealthy agents and brokers do more than just repair and replace for policyholders. They are expected to share opportunities in forecasting and prevention, helping clients avoid losses altogether.
“I think right now we think there are opportunities in the high net worth market,” Robic explained. “Where brokers and agents can work with affluent insurers to demonstrate the value certain targeted insurance products have over those underserved by standard markets.”