Identifying and satisfying high net worth clients are valuable skills
“A great way to identify high net worth clients is to look within your agency for your business owners and C-level executives,” explains Bill Gatewood, director of personal insurance for Burns & Wilcox. “Cross-selling with a commercial insurance colleague gives agents the opportunity to solidify business and insulate relationships.”
High net worth clients typically fit the following profile, according to Gatewood:
- Their primary homes are valued at $1 million or more
- They need at least a $5 million umbrella
- They own chauffeured vehicles
- They own valuable collections of art, jewelry, silver, gold, wine, etc
- They own a secondary home
These clients often need other high net worth types of coverages, including equine mortality, kidnap and ransom, excess flood, and yacht. Therein lies a bundling opportunity.
“The affluent marketplace is best sold as a package. We generally write at least three lines of business for our high ne worth clients,” Gatewood explains.
Partner in Protection
ACE Private Risk Services, a premier high-net-worth carrier, has chosen Burns & Wilcox as a partner in targeting the affluent market.
“ACE Private Risk Services conducts business with a very select group of independent insurance agents and wholesalers across the United States,” explains David Spencer, vice president of ACE Private Risk Services. “The reasons we allied with Burns & Wilcox is its breadth of locations (more than 40 North American offices), its expertise and focus on high-net-worth personal insurance, and the fact that it is a stable, family-owned insurance wholesaler with a history of independence and innovation.”
Insuring homes with values of more than $1 million can be tricky. Brokers and agents who aren’t familiar with the nuances of high net worth policies would be wise to partner with a specialty wholesaler, observes Don Malcolm, personal insurance manager in the Atlanta office of Burns & Wilcox. “We know the higher the net worth of a dwelling, the bigger the risk. But what agents don’t often realize is that the policy should offer insureds ‘all-risk’ without depreciation in coverage.”
Malcolm relates a story about an insured who lost a Rolex watch that was insured for $10,000. The insured told his agent he no longer wanted a new Rolex watch — that his watch collection had grown large enough, so instead he wanted a check for $10,000. “The insured could only get $5,000 for the watch because it was insured for replacement cost and the insurance carrier had a relationship with a jeweler where he could purchase the watch for $5,000,” he recalls. “The insured was really upset because he had been paying insurance on a $10,000 watch for years. If the agent had access to our programs, we would have suggested he present the client with an all-risk policy.”
Malcolm encourages agents to “sell coverage, not premium.” If brokers and agents are shopping price for a high-net-worth client, they are doing them a disservice. “We make it easy for our wholesale broker and retail agent partners. Our Elite Client Solutions program has representatives in all of our 38 U.S. offices. We can help underwrite the total package, and if it doesn’t all fit with one carrier, we always can find a solution to make it work,” he says.
What’s more, he says, “We have appointments with all of the major high net worth carriers, both admitted and non-admitted, so we have plenty of options.”
To Each His Own
The collecting tastes of many high net worth clients are shifting, Malcolm says. “It used to be wine, but it’s moved into gold, silver, and guns. We see a lot of gun collections.”
Insureds tend not to talk about these items much because they fear home invasions, he says.
The collecting tastes of the affluent are far-ranging, too, says Minuteman Adjusters Director of Claims Melanie Elias. “We had an insured with a $1 million museum-quality Boy Scout memorabilia collection and about $20,000 of it was destroyed in a water damage incident,” she recounts. She recalls another unusual claim involving a man, his art, and his two pets. “The man was dusting a painting in his home and fell off of his step ladder onto his dog, which caused the painting to rip. The agent advised the man to place the painting on the floor and wait for an adjuster to inspect it. During the night, the man’s pet rabbit ate part of the painting, causing the painting to be extremely damaged,” she says. “The man was able to get full replacement cost because of the quality of his insurance.” A rising area of concern for
A rising area of concern for high net worth clients is cyber-exposure. “There is a very blurry line between a business owner’s professional and personal life when it comes to what is on his or his family’s computers,” Gatewood says. “For example, let’s say a teenager posts a picture on his Facebook page of him sitting on his front porch and his address is in the picture. Maybe he’s even wearing a high school jersey, identifying the school he attends. Even if he isn’t, his school is listed on his page. Then he writes that he can’t wait for the upcoming 10-day family vacation to Florida. In that posting he has advertised to potential thieves where his house is located and that it soon may be vacant, all done innocently.” Burns & Wilcox offers a risk management product called IDMELive through which clients can purchase insurance for fully managed identity theft fraud claims and Internet monitoring.
“In addition to offering identity theft restoration, which is a claims service for victims of identity theft, we also offer clients Internet monitoring of their name, address, and telephone numbers in real time,” says Scott Artz, president of Identity Underwriters. “For example, when someone steals a person’s driver’s license or credit card, the thief uses the person’s name but changes the address. If the victim is on our system, our monitoring can tell instantly when and where that new credit card is opened and we can alert the victim in real time.”
“For example, when someone steals a person’s driver’s license or credit card, the thief uses the person’s name but changes the address. If the victim is on our system, our monitoring can tell instantly when and where that new credit card is opened and we can alert the victim in real time.”
The insurance product is sold through specialty wholesaler companies like Burns & Wilcox. It can cost as little as $60 a year, depending on level of coverage. And for high net worth clients, it can beef up existing homeowners coverage, says Artz. “Brokers and agents should note that most homeowners’ endorsements cover just the fraud expense reimbursement and/or some form of identity theft restoration claim service. However, this coverage only responds to the victims of identity theft and not their children and other family members,” he cautions.
“People want to be protected against identity theft and potential libelous Internet exposures where their children are involved,” adds Gatewood. “Today, parents are getting sued for postings their kids put on Facebook including cyber bullying. Cyber insurance is inexpensive and can offer families good protection.”
Nowadays, High-Net-Worth Coverage can be complex, given all the variables. So it’s important for brokers and agents to discuss the client’s needs thoroughly and partner with a high-net-worth personal insurance professional so clients are protected, Gatewood explains.
“Personal property damage and cyber crimes make victims feel especially vulnerable,” he says. “Our job is to protect them so the pain is less severe.”