Finding coverage to protect high-net-worth clients from damaging household hiring mistakes
Sometimes all it takes is one good reference for a high net worth household to hire an employee who, it turns out, is not only less than qualified for the work, but also a potential threat to the family, its wealth and wellbeing. But a proactive personal insurance broker or agent, with the backing of a strong private client division, can help spare clients the trouble that may arise from hiring the wrong person.
People with checkered pasts, troubled employment histories and the like — less-than-desirable employees for anyone, including high-net-worth households — are finding ways into family homes through simple referrals. “People are talking to their friends at the club, looking for a housekeeper,” explains Bill Gatewood, associate vice president, personal insurance product and sales, at Burns & Wilcox. “Someone says ‘I use so-and-so and she has a sister,’ and people get referrals without checking their backgrounds. Domestics like housekeepers, chauffeurs, au pairs and landscapers very often operate under the radar. Our private client division works with carriers that offer several free, extensive background checks per year as part of the premium.”
Enter firms such as Rehmann Corporate Investigative Services of Troy, Mich., which conducts those types of employee background checks on insurers’ and insureds’ behalf.
“Our background checks go above and beyond the standard search databases to provide our clients with more in-depth business and personal intelligence,” says Bill Kowalski, director of operations for Rehmann CIS. “Many people who lack the credentials to join the regular labor market — those who could not pass standard pre-employment record checks — seek employment in what is perceived as the ‘gray’ market for domestic work. The assumption is that their records will not be checked for such jobs.”
Working with firms like his, insurers, brokers and agents are out to prove that assumption wrong.
As households look increasingly to the gray market, they are becoming more vulnerable, Gatewood has learned in working with the likes of Kowalski,a former FBI special agent.
“I was fascinated by the results he got for clients,” Gatewood says of Kowalski, “and also by the fact that many brokers and agents aren’t aware that these extensive background checks are included in certain highnet- worth policy premiums.”
Kowalski is quick to point out that not every domestic job applicant has a troubled past. However, in a sixmonth period, one in four cases his department processed uncovered undisclosed, potentially relevant information about a household employment candidate. There’s the recent case of a family that, in the search for a driver, nearly hired a man to transport their children to school and elsewhere, only to have an extensive background check reveal that the person had a criminal conviction for sexual misconduct, recounts Kowalski.
Since home health aides tend to target affluent individuals, Gatewood suggests that retail brokers and agents discuss private client policies with high-net-worth individuals.
“Oftentimes retailers get sticker shock by the high price of these highnet- worth policies. But a built-in feature in the premium are these free extensive background checks, which can be very important to the affluent market,” he says.
A host of Internet-based background checking companies focus on domestic employees such as nannies, senior caregivers, housekeepers, landscapers and chauffeurs. However, Kowalski says these firms don’t do the “deep dive” investigations that firms such as Rehmann perform. “We have been able to discover a lot of information that wasn’t disclosed in a traditional background check.”
Social Media Landmines
Social media traffic also plays a role in Rehmann background checks, Kowalski notes. A traditional background check doesn’t include a person’s social media traffic, whereas an extensive check examines the person’s profile on various social media platforms.
Both Gatewood and Kowalski advise insurance brokers and agents to alert their clients about the potential perils of social media. Parents need to be vigilant about their children’s profiles on Facebook, Twitter, Foursquare and other social media platforms.
High-net-worth families in particular need to be concerned about 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 explains. “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 what school he goes to. 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 to occur. In that posting he has advertised to potential thieves where his house is located and that it will be vacant — all done innocently.”
Burns & Wilcox also offers several risk management products that include fully managed identity theft fraud protection and Internet monitoring.
“Our goal,” says Gatewood, “is full protection for our clients and all of their assets.”
Because for many high-net-worth households, hiring is a high-stakes endeavor