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How would you describe insurance for Family Offices?
Insurance coverage for a Family Office does not have universal attributes. Family Offices are uniquely structured, just as the needs of the members of its founding wealthy family are unique. Customizing insurance and risk management solutions to respond to the unique risks exposures of multi- generation family members can be a challenge for retail brokers and agents. A Family Office offers distinct advantages, such as a central point of coordination of insurance issues. Extended families provide leverage in carrier negotiations due to the large size of the premiums. A Family Office will have diverse needs for personal, commercial, benefits, as well as professional liability insurance products. While complex, Family Office clients are very profitable over time due to the high level of premium expenditures.
What is the profile of a client who would require insurance for a Family Office?
Logically, only your wealthiest clients would establish a Family Office. Most often, a Family Office serves multiple generations, and with a little internet research, you can identify the families with the financial resources which would require a Family Office. Family Offices work closely with a network of professional advisors. From attorneys and CPAs to investment managers and private bankers, these professionals focus on Family Office clientele and are excellent targets for referrals. You can also research Family Foundations. Many Family Office clients establish Family Foundations to facilitate their charitable giving. Also consider researching the myriad of Family Office associations, wealth management conferences and professional firms serving the Family Office marketplace.
What are the most commonly overlooked risk and insurance factors for Family Offices?
Primarily, the diversity of the risk exposures for the extended family tend to be overlooked. Often, the insurance program focuses only on the needs of the patriarch/matriarch. Yet, the activities of the next generation family members often give rise to the substantial liability issues. Comprehensive risk profiles should be developed for all family members, regardless of age. In addition, consistency of coverage, limits and pricing should be pro-actively addressed from the unique approach of the entire multi-generation family. If the family’s wealth management strategy is structured on a multi-generational basis, the insurance program should be designed accordingly.