While all eyes are on the current TRIA expiration and other property-related concerns, other insurance lines are looking at their own trends and issues. One area that falls outside of normal industry discussion is the high net worth insurance space.
There’s plenty to talk about –from a growing market to increased complications within the portfolio of the high net worth client, risks are abundant and often not covered by traditional homeowners insurance.
Brett Woodward, Senior Vice President of NFP’s property and casualty division, specializes in P&C high net worth (HNW) personal lines. He’s been working in the space for 25+ years and has seen the market morph from a small, two-player scenario to one that includes a number of national carriers.
According to Woodward, the need for specialized coverage has grown right along with the market. From a client standpoint, portfolios have become more complex, he says. “It used to be a client would have one or two high-value properties and some collections of art or jewelry needing a five or ten million dollar umbrella.”
Times have changed. “Now we see individuals buying exotic properties that are blending a little commercial with personal, plus international properties. What makes that difficult is it’s all controlled by each country’s regulations. That makes it hard to pull together a risk management program.”
Traditional coverage, he says, often won’t cover some of these properties. Inside of the personal umbrella, there are restrictions on incidental business. “If you generate too much revenue, that’s going to exclude the coverage.”
Also, domestic employee issues are on the rise. Woodward sees an increase in workers compensation claims, as well as a hike in employment practices liability issues. Many HNW individuals aren’t prepared for employer-like risks, he says. Plus, a large portion of people aren’t conducting background checks, which carriers in the HNW area offer for free. “We recommend they complete the background checks before they hire the nanny and find out she has a poor driving record or bankruptcy,” he says.
On the property side, flood risks are paramount to many HNW individuals. Woodward says the proliferation of floods from extraordinary weather systems are creating flood losses across the country, not just in coastal areas or areas typically associated with flood risk. For HNW policyholders, carriers offer flood coverage as an endorsement or a separate policy, he says. “It’s a much better coverage than you’d get with the National Flood Program, which limits losses.” In high hazard areas along a coast, however, the National Flood Program is the only option.
Another risky area is trustee liability. While corporate trustees are usually covered by company policies, private trustees can be bringing on a host of risks when agreeing to oversee a friend’s or family member’s trust. “You’re exposing yourself personally if one of the beneficiaries doesn’t believe you’ve followed the wishes of the trust agreement,” says Woodward.
He advocates a comprehensive review. “If you haven’t had a comprehensive insurance review completed by an expert in this space, it’s something you should look at. Look for an agency that’s an expert along with has the ability to handle all the assets across the country and the world.”