More and more adults in the UK are becoming rich, opening opportunities for insurers to boost product sales among the wealthy, according to a new report by Verdict Financial.
The research firm said the number of individuals classified as “affluent” – those with over US$50,000 in onshore liquid assets – continues to grow. Affluence in the adult UK population is also set to hit 32% by 2020.
Verdict Financial’s latest report highlighted the importance of specialist home insurance products which provide wider coverage, higher limits and better service for wealthy individuals compared to standard policies.
However, product penetration has been low since consumers are not aware of their own affluence and the sustainability for specialist products, Verdict Financial said.
There is also competition from insurers offering standard enhanced policies that provide slightly higher levels of cover than standard ones, but without the quality customer service.
“Being able to identify and access potential customers is critical, as is emphasizing the benefits of specialist products to encourage switching from standard policies,” said Danielle Cripps, analyst at Verdict Financial.
“Wealth is growing in the UK, meaning the pool of potential customers to capture will expand over time,” she added.
Cripps said mainstream insurers that are already well-established within the standard household market will be best placed to capitalise on increasing wealth, as current customers become more affluent.
She added that other insurers can increase their client base by partnering with banks, art collectors and societal institutions that provide access to wealthy individuals.
According to Verdict Financial, the market’s profitability is currently unsustainably low, but the combined mid- and high-net worth insurance sector in the UK is projected to be worth £1.3 billion by 2020.