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High net worth insurance – what's impacting the space?

High net worth insurance – what's impacting the space? | Insurance Business UK

High net worth insurance – what's impacting the space?

Given the sheer variety of factors contributing to the material shortages impacting the UK supply-demand cross-section, the crowning of the situation as a “perfect storm” by Criterion Adjuster’s operations director Mark Pierce (pictured) seems a reasonable assessment.

From COVID-19, to Brexit, to the ongoing resonance of the Ever Given crisis, the pressure on the supply end of the equation is immense. However, Pierce noted that the impact of these events is being accentuated by the sharp uptick in global demand for the products these supplies create. Yes, there are supply chain issues, he said, but they’re coming up against that significant increase in demand – which is, at least in part, being driven by the remote working conditions that have encouraged more people to undertake home renovation projects.

As with any storm, perfect or otherwise, how hazardous conditions appear really depends on your viewpoint, but Pierce highlighted that the high net worth sector does appear to be dealing with the sharp end of these exposures. Serving the HNW space means the team is not dealing with two-bedroom flats or three-bedroom semis but rather bigger, more expensive and more elaborate properties – and with all the material challenges that come with that.

“I think you also have pent-up demand, which is what is driving that increase in demand,” he said. “So we had a period where people were still working, as while many people were furloughed, at the higher end of the salary bracket [most] people were not being furloughed. They carried on, they were running businesses, or they were high-flyers within businesses. So, there was a pent-up demand among them.”

Criterion deals with one segment of the construction industry – insurance. It’s really the overlooked little brother of the construction industry, Pierce said, falling short of the giants of property development and redevelopment. That’s making conditions even more challenging as suppliers will look to invest their materials in whichever job offers them the greater margin. Insurance is being pushed slightly to the bottom of that hierarchy, which can be seen on the panels of contractors available to insurance businesses in the current environment.

While he understands this from an economic and strategic standpoint, Pierce also emphasised the ethical role that insurance plays in the event of a claim. A lot of the claims Criterion deals with have seen people made homeless by events, he said, with all the physical and mental stresses that come with that.

“That’s the thing,” he said, “when we are dealing with the top end of these, we’re dealing with distress situations – serious fires, serious floods, serious water escapes. And you’re talking about people’s lives beyond simple bricks and mortar. You’re talking about their psyche, you’re talking about their mental well being. And that’s where we really struggle because we’re desperately keen to help these people but we are boxed in with the supply chain, and the challenges around the supply chain as well, when every other part of the construction sector is trying to buy [materials].”

It is this ethical element that ought to resonate with insurance brokers who are looking for new opportunities to provide a value proposition to their clients. While brokers may be a step removed from the coalface of what’s happening with regards to the supply-demand cross, he has seen that when they are involved with cases, they really want to understand what the challenges are and how they can best support their clients.

“It’s a unique area for brokers to add value,” he said. “And we find in a lot of the high net worth space that brokers are rarely just involved with a client around a property. Invariably, they are also dealing with that client’s business insurance, often their life and pension arrangements, their health and PA insurance, their vehicle insurance, their company vehicle insurance, etc.

“They are supporting that client across a range of products, of which that high net worth policy on their house is one. That’s where the best brokers are really cute, they’re cross-selling and up-selling, they’re finding every which way possible to make that client as [loyal] as possible. And that client invests in their broker because that broker is providing a one-stop service.”

That value add is something that cannot be matched by the aggregator sites, he said, and offering a concierge-type service remains truly powerful. Certainly in the HNW space, he sees that brokers are the best at what they do when it comes to finding every possible way to deepen and broaden the reach that they have with their clients, across a variety of sectors and a number of product lines. That’s why he personally, and Criterion as a business, is keen to explore any opportunities to work with the right broking partners and open up the HNW sector to them.

“We want to work with as many brokers as possible who see things the same way we do,” he said, “where we know they can add value and they can see that we add value to what can often be a difficult claims process.”