Tailoring coverage for high net worth (HNW) clients requires an incredibly comprehensive approach as their risk profiles are often considerable and they’re constantly evolving. From purchasing luxury cars to multiple mansions, these wealthy clients heavily rely on agents to provide the protection they need.
Madelyn Mauk, private risk advisor at Holmes Murphy, spoke to Insurance Business about how clients in this space are often unaware of the coverages they should be buying, or which insurance carriers can best suit their needs.
“A lot of prospective clients have been with a standard carrier since they graduated college, but after 20 or 30 years, their net worth has changed along with the value of their assets,” she explained. “We work with several insurance carriers that can support their unique needs.”
There are two types of private risk clients, according to Mauk. There are the clients that will be willing to spend more money on their premiums based on carrier loyalty, and there are those that are more price sensitive.
“Putting yourself in the clients’ shoes really helps build relationships with these clients,” she said. “You don’t have to live in million-dollar homes or drive luxury cars to understand if a client would be willing to take on high deductibles.”
Each HNW client faces a different set of risks, and in order to ensure clients have the right coverage, annual reviews are vital. Agents and brokers need an up-to-date reflection of possessions that need protection, such as property, jewelry, and artwork.
“One of the interesting challenges that we face with clients that are considered HNW is that they often don’t have mortgages on their homes. Without mortgage brokers reminding them of insurance needs, when we hit annual reviews, they’ll bring up that they bought a lake home months ago without even mentioning it to their insurance agent,” Mauk continued.
Clients look to agents as the experts, and building trusting relationships fosters more transparency, which makes all the difference when it comes to risk management.
There are some aspects that private risk clients can easily overlook, such as sharing auto coverage with children or having a burglar alarm on every property, but Mauk noted that HNW carriers will actually provide credit for having the necessary risk mitigation protocols in place.
“Water shutoff devices, and fire or burglar alarms are so important, as clients may have multiple homes,” she said. “These are becoming common requirement if a home is valued over $5 million.”
There are also a lot of social exposures that come with private risk clients. Mauk said clients are more open to risk as they have name recognition and tend to host functions frequently.
It’s easy to Google the net worth of a wealthy CEO or business owner - some have thousands of followers on social media, posting every experience they have. Criminals can easily find out if clients are on vacation and away from their valuables, which all contribute to their risk profile.
“Carriers are worried if a client or their families are showing off - the risk exposure is much higher,” she added.
Finding an insurance company that meets the complex needs of a HNW client’s life through annual reviews allows agents to do their job well. Working with financial advisors, assistants and managers of these clients can also be helpful so that nothing slips through the cracks.
“We try have a more tailored approach where we reach out every three months to get the updated list of assets,” said Mauk. “Acting as that point person and finding contact points that may not be the actual client itself can also be very beneficial.”