Securing high net worth home insurance in today’s hard market

The current climate of securing home insurance coverage (or bundles) for the mass affluent and high net worth customer base has become increasingly difficult as carriers are exiting states, reducing coverages, and scaling back endorsement options. In this episode, Jeff Arnold, founder of RightSure, Maria Geary, director of RightSure’s Private Client group, and Barton Beckley, mass affluent risk manager within RightSure’s Private Client group explain how they are confronting these challenges head-on.

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Bethan: [00:00:28] Hi everyone and welcome to IBTV. I'm Bethan Moorcraft, senior editor at Insurance Business and we have a very exciting panel discussion lined up for you in today's episode all about securing home insurance for high net worth individuals in today's challenging marketplace. I am delighted to welcome three experts from Rightsure. We have Jeff Arnold, founder of Rightsure.

Jeff: [00:00:52] Hello. Good morning, Beth. And so happy to be together again. Looking forward to today's conversation.

Bethan: [00:00:58] It's great to have you back on the show, Jeff. We also have Maria Geary, director of Rightsure's private client group. Pleasure to meet you.

Maria: [00:01:06] Thank you so much for having me.

Bethan: [00:01:09] And we have Barton Beckley, mass affluent risk manager within Rightsure's private client group.

Barton: [00:01:15] Hello. Hello. Thank you so much for having me this morning.

Bethan: [00:01:18] Thanks a lot for joining the show. It's great to have you on board. So let's start with the current state of the home insurance market for the mass affluent and high net worth individuals. Maria, I'll come to you first. What trends are you seeing?

Maria: [00:01:34] Honestly, there has been so many different changes in the last couple of years in the home insurance market that's not just specific to the affluent market, but for this specific market segment, what we're seeing is actually a lot more spending. The traditional ways that they were using to spend income were eliminated for a while, but there was still a need to purchase. So we're seeing a lot of home buying. We're seeing a lot of secondaries. We're seeing larger collections, which is interesting.

Bethan: [00:02:06] Thanks, Maria. And Bart, what have you seen in the space?

Barton: [00:02:09] What I've seen is an increasing trend, honestly, of a lot of natural disasters and a lot of confusion with these price increases. I see a lot more policy reviews coming up as a frequency and as a normality for a lot of these clients, just to kind of review their book of business and make sure that they are in the right spot, you know, with the right carrier, with the right adequate coverages.

Bethan: [00:02:31] Right. Thanks, Barton. Jeff.

Jeff: [00:02:33] I kind of echo what the experts, Maria and Bart said with with one caveat, that consumers are not used to the hard market that we're in now. And so the mindset is that insurance would only go down, right? They're not used to premiums increasing or going up. And so they're being met with sticker shock a lot of times at renewal. It's a great time to be in the business because you can actually lose all of your your counsel and advice skill sets to talk them off the ledge. But yet we're seeing rising price increases, rising premium charges all across the board. So we're in the middle of a very hard market.

Bethan: [00:03:15] Great. Thank you. Maria, do you think customers so the buying public are aware of the current marketplace challenges? And do you have any thoughts on how retail brokers and agents can help to mitigate some of these issues? Do have some thoughts on that.

Maria: [00:03:30] And unfortunately, I don't believe that this this market has any awareness that the insurance companies are needing to take price and needing to take rate increases. So it is a delicate conversation and I think it will continue for the next couple of years where every renewal, we have to do a thorough review of what's necessary and what's not necessary because the rates are going to be increasing across the board for all markets.

Bethan: [00:04:01] Thanks. And Bart what do you think about that in terms of kind of how you can help clients mitigate and sort of resolve some of these challenges?

Barton: [00:04:09] Absolutely. And I think the most important thing, especially as advisors and as counselors for these clients, is to really educate them on why it's going up and how it's going up. So about local disasters that are happening in your area, maybe it might be the Malibu fire. It could be a hurricane down in Puerto Rico. Know there's various factors. But realistically, you should be able to be able to present opportunities for your client on how to save money, whether that be programs within the company, or it could be a third party, you know, install a fire sprinkler system to gain discounts. There are ways to mitigate those rate increases, but a lot of people just see the rate and then start to shop versus how can I attain a better rate with the same company?

Bethan: [00:04:50] And Jeff, what are your thoughts on kind of the general public understanding of the issues at the moment?

Jeff: [00:04:57] Yeah, it's a great question. Thank you. I think, you know, consumers are confused again because they're used to premiums only going one direction down south. Right. Decreasing, and they're not. They're increasing. And so what we as a company are doing is we spent the last two years leveraging a great deal of capital to build out a platform, a technology, an interface with customers. We call it great card that really allows us to hug all of our private client, massive customers, tighter than ever, message them about these rate increases, talk to them about savings options or about better purchase decisions, might be increasing deductible, might be taking on more of the risk yourself. So with respect to your question, what we're seeing and what we're doing is trying to educate the consumers. And we're wrapping technology through every part of the process to help hug that customer tighter, help save the money, and help them to develop an appreciation for all the technology that right here is known for and brings to bear.

Bethan: [00:05:59] That's great to hear, you know, with some of these market challenges in mind. But what are some endorsements that you wish every policyholder had or sort of would accept these days?

Barton: [00:06:12] Definitely. So some of my favorite that I really do wish that everyone honestly if you have an option of getting highly recommend getting would be first and foremost is the cash out option so you know in a devastating loss the total loss and you lose your home you know, it could be because it was a natural disaster and maybe you decided, I don't want to live here anymore. But a lot of people that I do see are faced with this is a lot you have and this is the area you need to rebuild on versus that a cash out option where you could just take the money and decide to walk away. The other one would definitely be a service line. So those cover all of those cables, fiber optics, anything underground from your front doorstep or your garage to your end of your driveway. And I think that's super important because as you know, this space grows and people get bigger houses, they get bigger lots and their driveways and their land becomes a lot bigger. But when it comes to the city and upgrading things and things that might run through your lot, it could be a huge expense that could go unforeseen. Definitely.

Bethan: [00:07:11] That's interesting. Maria, any to add there in terms of coverage you wish that people had?

Maria: [00:07:18] Well, I would definitely add a couple. I love the ones that Bart mentioned. Please don't go without them ever. But in addition to that, it's important to make sure that the provider that you're worth offers a guaranteed replacement cost. We're noticing that there's a trend that I don't foresee stopping where carriers are needing to take rate because the supply is higher, the cost for labor is higher, the cost for remediation is higher. So that guaranteed replacement cost will take all of those factors into account and you won't find yourself underinsured when you get to claim time. Additionally, I recommend a large deductible to my clients so that they use the policy more as a catastrophic policy. So there is an endorsement available for large loss waiver, which, if they have a larger loss than, say, 50,000, they wouldn't be applied that deductible at all. So I think that's a huge benefit on every policy. 

Bethan: [00:08:17] And that's a really interesting one. Jeff, any final thoughts there or anything to to add?

Jeff: [00:08:23] Yes, thanks so much. I would submit this to your listeners, Beth, and that, you know, in our industry, the purchasing part of the public has this belief that it's all a commoditized product and that everything is the same. It's only differentiated by price and nothing could be further from the truth. And so what agents in the mass affluent, high net worth space experienced most is reducing this this confusion. With that it is all the same. It's just about price and introducing this this consultative. Says, Look, the price let's put price aside for a second. Let's talk about value, what you want in crafting something special. That's the beauty of being in this in this high net worth space is we're dealing with much larger assets, much larger houses, and it needs individualized, tailored coverages.

Bethan: [00:09:19] That's very interesting. That sort of issue of price versus value is one of those, as you said, Jeff, one of those age old dilemmas in the insurance industry. Maria, how do you go about kind of advising your clients around that and tackling that issue?

Maria: [00:09:36] I would say education. Education has to be primary. And the way that we go about consultation with our clients, it's a matter of educating on risk retention versus transfer. There is coverage for almost every circumstance, but not every client will value those coverages and they might just want to retain that risk. But making that educated decision as to what to send to the insurance company for them to worry about and you're paying a premium for that versus what do you retain? And what's going to come out of pocket at time is something that I want to make sure each individual has enough information to make that educated decision.

Bethan: [00:10:17] And but how do you go about tackling that with your clients?

Barton: [00:10:20] And I think these both hit it right on the head. It is exactly what they say. It's education. And for me, it's just providing those different life differences between the coverages, you know, for this small amount of premium more. This is the benefit that you could get out of this if you decide not to. This could be the consequences in which you could be paying out of pocket, you know, or it could come out of yourself at the end of the day, you know, you've got to make those decisions yourself. But my job is to give you all the tools and resources to make the most educated decision that's right for your lifestyle and what you can handle.

Bethan: [00:10:53] Excellent. Thanks. But and Jeff, earlier you mentioned Rightsure's kind of technology platform. Does this help to kind of breach the subject of price versus value and how does it help?

Jeff: [00:11:05] So, yes, I mean, you know, we've developed and are still building in a robust fashion, a revolutionary platform that reaches out to customers in every way imaginable. Text chat, the QR code. Right. Allows them to integrate and talk with us multiple ways. But we've also infused all this artificial intelligence all along the way. That's, that's doing the work of, of humans on the back side, watching for rate increases, looking for policy language change so we can notify customers of any change at policy renewal time, not just relative to rate, but relative to coverage. Right. Because briefly, if I could just address just for a second, you know, companies change policy language all the time. People don't know. Right. And they don't care until claim time. But if you like us leverage technology to notify clients of these changes, it goes a long way to help that customer feel better about the purchase decision. And so yeah, I believe, you know, what sets rideshare apart is our technology and our new record platform really does a lot to further that client agent broker experience.

Bethan: [00:12:17] That's great. Thank you. Now changing tune slightly. One question I have to ask because we're talking to over two years into the pandemic, I wanted to ask sort of how COVID 19 has impacted this space. Now, I think we've all read articles and see news about how people have moved to the sunny states and built new homes and things like that, that chasing sunshine and getting out of the big cities, you know, did that change the dynamics in the marketplace? But what have you seen?

Barton: [00:12:47] To begin, I would say a lot of people have been doing that. And the main reason is because, you know, it's congested in the city and they do want to move out there. And secondly, they're not really selling their primary place that they were living anymore. Now they're putting those places on Airbnb, they're wanting to have those second homes. And then it just incorporates more into the in-home business life as well. So people aren't really traveling to work anymore and they're getting the more flexibility from wanting to be in office with a bunch of people and then having to have leisurely times. So on the flip side of that, there's also a hard side because now the clients that, you know, the mass affluence that may own commercial buildings, they're having that hard time getting those leases filled and keeping them filled. So there's there's this double sided edge. It's more flexibility and it's nice on one side, but creates hardships on another.

Bethan: [00:13:38] Yeah, definitely. Maria, what have you seen in terms of the impacts from the pandemic?

Maria: [00:13:44] I agree with Bart because people are at home more in the industries that they had normally been in an office for. We're finding a lot more business, personal property need at home. We're finding a need for cyber liability and the volume that we've never seen before. We're having to add on endorsement like the home sharing endorsement and additional coverages to cover some of those aspects that hadn't existed before. This is, again, where that consultation is going to become essential. We can't assume things were the same as they were the previous year. Those exposures are changing and we have to have the conversation in order to make sure their situation is appropriately covered because it's not going to be the same as everybody else's or the previous year.

Bethan: [00:14:34] It's been a very interesting time, Jeff. What have you seen?

Jeff: [00:14:39] I think more in my mind, it pivots more from a coverage and exposure thing to more of a mental awareness and mental wellness thing. Right. So the COVID epidemic pandemic affected everyone in a different way. But how could it not? How could you have not come through there and not had your business challenge, your leadership style challenged, your insurance platform challenged? And so when we're talking to our agents to talk to customers, it's, you know, let's suspend the coverage of the premium talk for a moment and start conversations with wellness check ins. Right. Because everyone is just a little bitty, a little bit harried. Right. They're just on edge based upon what they've come through. And so my short takeaway would be COVID changed everyone's mindset and how they look at everything. Be aware of that. Take time just to check in before you dive into business.

Bethan: [00:15:34] So as you said, COVID 19, it did change the risk landscape for clients in the high net worth and sort of high affluent space. Building on that, Maria, what emerging risks do you expect to sort of come into this market in the next two or three years?

Maria: [00:15:51] I do expect that collections and the requirement for scheduling items is going to continue to increase and our conversations are going to become more essential than what they were previously. So we're just continuing to build on those trends that we were seeing during the COVID 19 pandemic. I don't see us going back to the way it had been previously. I do anticipate additional changes that we can't quite see yet. So staying in close touch, staying in connection with our clients is just going to continue becoming more and more important.

Bethan: [00:16:27] Yeah, that's great. Thank you. And what are your thoughts on emerging risks in the high net worth space?

Barton: [00:16:34] So I think it's going to be changing more towards a more cultivated and small niche network. So I feel like a lot of people are going to be chartering planes more, buying private jets, private transportations, maybe yachts, boats. I think it's going to change from a more socialistic community to a more isolated community. And that's just some growing risk because people just don't want to be around so much danger and they still want to have the best of things. So I do think there is going to be an increase in toys, if you will, and just leisurely stuff.

Bethan: [00:17:09] And Jeff, any final thoughts in terms of how you see the marketplace changing over the next couple of years?

Jeff: [00:17:15] Yeah. So, you know, this space that we're in, this mass affluent, this high net worth, private client space is so unique and we get presented with different opportunities every day. Right? And so you cannot be in this space and have one day be like the next. It's just unique. Like Bart mentioned, you know, sometimes customers will buy jets, sometimes they have two jets, sometimes they have domestic staff, sometimes they might own four or five houses. And so, you know, no cookie cutter approach works. This is there is no algorithm or rate software that that allows you to just put all this in and get something back. You have to be very sophisticated, very intentional and very knowledgeable about the products you sell, the endorsements you need to add to make sure that you're protecting your client's assets, which is vastly different than any other type of asset that most individuals face. So the great thing about my parting shot is this in this in this podcast is that this is a wonderful time to be in the high net worth space and right choose the right place to be.

Bethan: [00:18:22] Thank you, Jeff. It certainly sounds like a very interesting line of work and there are lots of exciting opportunities and also maybe some challenges on the horizon. So, you know, thank you. I think that's a great place to end the discussion today, Maria, Bart, Jeff, thank you so much for joining us on IBTV. Thank you very much.

Jeff: [00:18:43] It's been a pleasure.

Barton: [00:18:45] Thanks so much. I appreciate it.

Bethan: [00:18:47] Thanks also to our viewers for tuning in. I'm Bethan Moorcraft, senior editor at Insurance Business. Make sure you check out the rest of our IBTV episodes, podcast and daily News at www.insurancebusiness/us. Thanks, everyone.