Brokers are using their skills to take control of a fast growing niche sector Katy Dowell explains.
High net worth cover may be a niche market but it is experiencing considerable growth. And this is excellent news for brokers.
"I believe there is a bright future for the high net worth market and, above all, it is a broker's market," claims Oak Underwriting marketing director Tony Lumsden-Cook.
GAB Robins reports high net worth as its biggest area of growth in the past two years. It puts this down to new money swelling the sector bracket and increasing the size of the market.
Two key factors are driving this. One is that brokers can use their usual expertise in delivering the right product for the right individual and then benefit handsomely.
Lumsden-Cook adds: "The market is very much an area where risk management comes into play and the broker can be seen to be providing a service and not just selling a product."
The second factor is that the market is becoming more specialised, which again benefits the broker. "We are getting away from the idea that general cover for this type of client will do," says Lumsden-Cook.
The wide scope within this niche highlights the importance of exploiting specialist knowledge. For example, brokers can offer advice on security.
On average, a high net worth client would pay £3,000 per annum, he adds.
And the growth and rewards from this lucrative income look to continue.
Heath Lambert private client division director Alastair Graham says: "High net worth clients tend to have considerably better protection within the home. They have sophisticated alarm systems and tend to have people on the premises at all times."
Five star
GAB Robins UK client services director David Walker says: "It's a traditional skill-set in many ways, but to be truly effective in today's regulated environment, it is one that needs supplementing with a wide range of knowledge and support services."
The demand for high quality service means that competition has become stronger. Graham says: "It is expensive and time consuming, but the margins make it lucrative."
Service is key. It encapsulates personal visits and risk management advice.
"If you understand what your clients do, if you have been to their house and built up a relationship with them, it helps to create a level of trust," says Graham.
It is recognising and understanding the more specific demands of high net worth clients that ensures success, says Walker.
"In a service-led market, it is important to handle both small and large losses with empathy, professionalism and respect."
So far, claims limits are unknown. And the necessity for ample capacity is essential if, say, works of art, which could reach £100m in a single claim, are to be covered.
Graham says: "If there is a limit I have not come across it. There could be capacity issues, but when you are insured through Lloyd's, you have Lloyd's capacity as a contingency."
Insufficient capacity
Oak Underwriting specialises in high value antiques, fine art silver and jewellery.
"If the provider has insufficient capacity to ensure delivery during a catastrophe event, handling high net worth claims will not only be difficult but extremely damaging to the insurer and broker alike," says Walker.
To plug into the high net worth market, GAB Robins personal lines division is undergoing a period of change, attempting to set a clear division between its premium domestic package and its high net worth arena.
Individual packages
It hopes this will enable it to take a more flexible approach to individual packages.
"This is where specialist high net worth insurers have differentiated themselves in the past, and where others are beginning to follow."
Originally, high net worth cover began with low minimum premiums but it didn't insure large amounts.
"But now other players are entering the market to offer more specialised services, so it has pushed the criteria for high net worth up. The market has ended up with standard cover for the mass affluent and specialist high net worth cover," says Graham.
GAB Robins sees the market expanding beyond the South East. "Significant pockets of high net worth business now exist throughout the UK, particularly in the Westcountry and Scotland, and a full UK coverage is needed as a result."
