Untapped Wealth

When Chubb entered the Irish market back in 1998, even its most optimistic business forecasters could hardly have anticipated the subsequent economic success story. This wealth boom has marked Ireland out, not just in Europe, but in the world. And for an insurer talking wealth to the wealthy, Ireland's new business hunting grounds were about to become incredibly rich.

Back in 1998, just 960 individuals or jointly tax-assessed married couples had annual incomes of more than €254,000 (£156,702) in today's money, according to Revenue Commissioners' statistics. By last year, the number breaking this threshold rose to 7,400, an almost sevenfold increase.

The story of Ireland's technology and pharmaceuticals high earners has been written over and over again. Suffice it to say that, for Ireland, they have redefined the term wealth creation and displaced Ireland's landed gentry.

But it's not just the numbers of new wealthy, it's also the volume of wealth that has been created that marks Ireland out. In the past five years, the country's 100 most affluent have increased their combined wealth by 110%, from E9.8bn (£6bn) in 1997 to E21.5bn (£13.2bn) in 2001.

Inevitably, such a level of wealth creation has had a knock-on effect on the value of the trappings of wealth. Property prices across the pleasanter Dublin suburbs have rocketed and the value of country houses within commuting distance of Dublin has soared. Similarly, Ireland's art and antiques market has taken off, with Christie's and Sotheby's hurrying to assemble catalogues of artefacts from their London auction rooms.

However, with the exception of Chubb, the wealth of Ireland's prosperous seems curiously untapped as far as the general insurance industry is concerned. With typical rebuilding costs in Dublin ranging from €1,759 (£1,085) per square metre to as much as €4,996 (£3,082) for a period property, underinsurance in the high net worth (HNW) market is rampant. However, several brokers specialising in the household insurance market believe it does not make commercial sense for them to explore and exploit the market.

"Trying to attract them could be very difficult," explains one Dublin broker who kept to his core liability insurance expertise. "High net worth individuals tend to stick with the broker they have and are reluctant to discuss their wealth with more people than they absolutely have to for security reasons."

Liz O'Brien of Marsh Financial Services says the HNW market, despite the country's recent record on wealth creation, is still very small in relation to the rest of the personal lines property market.

However, she concedes: "Where we are offering home insurance to high net worth customers, Chubb is the automatic choice."

So does Chubb, with its Masterpiece policy, have the sector sewn up? Certainly it claims to be market leader. And it says it is the pioneer of this particular insurance class that offers home appraisal; all risks worldwide; full new replacement for all items and no restrictions in relation to the switching on of burglar alarms or storing of valuables in safes.

Chubb claims to have a "reasonable percentage" of the Irish HNW market, which it estimates to be worth around €50m to €75m (£30.8m to £46.2m).

So, how has Chubb achieved this? Ronan Foley, personal lines manager for Chubb in Ireland, says word of mouth has been crucial to growing the market.

He says: "The difficulties we experienced when initially developing this market in Ireland was that affluent clients were simply unaware that their standard policy was inappropriate for their specific needs.

"But once they experienced the difference, especially on the claims side, they became totally convinced."

While Chubb's business model has been to tailor specific products, such as Masterpiece, for its wealthy client base, other insurers have held fast to the idea of accommodating the rich within their existing family of products.

Ireland's largest home insurer, Royal & SunAlliance (R&SA), with a third of the household market, recently conducted a high profile advertising campaign using the slogan: "From the White House - to the Green House", to reinforce its message that, in Ireland, it covers all types of homes, from the exclusive to the semi-detached.

Through its primary product, Safehome, R&SA says it has captured a large slice of the Irish home insurance market through high levels of cover and benefits as standard.

R&SA head of public relations Pat Nally says that despite expanding levels of personal wealth, the market is still very much a niche one.

"The Irish high net worth niche has grown. But in terms of overall market policy numbers, and even allowing for the higher premiums involved, it remains a niche segment."