Insurance Business America 9.07

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SECTOR FOCUS: HIGH-NET-WORTH INSURANCE

you have to be proactive, and it’s definitely challenging conditions in some markets,” he says. “I think that’s going to carry on through the balance of this year, with or without a major hurricane.” Williamson also sees a silver lining to the COVID cloud, which, like O’Brien, he attributes to a strong real estate market. “People continue to move away from large cities and buy more and bigger vacation homes,” he says. “So that creates an insurance buying opportunity for our clients. Early in the pandemic, as clients were at home and weren’t really traveling, they may have spent more time looking at their personal affairs and thinking about their insurance costs. That caused them to shop, and particularly for a new company like us, shopping is a good thing.”

Both Grodensky and Williamson highlighted the ready availability of cyber products for HNW individuals; the challenge, Williamson says, is for brokers to explain the risks to consumers and for insurers to make higher limits available; currently, the limits are quite low because there’s not enough premium to justify higher limits. “I have a feeling the rash of cyber ransoms is going to create much, much more demand for those products,” Williamson says. “For now, the take-up rate in personal lines is still very low.”

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According to Barclays, criminals are increasingly setting their sights on highnet-worth individuals, who are seen as high-value targets without the same level of security as a corporation.

The FBI recorded 791,790 cybercrime complaints last year

What’s next? Going forward, O’Brien believes the HNW insurance market will become increasingly digital as more consumers demand better self-service and greater flexibility. Throughout

“People continue to move away from large cities and buy more and bigger vacation homes. So that creates an insurance buying opportunity for our clients” Charles Williamson, Vault Despite the changing perceptions of risk, both O’Brien and Grodensky feel there haven’t been a lot of new products in response, especially the cyber and catastrophe realms. O’Brien notes that personal, cyber and identity theft coverages have been around for a while, and although they might be attracting new attention, they haven’t had any major upgrades. Grodensky, meanwhile, acknowledges recent developments in online antibullying coverage, as well as family life protection in light of mass shootings and workplace violence. He adds that “the lack of new products currently is the challenge of P&C markets in CAT areas like Florida and California.”

THE HIGH-NET-WORTH CYBERCRIME WAVE

the pandemic, for example, Chubb was able to use remote technology such as smartphones to help more than 30,000 clients document and interpret damages and claims. “What we learned was that the clients were significantly more engaged with us,” O’Brien says. “They spent time with us walking us around their house with their phone in hand and had those conversations.” Grodensky sees more changes ahead in the market. “We do expect increased market consolidation; increased restriction based on year, build, and location for the immediate future; and climbing rates,” he says. “Construction costs are going to drive up replacement costs as well, and that will be

Cyber scams resulted in more than $4.2 billion in losses

There was a 69% increase in number of complaints made by cybercrime victims

More than 25% of ultra-high-networth families, family offices and family businesses have fallen victim to a cyberattack Source: Barclays

reflected in the insured premiums. I do see this leveling off in the next couple years, given that well before the pandemic, insurers had been pressing for increased premiums to offset the years of rates being driven down in the previous soft market.” For Williamson, the future of the HNW segment comes down to the insurance industry’s ability to attract and retain new talent. “We as an industry need to be manufacturing more talent and recruiting more aggressively and more smartly to ensure the growth,” he says. “In terms of macro trends, like in a lot of businesses, talent remains key.”

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