The near-depression-level economic depths that were reached following the financial meltdown of 2008 were so severe that even the super-rich were badly hurt.

“The high-net-worth client has not been immune to this economic downturn,” says Lee Roth, president of Chartis' private-client group division of North America. “In 25 years in this business I had not seen one economic downturn that affected the high-net-worth clients, but this one was different.”

Roth says that while some clients increased deductibles in recent years, the trend among them was to make fewer purchases of collectibles and high-end products such as boats and jewelry.

Tom Ealy, president of Encompass Insurance, says that when it came to buying insurance there were some areas in which the HNW insured could not cut back, such as homeowner's and auto coverage. However, shopping behavior did appear to change as wealthy insurance buyers examined their coverage a little more closely to understand if they were getting the most for what they were paying.

At insurance-broker Aon Risk Solution's private risk-management practice, President Ray Condon says the buyers can be broken down into three different groups. Each group, he says, dealt with the economic reality differently:

Those with insurable assets between $1 million and $5 million were the most cost-conscious during the height of the economic downturn. They wanted good coverage but also wanted to save money. Those in the construction and financial investment areas, hit hard by the recession, made the most changes—opting for higher deductibles, getting competitive bids on programs from different carriers or cutting back on coverage where it was not deemed necessary. For example, a buyer would insure jewelry pieces worn on a daily basis and put the rest in a vault.
Those in the $5-$50 million range were not as hard-hit but still opted for taking on higher deductibles to mitigate their insurance costs.
For the nine-figure-and-up ultra-rich, Condon says there was no slowdown in their insurance purchases, adding they remained “stable and consistent.”

Jim Fiske, U.S. marketing manager for Chubb Personal Insurance, says there was increased activity around deductibles for the wealthy insured and an increased interest in clients and agents reviewing policies for available discounts, such as security systems and home renovations that result in electrical upgrades.

Special Reports /

Recession Walloped Even the Wealthy

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