From the December 17-24, 2012 issue of National Underwriter Property & Casualty • Subscribe!

Carriers Say Sandy Provides an Ideal Teaching Moment for Illustrating the Value of High-Net-Worth Coverage

Storm could underscore to the wealthy the coverage and service advantages available from specialized insurers

The communities in the Northeast most gravely affected by Superstorm Sandy include some of the wealthiest towns in the nation: For practically every bungalow destroyed by the storm surge, a million-dollar beachfront mansion was also claimed.

Yet for all their means and money smarts, many of these well-to-do individuals were largely underinsured—and now they are paying the price, as they’re finding out the coverage they had won’t fully pay for all of the damages incurred.

Agents and brokers have long been aware that the high-net-worth (HNW) demographic remains largely underserved by the insurance industry. Up to 60 percent of individuals who would qualify for a policy with an HNW insurance carrier remain with a standard insurer.

However, several carrier executives say, the devastation wrought by Sandy presents an ideal teaching moment for illustrating the value of HNW coverage—and getting the wealthy to make the switch to a specialized carrier.

“This is a tremendous opportunity to talk about High-Net-Worth solutions,” says Jerry Hourihan, senior vice president of AIG’s Private Client Group. “Independent agents can promote the products and services. We plan to do some direct marketing as well.” 

Ross Buchmueller, CEO of Privilege Underwriters Reciprocal Exchange (PURE), says Sandy provides some striking examples of the different post-storm experiences of the “haves” (those with HNW coverage) and the “have-nots” (those who still rely on traditional coverage to insure their assets).

“We and carriers like us have been trying to describe the differences between these two levels of coverage, and we’ve been making progress,” Buchmueller says. 

But post-Sandy, he points out, “people are going to talk to their neighbors, and policyholders with a High-Net-Worth carrier are more likely to tell a much better story.”

Indeed, HNW carriers, in their response to Sandy, say they believe they are making the sort of impressions that will result in some epiphanies among potential policyholders when they hear from wealthy friends about the level of service delivered and the amount and type of coverages offered. 

PLATINUM-CLASS SERVICE & COVERAGE

One point of service differentiation is in the area of speed.

For example, Jim Fiske, vice president and U.S. marketing manager for Chubb Personal Insurance, notes that the adjustment process was initiated on more than 90 percent of Chubb’s HNW claims within the first eight hours after Sandy subsided.

And when it comes to terms and conditions, HNW policies often have no “holdback” provisions, thereby allowing for full replacement costs, including building-code upgrades. 

“Many times you have these stately, older mansions, and when you rebuild, you have to adhere to [modern] codes,” says Donald Soss, vice president in charge of the private-wealth group at Fireman’s Fund. 

And because it can take a very long time for these mansions to be rebuilt, Fireman’s Fund has no limitations on providing living expenses for the client in the interim, whereas the standard market does. 

“Sandy might bring to the forefront hundreds if not thousands of cases in which High-Net-Worth [insurers] responded better than standard carriers,” says Buchmueller. HNW carriers, he adds, can “build upon this to better articulate the value of being with a specialist.”

“We can separate ourselves with the exquisite focus we have to get all the little things right,” says Fiske, who adds that HNW providers have had very low complaint ratios since Sandy, according to the New York Department of Financial Services.  

Comments

Resource Center

View All »

Get $100 in leads with $0 down!

NetQuote's detailed, real-time leads have boosted sales for thousands of successful local agents across the...

The Growing Role of Excess & Surplus Lines in Today’s...

The excess and surplus market (E&S) provides coverage when standard insurance carriers cannot or will...

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

How Many Of Your Clients Are At Risk Of Flood?

Every home is vulnerable to flooding. Learn four compelling reasons why discussing flood insurance with...

Gauging your Business Intelligence Analytics Capabilities and the Impact of...

Big Data, Data Lakes and Data Swamps, How to gauge your company's Big Data readiness....

Extending Contact Center Capabilities Across the Insurance Enterprise

Today advancements in technology are making a big impact on business and society. To yield...

Drug and Alcohol Testing Requirements

In this two-part series, NBIS Risk Management team will break down the requirements to assist...

Looking for Markets?

Search Kirschner’s Insurance Directory to help service your hard to place risks.

497 Risk Categories | 70,000 P&C Insurance Markets

kirschners
Specialty Markets Insight eNewsletter

Receive updates and analyses on hard to place and challenging coverages. Sign Up Now!

Advertisement. Closing in 15 seconds.