Few issues are as important to high-net-worth individuals asfinding a company that aligns its interests with its clients.

Insurance brokers have made strides to improve alignment overthe past decade. There is greater transparency and a proven beliefthat aligning your interests with the interests of policyholdersmakes good business sense.

The challenge for carriers may be harder. There is a perceivedinherent conflict for P&C insurers to satisfy the desires ofshareholders (increased profits) with the desires of policyholders(more service and lower prices). Insurers such as Amica andNationwide have taken their message on alignment of interests tothe airwaves in well-funded advertising campaigns, knowing thatconsumers see value in this powerful message.

Brokers specializing in the high-net-worth segment can embracealignment and work with their carriers to deliver even greatervalue. Here are just a few ways:

Best Clients Need Best Rates

You likely have seen cable or cell phone service providers offerdiscounted rates or other incentives to entice new users to jointheir networks. This and similar practices have moved Ally Bank tostate that “even kids know that it's not right to treat your newfriends better than your old ones.” As a current customer, you mayfeel deceived by these marketing tactics, but you probably are notsurprised because many consumers have low expectations from theseproviders. These categories of providers aren't ones we associatewith labels like “trusted advisor” and “fiduciary.”

These “new business writing companies” are routinely employed bysome specialist insurers, creating the potential to alienate loyalpolicyholders if and when they realize that new customers withsimilar risk profiles are paying thousands of dollars less toinsure their similar homes. A system that subsidizes new, untestedbusiness at the expense of responsible, long-term clients mayattempt to preserve profits, but runs counter to the principles ofalignment. Turning loyal policyholders into enthusiasticambassadors is a far more effective way of growing a profitableinsurance company.

Independent agents and brokers can work with carriers to stopthese tactics and ensure that their loyal customers are offered thebest available rates.

Promote Transparency

High-net-worth families are smart, sophisticated people. Theywant to know where their money is going, and that it is being usedin their best interests. Here are three examples where wealthy andsophisticated consumers would benefit from greatertransparency:

• Valuations. No issue creates more dissatisfaction among ownersof high-value homes than replacement cost valuations. Because theappraisal process typically occurs after a policy is issued, thereis a sense of “bait and switch.” This is a complicated subject, butlistening to the feedback of policyholders (and engaging them inthe process) not only eliminates “detractors” but creates“promoters.”

• Options. One of the great advantages of the independent produceris the ability to access multiple markets. Agents can earn greatertrust if their market syndication processes are transparent andtailored to a client's preferences.

• Compensation. Over the past decade, nearly every major brokerhas improved their disclosures for how it is compensated. You don'tneed to reinvent the wheel here, but it would be wrong to thinkthat consumers do not care.

Assist Clients to Prevent Losses

Nothing defines alignment in the high-net-worth space betterthan preventing or avoiding loss. The best advisors understand eachclient's unique needs and then build a personalized plan to addressthem. Specialist carriers have teams of risk managers that helpclients better protect their homes, families and “irreplaceables.”A proactive, personalized effort to help prevent losses can creategreater customer satisfaction than a great response to a claim.That means doing research for clients, coordinating withcontractors and setting appointments. Recognize the value that youand your firm can create for the client in the risk managementprocess.

When the customer is at the center of one's focus—and wheninterests between client and firm are aligned—there is ampleevidence to suggest that insurers can actually grow faster and bemore profitable. Particularly in the high-net-worth segment,consumers continue to become more informed and more demanding. Thecommitment to stronger alignment of interests is an advisable stepfor all who seek to serve this niche.

Mark Galante is the chief marketing officer with the PUREGroup of Insurance Cos. Contact him [email protected].