Superstorm Sandy may have provided the most persuasive argumentyet for the benefits of insurance coverage designed specificallyfor the owners of high-value homes. Those who bought coverage fromspecialists in the high-net-worth niche—including ACE Private RiskServices, AIG Private Client Group, Chubb, Fireman's Fund andPURE—benefited from quicker service for tree removal, a broaderinterpretation of coverage for sewer and drain back-up, greaterflexibility with flood and excess flood solutions and fullreplacement cost.

More more carriers and brokers specialize in this niche in theU.S., but the aggregate homeowners' market share of the fivehigh-net-worth specialist carriers decreased for the fifthconsecutive year in 2012.

A Rising Tide

The loss of market share among the high-net-worth carriers isparticularly concerning considering the demographic trends thatshould be supercharging growth in this segment. Theinflation-adjusted net worth of the wealthiest 1% of Americans hassteadily increased and research suggests that a massive proportionof all additional net income in this country has been realized bythe wealthiest Americans.

During the past decade or so, the largest personal insurancecarriers in the U.S. have contributed to the greatest spike inadvertising spending in any marketing category. The trend seemsstronger than ever. According to Kantar Media, insurers spent roughly $1.3 billion inadvertising in the second quarter of 2013 alone, up 12.9% duringthe same period a year earlier.

And while the growth in insurance advertising started as a callfor consumers to save money, the advertising has clearly shifted toturf that specialist high-net-worth providers should own:professional agents who complete thorough due diligence (“discountdouble-check”), policy language that is broad enough to protectagainst “mayhem,” and experts that will make you smarter aboutinsurance (even if you didn't attend Farmers University). Thebillions spent to reinforce these issues creates a challenge forspecialist insurers and brokers.

The Start of a Solution

Within the past few years, a group of agents, brokers andcarriers established the Private Risk ManagementAssociation (PRMA), an independent, non-profit group to liftthe specialist high-net-worth category through greaterprofessionalism, awareness and advocacy. PRMA aims to reverse thetrend and grow the category by creating a forum for insurance andwealth management professionals to share insights and drive issuesthat improve the experience of the high net worth consumer. Itplans to provide educational opportunities for the workforce in theniche market, establish standards and distinguish those who havemastered the specialty, as well as provide networking, recruitingand career advancement services for association members.