High-net-worth individuals typically insure possessions with a mass market insurer and don't know they are underinsured until it is too late.

A survey of 600 agents and brokers by Ace Private Risk Services appears to confirm what the high-net-worth (HNW) insurance industry has been up against—a large portion of its client base is unaware of specialty products meant for their lifestyle, and the coverage doesn't have to be expensive.

“Financially successful families and individuals often fail to adjust their personal insurance programs as they build wealth,” says Robert Courtemanche, division president of Ace Private Risk Services, in a statement. “If they had looked for an agent and carrier better suited to their current level of achievement and lifestyle, they probably wouldn't have to pay much for better protection. In many cases, they could have paid less.”

Access Ace's white paper on this subject here.

In fact, the overpaying-for-underinsurance dilemma in this sector has worsened, according to the survey results, Compared to a similar survey in 2010, more agents say high-net-worth individuals are missing savings opportunities and are underinsured.

Ace says HNW families are “especially vulnerable” to certain risks. Since they have a tendency to buy second homes near the coast or in the mountains, there is a risk of natural catastrophe and wildfire. Volatility in the financial markets has led this segment to but more jewelry, fine art, wine and classic cars as a means to diversify. And a majority in this market fear being hit with a liability lawsuit by an opportunistic plaintiff.

Agents and brokers were asked which risk was underinsured, and which risk was the most serious threat. Ace says 45 percent of respondents say the home is the most underinsured, and 40 percent say they consider umbrella liability the most serious exposure to HNW individuals.

Special Reports /

Ace: High-Net-Worth Market Overpays to be Underinsured

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