Best practices for reducing wealthy-client risk in 2025

Cyber threats are getting more sophisticated.

Technology has transformed our lives, but it also increases cyberrisk. Smart devices can be entry points for cybercriminals, and valuable personal data makes HNW individuals prime targets. Roughly one in four ultra-high-net-worth families have experienced a cyberattack, and 61% report that cybersecurity is a top concern.

Cyberthreats will keep evolving with technology, posing real risks to personal and financial information. Complex cyberattacks also can create unclear liability. For example, if a cybercriminal gains access through a service provider (e.g., advisor, cloud storage provider, or cybersecurity firm), it may be difficult to assign blame or understand who is liable for the damage.

Best practices for protecting HNW clients from cyberthreats:

• Secure internet connections. Use a Virtual Private Network (VPN) to encrypt internet connections. When on public Wi-Fi, avoid accessing sensitive information or conducting financial transactions as cybercriminals can intercept unencrypted data.
• Strengthen account security. Use strong, unique passwords with a mix of letters, numbers and special characters, and avoid common phrases like names or birth dates. Regularly update passwords, and diversify across accounts. Enable Multi-Factor Authentication (MFA) for added protection.
• Monitor the kid's online activity. High-profile, or children of wealthy families, are often targets for cybercriminals who exploit their lack of experience with cybersecurity and take advantage of the large risk exposure present.
• Be extra cautious with wire transfers and online payments. These are frequent targets for cybercriminals, especially when it comes to social engineering/cyber extortion attacks. Always verify payment details and ensure you’re sending funds to trusted accounts. Consider using secure, encrypted channels for sensitive transactions.
• Secure standalone cyber insurance. These policies are relatively inexpensive given the potential risk and can provide much-needed coverage for events like social engineering and ransomware attacks.

Liability verdicts are targeting wealth

While liability claims have always been part of the equation for HNW individuals, today, the stakes are higher than ever. Nuclear verdicts — those worth $10 million or more — are taking over the U.S. litigation landscape, arising most in California, Florida, New York, and Texas. The size of settlements and jury awards often reflects the target’s perceived wealth, making assets the focal point rather than actual damages.
 
This is a concern in industries like real estate and hospitality, where substantial assets make HNW individuals vulnerable, and personal umbrella policies may no longer fully protect against large-scale liability claims.

Best practices to reduce liability risks

• Increase liability coverage. Ensure that your clients' umbrella and excess liability policies offer enough coverage to protect your wealth and assets. With increasing liability awards, it is essential to have higher coverage limits that reflect your financial situation.
• Evaluate potential exposures. Beyond obvious risks like car accidents or slip-and-fall incidents at your clients' homes, consider less obvious threats, such as dog bites or defamation of character occurrences, which is on the rise due to the presence of social media. Comprehensive insurance should address these concerns, including special coverage for things like swimming pool accidents or personal injury protection.
• Take preventative measures to reduce risk. From maintaining safe property conditions to practicing good driving habits, reducing the likelihood of incidents that could lead to liability claims is key.

A note about coverage terms

Insurance carriers are moving toward higher deductibles. A key factor driving this change is the withdrawal of traditional carriers from high-risk states. In California, for example, many admitted carriers are leaving due to the inability to remain profitable amid frequent wildfires and strict regulations. Those that are still writing policies may be mandating higher deductible options, or including specific coverage sub-limits, especially in wildfire- and hurricane-prone states. This shift is part of a broader trend toward surplus line markets in high-risk states.
To manage exposure, insurers are creating larger separate deductibles for perils like wind, hurricane and wildfire, which helps control loss payouts but puts more responsibility on the homeowner to self-insure against these perils.

Best practices to present a low-risk home to insurers.

• Invest in risk mitigation measures. Depending on where you hold property, your home should be defensible against wildfires, floods, wind or hurricanes. Insurers will look for ember resistant venting, flood barriers, reinforced windows, and storm-resistant doors.
• Upgrade to modern systems. Outdated systems can pose significant risks, from water damage to fire hazards. Regularly inspect and upgrade plumbing, electrical systems and HVAC units to ensure they meet current safety standards and are in good working condition.
• Retrofit for safety standards. Retrofits can improve home safety and resilience to both natural and human-caused risks. For example, installing automatic water shutoff devices, replacing old roofing materials with fire-resistant options, adding an automatic seismic shutoff valve in earthquake-prone regions, or upgrading insulation and ventilation to improve energy efficiency and prevent mold growth.

 Water damage still reigns supreme

Each year, water damage or freezing impacts about one in 60 homes. Hidden pipes concealed within walls or floors often leak undetected until visible damage emerges, at which point the issue is usually severe.
 
Insurers are tightening policy guidelines, particularly for homes built before 2000, and promoting risk management tools to reduce claims and lower premiums.

Best practices to mitigate water damage risks

• Install smart water monitors: These devices monitor water usage and automatically shut off the supply if they detect abnormal flow, helping to prevent severe damage.
• Use drone technology to assess your property: Drones can capture detailed aerial imagery of your property, including hard-to-reach areas such as your roof, ensuring the quality is in good condition. This proactive approach helps prevent future roof leaks and water losses by detecting damaged areas more deliberately and preventatively.

Christina Oakes is executive vice president of Private Client Services at Venbrook.

See also:

• 10 Best U.S. cities for wealthy insurance-client prospecting
• 8 things wealthy people worry about
• Navigating the insurance struggles of affluent clients
• 3 insurance policies for ultra-high-net-worth clients