High Net Worth Home Insurance 2016
All the vital news, analysis, and commentary curated by our industry experts.
Wealthy individuals require specialist mid net worth (MNW) and high net worth (HNW) insurance policies that offer wider coverage, higher limits, and better service compared to standard products. This is due to the higher value of their assets, which may include multiple homes, luxury cars, yachts, antiques, jewelry, wine, and fine art. Home insurance is generally provided on a global all-risk cover basis, often with an element of legal protection and travel insurance to which motor insurance can be additionally added. The market is forecast to grow as the number of affluents in the UK increases. Insurers are trying to grow the market by expanding their customer base by increasing consumer awareness of specialist products, better targeting their products through partnerships, reducing underinsurance, and adapting their distribution strategies to consumer purchasing preferences. Brokers remain the main distribution channel, although MNW individuals are moving away from them in favor of purchasing directly and via banks online. The market is soft due to insurer overcapacity, which has driven down rates and profitability, although premiums are beginning to stabilize. Competition is also provided by insurers offering enhanced standard policies. Hiscox and Chubb account for the largest share of GWP; meanwhile the rest of the market is characterized by a range of specialist and composite insurers. In the future, technology will play a greater role in the market by improving insurer-broker-customer relationships and managing household risk.
• Hiscox and Chubb hold the largest share of the market.
• The market is low in profitability with an estimated COR of just under 100%.
• By 2020, the combined MNW and HNW market is forecast to be worth £1.3bn in GWP.
• MNW business is moving away from the broker channel.
Reasons to Buy
Adapt your distribution strategy to ensure it still meets the needs of clients.
Ensure you successfully market your products and target potential clients.
Benchmark yourself against other players in the market.
Be prepared for how technology will impact the HNW home insurance market over the next few years.
Home & Legacy
Bluefin Private Client Insurance
Arthur J Gallagher
Table of Contents
The MNW and HNW home insurance market has potential to grow
Critical success factors
The HNW Home Insurance Market
There is no standard definition of MNW and HNW individuals
Insurers define wealth differently to other financial services
Classifying MNW and HNW individuals is vital for product development and targeting
Home contents, rebuild cost, and premium price are used to classify home insurance
Client risks within the MNW and HNW space are diverse
Despite an incredibly diverse client market, products are undifferentiated
Some insurers believe client segmentation is the way forward for product targeting
The market for specialist household policies continues to grow
The MNW and HNW home insurance market is estimated to be worth £1bn in GWP
The number of affluents in the UK is growing
Not all wealthy households will have a specialist home insurance policy
The MNW and HNW home insurance market has potential to grow
Increasing the number of customers and premium price will grow the market
Identifying individuals in need of specialist home insurance is key to increasing penetration
Hiscox is the only insurer with a high-profile MNW home advertising campaign
Online channels could help identify customers who require specialist home insurance
Insurers are looking to develop partnerships to access HNW individuals
The market has softened due to overcapacity
Rates are beginning to stabilize but market profitability is still critically low
HNW individuals are loyal to their provider while MNW clients switch due to higher price sensitivity
Enhanced standard home insurance products are additional competition to the market
Underinsurance is a result of inadequate valuations and consumer attitudes to price
HNW individuals pay for service in addition to insurance
HNW clients’ insurance needs are treated as a whole
HNW providers are renowned for their service of quality and excellence
HNW clients have access to professional networks and helplines, adding extra value
HNW providers battle claims before loss occurs to streamline their service
HNW clients look to brokers due to the greater complexity of their insurance needs
MNW home insurance is moving online
Fewer MNW home insurance policies are purchased through a broker
Online purchasing is becoming popular with MNW individuals
Insurers are beginning to offer their products directly online
Brokers should digitize their purchasing journey to remain relevant
Partnerships with banks and wealth managers will help access potential customers
Chubb and Hiscox hold the biggest share of the MNW and HNW market
Chubb and Hiscox remain the largest underwriters in the market
Hiscox Private Client provides HNW customers with a personalized service
Chubb offers three Masterpiece policies with varying levels of cover
The remainder of the market is characterized by smaller insurers
Numerous different regional and national brokers exist in this market
Insurers have moved into the HNW space through acquisition
Specialist insurers have been acquired for their HNW business and brand reputation
Covea acquired Sterling to expand its offering to HNW clients
ACE has rebranded as Chubb after acquiring the insurer
RSA acquired Oak Underwriting to strengthen its HNW insurance offering
Home & Legacy offers a range of product cover levels across its entire portfolio
Plum Underwriting expanded its HNW business through the acquisition of Synergy
Insurers with main offerings focused on standard policies also offer HNW cover
Composite insurers want to provide an all-round product and client offering
Aviva upgrades its HNW Distinct division with the launch of Aviva Private Clients
AXA’s HNW home policy is provided through its specialist division for fine art cover
AIG has launched three new claims centers of excellence to increase efficiency
Zurich Private Clients offers insurance for HNW and UHNW individuals
Direct Line SELECT was launched for MNW customers in 2011
Ageas’ House Guard Prestige policy offers home insurance for MNW clients
MGAs have been targeting the HNW market
New MGA Horizon looks to simplify and modernize product distribution
Hyperion now offers HNW insurance through merger with RK Harrison
The Market Going Forward
The market will grow as affluence in the UK increases and rates harden
The MNW and HNW combined market is forecast to reach £1.3bn in GWP by 2020
The number of wealthy individuals in the UK will continue to grow
The number of specialist home insurance policies in force will increase
The market will grow as insurers raise premiums to improve profitability
Technology will be used to improve insurer-broker-customer relationships
MNW policies will be increasingly available to purchase directly online
The online channel will streamline product purchasing and claims settlement processes
Video and audio could be used to increase policy understanding
Digitally documenting high-value contents will help insurers manage client risks
Technology will play a future role in managing household risk and claims
Digital homes are becoming more popular
Installing water leak detection systems will reduce household claims and premium prices
Smart security will allow homes to be monitored even if they are unoccupied
Clients’ personal data needs to be protected as crime moves online
3D printing will repair or create replicas of lost or damaged contents
Abbreviations and acronyms
Liquid assets (or liquid wealth)
London insurance market
MNW (or mass affluent)
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