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 T h e  r e c e s s i o n  c r e a t e s  i n c r e a s e d  r i s k s  a n d  p r i c i n g  p r e s s u r e 
 
The recession
has taken a toll on everyone’sinvestment portolios, but high net worth individu-als have been particularly hard hit in the last year.In response, auent customers are watching theirexpenses and cutting back like the rest o the country.When it comes to insuring the auent, independentagents and brokers must address singular exposures inthe tens o millions o dollars, rom stolen Picassos andhorrifc kidnap and ransom schemes to a yacht runningaground in Cape Cod. But, as the current economydemonstrates, even those with higher incomes havelimits on what they’ll pay to transer their risks.“Rich people eel a lot more vulnerable these days,”says Celia Santana, president o Personal Risk Manage-ment Solutions in Manhattan, New York. “They thinki Lehman Brothers and Bear Stearns can collapse,anything is possible.”Santana is among the rare breed o agents whospecialize in the insurance and risk management needso people with annual premiums in excess o $10,000or assets o more than $10 million—although several o her clients earn that much in a year. This year she hasnoticed clients are more interested in their insurancepolicies—what they cover and cost, and how to improveboth. So has Dan Glunt, ounder and owner o Fort PointInsurance in San Francisco. “A signifcant number o theultra-auent are asking i they have enough liabilityinsurance,” he says. “At the same time, they’re lookingor ways to reduce the premium by sel-insuring, takinghigher deductibles to reduce the cost.”
by russ banham
Market
or the
HigH-
end
HigH
stakes
Jay MontgoMery
oCtoBer 2009
 n
INDePeNDeNt AGeNt
 
45
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 a  f u e n t  c u s t o m e r s.
 
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INDePeNDeNt AGeNt
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oCtoBer 2009
 
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ais in  aun insu-anc mak say i plicynin lvls main sng,dspi  cnmy’s impac. “W’n sing a mass xdus  u clinbas,” says Jim isk, U.S. makingmanag a Cubb Psnal Insu-anc. “N a w sing n pa  cuny suing ws anan.”iman’s und as ad a similaxpinc. “W’v ad an xmlygd nwal nin, s alls m a cusms a cauiusabu mving away m spcial-izd svics,” says Dn Sss, vicpsidn and sgmn lad  ign w and aun plicylds.“W’ vn sing signifcan salsincass in gins lik txas, wicsms  b gwing m an sas.”inding nw pspcs is a cal-lng, wv. “ral sa sals adwn 6% in Gnwic, Cnn., and15% in Palm Bac, la.,” ns Jyhuian, sni vic psidn andnainal sals manag in  pivaclin gup a Cais. “ou nwbusinss is smwa ansacin-i-nd, maning a wn smnbuys a nw m i’s an insuanc-slling ppuniy. obviusly, sppuniis a a bi lss in  cu-n cnmy.”
—r.B.
against crimes like kidnap and ransom,extortion and employment practicesliabilities.
Carriers Capitalize DespiteDownturn
Absorbing the property-casualty riskso these wealthy insureds is a handul o carriers specializing in the market, anddespite the eects o the recession, compe-tition is alive and well in the sector.ACE Private Risk Services most recently joined the ranks in January 2008 ateracquiring the high net worth personallines insurance business o The AtlanticCompanies. “The economy has made peopleexamine their spend(ing) or insurance andthe value they’re getting, which we seeas a plus or us as a new market entrant,”says Wetteland.ACE is now competing against veteransin the business—Chubb Personal Insur-ance, Fireman’s Fund, Travelers and ChartisPrivate Client Group (American Interna-tional Group’s new name or its p-c andgeneral insurance business). The insurersoer packages o insurance policies andendorsements addressing the unique risktranser needs o high net worth individu-als, with products like Masterpiece (Chubb)and Platinum Portolio (ACE). Since thewealthy can be cleaved into sub-categorieslike “new money” or “ultra-auent,” thepolicies within the packages are custom-tailored to each insured’s particular profle.There are subtle dierences in theoerings rom the insurers, rom cover-age limits to policy cost, but most tend toprovide similar coverages and services. Freebackground screening o new hires, likenannies and fnancial advisers, is oeredby most o the carriers.(ACE and Fireman’sFund actually use the same internationalsecurity frm—The Guidry Group.) Sincethe insurers absorb the risk o a nanny orfnancial adviser causing fnancial loss, thebackground screening makes sense. “Whilemost fnancial advisers are men and womeno high skill, integrity and unimpeachablecharacter, recent scams like (Bernie) Mad-o give pause or consideration among thewealthy, whose status invites greater expo-sure to such risks,” explains Wetteland.He explains the penny pinching thisway: “Many auent people have about75% o their total wealth wrapped up intheir investment portolios, which isn’tinsurable. The other 25%, represented bytheir homes, boats, cars and property, isinsurable. With portolios worth perhaps40% less than two years ago, more ocusis being given the insurable portion. Andthat’s where we come in.”Other agents servicing high net worthindividuals report similar fndings. “We’refelding a lot o calls rom clients abouttheir renewal policies, looking or ways toamend coverages or reduce the premium,more so than I’ve seen in the past,” saysBrian Bettini, president o San Raael,Cali.-based Allen, Bettini & Carter.
Recession Breeds New Risks
While the rich are still rich, they’re nowhesitant to pay more or some things.Santana, Bettini and Glunt acknowledgethat they are working closer with clients tostreamline insurance costs, while counsel-ing wealthy clients on how to decrease andmitigate new risks caused by the reces-sion. “Wealthy people, just like the rest o us, have lost signifcant amounts in theirinvestment portolios and are suddenlyvery concerned about protecting the assetsthey have,” says Claudia Wetteland, seniorvice president o ACE Private Risk Services.“In a downturn they become a target orlawsuits. Even i the suits are unsubstanti-ated, they still need proper coverage.”When people lose their jobs, go througha home oreclosure and/or suer devastat-ing investment losses, they’re more apt tocommit crimes. For example, a disgruntlednanny, gardener or chaueur let go orfnancial reasons might fnd cause to suea ormer employer or wrongul termina-tion, discrimination or sexual harassment.More ethically-minded people in thesedifcult times also create risks or theauent. “An average income earner mightreduce his or her auto liability limits,”says Santana. “We’re advising our clientsto increase their uninsured/underinsuredmotorists coverage.”She’s also suggesting broader liabilityprotection at higher limits, to protect
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CindieLynneAKACIn

More or less-Mutal Structure-Thank you for sharing-Best, CIn

reply06 / 29 / 2010
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