Underinsurance risk to HNW individuals
High net worth individuals are falling prey to underinsurance in the face of rising inflation rates and the pressures of the UK’s cost of living crisis.
New research from specialist insurer, Ecclesiastical, supports this, with a statement released on the 19th June 2023 revealing that of 119 brokers interviewed between March and April this year, 77% felt there was a notable issue – a 5% hike in perception from last year. 68% of them reported that underinsurance amongst HNW clients was at its highest perceived rate.
So, in which areas are clients in most danger of being underinsured? The list reported by Ecclesiastical is as follows:
Buildings (69%)
Jewellery (56%)
Contents (53%)
Watches (50%)
Art (31%)
Antiques (29%)
Handbags (25%)
Clothes (23%)
Whisky or wine collections (23%).
Problems with the high net worth sector
“Underinsurance has always been an issue in the HNW sector,” says Sarah Willoughby, Ecclesiastical’s art and private client business director. “but now, set against a backdrop of continued high inflation, our research has found seven in 10 brokers believe underinsurance is more of an issue for HNW clients than ever before.”
There are several factors that brokers believe result in this phenomenon for HNW clients, notably, a lack of awareness over how much re-build or repair costs are on the rise (79%), out of date valuations of personal high value items (78%) and a lack of knowledge regarding the current value of buildings/contents (75%).
Two further factors are inflation (66%) and a reluctance from clients to pay higher premiums (61%).
When it comes to out-of-date valuations, 73% of brokers believe HNW clients hold insurance cover based on valuations over five years old. 24% stated clients have current insurance based on valuations that are over ten years old.
“It’s more important than ever that brokers are speaking to their clients to ensure they are keeping valuations up to date”, said Willoughby. “While high net worth clients may have existing valuations, the prices and values of many precious items are increasing rapidly, and valuations can quickly get out-of-date.”
Rapidly appreciating items like jewellery and watches should be revalued every three years. While fine art, porcelain and antiques should be revalued every five years, Ecclesiastical advises.
Next steps
“Brokers play a vital role in ensuring their clients have the correct cover in place,” Willoughby concluded, and that’s where Ascend steps in.
Ascend Executive is here to help! We can review and assess all your current insurance needs when it comes to property, possessions and assets. Our expert team can talk you through your personal risk when it comes to underinsurance.
‘It’s never been more important for HNW individuals to talk to a broker,” says Managing Director of Ascend, Matthew Collins. “These are challenging times, but we are here to protect you and to safeguard your assets. The team at Ascend Executive have a wealth of experience when it comes to the needs of high net worth clients, so do give us a call today.’
Download our guide to HNW underinsurance
You can contact Ascend Executive on 01245 449060
Contributions:
https://www.ecclesiastical.com/media-centre/underinsurance-high-net-worth/