High-Net-Worth Market Opportunities

The definition of a high-net-worth client varies, but it’s not unheard of for clients to pay millions of dollars in premiums to insure higher values homes worldwide. Agents who want to target the high-net-world market must speak the language, said Diane Delaney, executive director of the Private Risk Management Association (PMRA), on a recent InsuranceJournal.tv On Point podcast. Delaney joined On Point’s host, Peter van Aartrijk, principal at Aartrijk, to discuss the mindset and tactics needed to sell insurance to high-net-worth clientele.

No matter what’s happening in the economy, the high-net-worth market continues to grow.

“Maybe not as rapidly as it was before, but the opportunity is there, and it really varies based on where you’re located in the country as well,” she said.

Many high-value properties are along coastal regions or in wildfire-prone areas so insuring these properties needs expert knowledge. In high-catastrophe areas where high-value homes often are located, property insurance is harder to find, and rates are climbing. “And yes, while the high-net-worth client does have the funds to pay for their insurance, nobody wants to pay 50% more than what they were paying the previous year just because that’s what it is.”

Independent agents and brokers are spending more time with clients, focusing on steps clients can take to safeguard homes in high-risk areas so they can prevent damage and maintain their insurance, Delaney said. There is talk about self-insurance, taking on higher deductibles and layering coverage, she added.

“I think we’re really fortunate in the high-net-worth space because when you are talking about the mainstream carrier, it does become about price because it is transactional,” she added. “The products don’t differ. But when you’re playing in the high-net-worth, there’s a lot more flexibility in really personalizing the insurance program to that specific individual.” The emphasis is on protecting the asset base clients worked hard to build and the legacy they want to pass on, and asking questions about how they envision rebuilding their life after a catastrophe or accident, she said.

High-net-worth clients don’t want a lot of jargon, she said. “But using phrases such as, ‘My job as your insurance advisor is to make sure we’re protecting what’s most important for you and your family to maintain your lifestyle,'” is important because that’s really what this is, she said.

One issue right now is agents are in a more reactive phase where they’re regularly trying to get ahead with the client, Delaney said. “Where every day they’re getting phone calls, ‘My rate went up! My rate went up!’

“And I have to say, I speak to brokers every single day and … at least 10 of them a day are telling me, ‘Diane, this is exhausting. I’m just, I’ve never had conversations like this before,'” Delaney said. “So, we’re finding we have to start working with our brokers on training them on how to have these conversations because they don’t want to say to the client … ‘You’re lucky you got a 30% increase because that means you have insurance where most of our clients do not.'”

Building a book of business of high-net-worth clientele takes time and careful attention, Delaney said. To help build a pipeline of new business in this space, specialist agents need to go where the high-net-worth clients mingle, she added. “They can be going to car shows and different events to meet these individuals, but it may take a year before they turn a prospect into a full-blown client. And having patience to do that is difficult.”

But high-net-worth clients are great prospects for agents willing to build and nurture their expertise in this space. “We have a big opportunity now going into 2024 to really think about all the different types of value-based sales training that we can give to the brokers,” she said. “It’s needed, and it doesn’t come naturally to a lot.”

Delaney said that an organization like PRMA can become a valuable resource and offer support to agents wanting to specialize in high-net-worth. While members may be competitors, they are all playing in the same field. “There are plenty of clients out there, but we need one another to be successful,” she added.

“Not every individual broker is going to be the answer to everything,” she said. “But if they can go to PRMA, collaborate in (online) member forums, and throw out a question to the membership of where they’re struggling with placing business,” that can be a great help.