What exactly constitutes a high net-worth client?
“Different people have different numbers,” says Lisa Lindsay, executive director, trustee and founding member of the Private Risk Management Association. “Some might look at premium size, some might look at number of residences—there are so many different ways to look at it.”
If you have a high net-worth personal lines book, you need to understand “each provider’s appetite, specialty, whether they’re actually fluent in it and whether they have a proven track record in underwriting, servicing and providing claims expertise,” Lindsay says.
Here’s how four high net-worth carriers define their terms:
“Our entry level for AIG is people that have a $1-million home or pay $10,000 for their insurance program overall, and that would be a package of home, auto, collections and excess,” explains Jerry Hourihan, president of AIG’s Private Client Group.
In three states with plans to expand, AIG also offers a product that sits just below Private Client Group: Premiere, designed for clients with homes valued between $500,000 and $1 million.
“We don’t put definitions around what is high net worth,” says Scott Gunter, COO of Chubb Personal Risk Services North America, who points out that there’s a big difference between someone who lives in a one-bedroom apartment and has all their assets in stocks and bonds, and someone who has a large home, more cars than drivers and a wide range of passions and collectibles.
“I could be very wealthy, but I really am not a high net-worth client because I don’t need anything that the high net-worth insurance market is providing,” Gunter explains. “We focus more around the customer’s lifestyle expectation rather than just picking an asset number or house size.”
“We define it by the value of your home—I think that’s the easiest way to quantify the market from an insurance perspective,” says Will Van Den Heuvel, senior vice president of personal lines at Cincinnati Insurance.
Here’s how Cincinnati breaks it down:
- Mass affluent: $500,000–$1 million
- High net-worth: $1–5 million
- Ultra-high net-worth: $5 million and up
“One of the things that might get confused is that you’re talking about the difference between the minimum you could write—in our case, that’s somebody who has a home insured for $1 million or more—vs. the target, and then what’s your ceiling?” points out Ross Buchmueller, CEO of the PURE Group.
For PURE, the target is “someone with multiple locations and sophisticated needs,” Buchmueller explains. “And we don’t like to insure properties for more than $100 million. The definitions are practical—when you’re a broker and you know somebody’s entry level and somebody’s ceiling, you can figure out who to work with.”
Jacquelyn Connelly is IA senior editor.