Declaration of Independents: Christopher Cay

 DOIChristopher Cay

Cay Insurance
Savannah, Georgia

Warren Buffet says, “Price is what you pay, value is what you get”—and nowhere is that adage more pertinent than high net-worth personal lines.

“Nobody wants to pay more for their insurance—the affluent clientele we have can be very, very careful with their premium dollars,” says Christopher Cay, principal of Cay Insurance in Savannah, Georgia, which specializes in high net-worth personal lines.

But where “a mainstream personal lines client will probably move for $100 savings,” Cay says, “if a rate increase is reasonable, a high net-worth client is more likely to accept it.”


If a client is with a direct or captive and they have a $1-million-plus home, because those rates often are not geared toward writing homes of that value, you can not only improve the coverage with a high net-worth carrier—you can also actually save them money as well.


We always counsel our clients to treat their insurance like a catastrophe policy—it’s not in their interest to file small claims, because that could jeopardize their coverage or just increase their rate. The high net-worth client has the ability to take a $10,000 deductible, realize those savings and be able to self-insure that first bit, which then makes a fairly significant impact on the premium.

When someone gets to be very high net-worth, they don’t want to just swap dollars with the insurance company. They can do things to self-insure. That’s helped us the most—being able to put ourselves in the client’s shoes and understand the risk management from their standpoint. That needs to be recognized and accounted for when putting together their insurance program.


The market is so competitive that you’ve got to see about placing the client with the most competitive carrier, or someone else will. After the consolidation of Chubb, ACE and Fireman’s Fund, there are new entrants into the market, and it’s helped to have those options.

The oldest trick in the insurance book is to come in with low rates, develop a book of business and then move the rates up to more of a market standard, knowing clients aren’t going to move then for the same rate. That’s a reality, but the other reality is that the only thing you can really do is get the savings that are available at that time, so if you need to look at a different time, we can.

It’s really important to find the high net-worth carrier that has the best fit for that client, because if a carrier really likes a risk, they can get very competitive on the pricing. We try to quote the client with as many options as we can, based not solely on premium but on overall value.


Our family business, a super-regional which was the predecessor to this business, had a division that did high net-worth personal insurance, but the main business was large commercial insurance. That’s what I started out in, but I loved this end of the business—the affluent clientele portion, working with people and seeing the different assets and being able to help people more directly. The family business was sold in 2005, and I started this agency two years later to focus on the high net-worth space. We also have a small commercial niche.


We had a prospect come to us who was working with another agent. He had a $1.7-million home on the coast with a $1,000 homeowners deductible, and he was very concerned about flooding. We were able to put him with a high net-worth carrier, increase his deductible to $10,000 on the homeowners policy, and use those savings to buy the full $1.7 million in flood coverage. For just $9,000 more in risk, he was able to get another million and a half plus in flood coverage, on top of a primary flood policy.

Several years ago, we had another client in Atlanta who did not have an umbrella. When we worked with him, we taught him about the value of an umbrella, and he ended up purchasing an umbrella through us. Several years later, he had a fire at one of his rental properties that resulted in a fatality. The umbrella responded to cover his liability.


One of the real pain points is insurance to value on homes. We see it time and time again where you insure a home for a certain amount and the carrier will come back later with a different replacement cost estimate. A requirement of the guaranteed replacement cost policy is that you write the coverage up to the amount the carrier suggests, and what we hear more than anything is that those values are too high for replacement cost. Since that’s the premium rating basis, that’s a pain point for clients.

Then again, I don’t know how that could be best addressed, because the flip side is that in the event of a loss, homes are often underinsured. That’s difficult, and it’s difficult to get a client to understand that as well. One of my clients is paying $785,000 for a turn-of-the-century home here in Savannah, but the replacement cost is more like $1.8 million. It’s crazy, but what we have to look at and what the carrier has to look at is if that home were to burn down today, what would it cost to rebuild?


When a client has a claim, it’s going to solidify that relationship more than anything else could because of the high-touch claim service high net-worth carriers provide. Obviously people don’t want to have claims, but generally when they do, they’re so pleased that they recognize the value of their insurance program. That solidifies the relationship.


By and large, affluent clientele are generally in their 50s and 60s or older. The new generation that has grown up with an iPad in their hand and the mobile capabilities—that’s going be a big change. Is the high net-worth industry ready to address the self-service needs of that demographic? Probably not yet.

Photo by Rob Kaufman