A decade of natural disasters, years of inflation and inadequate rates have caused premium increases and restricted capacity across the homeowners market. However, one of the hardest-hit segments is the high net-worth market, where capacity is tighter, rates have escalated and homeowners have been forced to find creative solutions to insuring their homes.

“Rate increases are somewhat democratic in that it has affected the mass affluent market, the high net-worth and the ultra-high net-worth market, including areas that are not classically catastrophe exposed," explains Katherine Frattarola, executive vice president and head of HUB Private Client, who points out that areas such as the Chicago suburbs and Northeast have experienced losses due to winter weather and high-profile fires.

Affluent homeowners face issues because they typically live “where the wind blows, the ground shakes and the earth burns," Frattarola says. “They like to live on a mountain surrounded by brush, on a barrier island or right on the beach."

This winds up with an aggregation of high-value homes in areas that are becoming riskier due to changing weather patterns. When companies assess their risk portfolio, they are more frequently determining that they are not comfortable with the risk in certain areas.

For the high net-worth segment, affordability is often not as large of a concern as it is for the average consumer. Instead, the focus turns to availability. But with admitted carriers retreating, clients are forced to look at the non-admitted market, where there is more flexibility surrounding rates—while others who do not have a mortgage consider self-insurance.

“We are having lengthy conversations with our wealth management centers of influence (COI) partners around how to counsel their clients because, for the first time, we're seeing that clients are either opting not to buy a secondary home in a catastrophe-exposed area or they're asking their financial adviser to ring-fence assets to pay for personalized insurance," Frattarola says.

Customization is key for the high net-worth segment amid a lack of capacity. Frattarola's department is able to access a diverse array of carriers, both admitted and non-admitted; borrow from commercial lines insurance and create towers of limits; offer deductible buyback; exclude wind; carve in self-insurance options; and offer parametric and basket and blanket solutions for very wealthy individuals.

Will Jones is IA editor-in-chief.