By Kevin Foley —
Conditions in the insurance market are changing the way successful families and individuals buy insurance.
Insurers are struggling after three consecutive years replete with natural disasters. A record $105.7 billion in insured losses occurred in 2017 alone. In 2018, the U.S. saw a record 55 catastrophe, incidents causing $25 million or more in damage.
Before this rash of natural disasters, the simple strategy was to bundle a complete portfolio of insurance products—home, auto, personal umbrella, fine art and jewelry—with a single insurer. But insurers are pulling out of catastrophe-prone areas and being more selective if an account has had losses. The one-insurer strategy can no longer be the only strategy.
Sophisticated brokers for high-net-worth individuals are turning to the excess and surplus lines (E&S) market to cover their homes and possessions. If constructed well, this “mosaic” of insurance products will sometimes provide the best combination of coverage and price available.
The E&S market specializes in hard-to-place, unique or high-valued risks. E&S insurers are more flexible and can react to market changes, providing made-to-order solutions for complex customer needs. E&S insurers also offer a wider range of coverage limits and deductibles. Lloyd’s of London, the specialist insurance market known for insuring celebrity body parts, is the largest writer of E&S insurance in the world.
Most of the high net worth insurers have created E&S subsidiaries to meet this demand. They provide the same exceptional claims, risk management and advocacy services afforded to their premium policyholders. For example:
- PURE Group of Insurance Companies is issuing E&S policies via its PURE Programs subsidiary. These E&S policies provide broad coverage and the same quality services as PURE’s traditional insurance program.
- AIG’s Private Client Select insures individuals who qualify for its Private Client Group’s traditional insurance program but whose complex needs require more protection. Through a range of custom policies, the program offers solutions for exposures such as homes under construction, homes in coastal locations and excess liability risk for high-profile individuals. It is an extension of Private Client Group’s offerings that includes homeowners, private collections, personal excess liability, employment practices liability, earthquake and excess flood insurance.
- Chubb Custom Solutions provides admitted and non-admitted solutions to complement their traditional home, auto, valuable articles, and liability products. Chubb Custom Solutions provides more flexibility and offers solutions for certain international policies.
A complex strategy requires a sophisticated broker. Today, understanding how to bring together traditional insurers, their E&S subsidiaries and other markets such as Lloyd’s is the best way to serve clients. A broker who knows the E&S market can assemble a comprehensive, customized and cost-effective insurance solution.
“Our approach is to understand your lifestyle, your assets and your exposures,” said Justin Foa, President & CEO of Foa & Son. “That means using the insurer or insurers to tailor a superior insurance program exclusively for you.”