Education and client conversations key to reducing underinsurance in the HNW space

That was message from Aon head of private clients Alexa Owen, who was speaking at the first Insurance Age Broker Breakfast this week in Leeds.

Underinsurance is not new at all. With our customers, they are accustomed to their surroundings and take it for granted, but they are often not aware of how much things cost.

Alexa Owen

“Underinsurance [in the HNW sector] is not new at all. It has always been prevalent in commercial and private clients. With our customers, they are accustomed to their surroundings and take it for granted, but they are often not aware of how much things cost,” explained Owen.

“So, it is an education piece, and risk management is part of that to make sure they appreciate what they have got and understand that, for example, it is not straightforward to rebuild a listed building for example.”

Guesswork

Owen continued: “During Covid-19, one of the issues we had was [we] weren’t going out to see properties, so it was very much guesswork, looking at what [customers] paid for a property, and then making an educated guess around [insurable value].

“But we have a claim going through for a listed building presently, and the sum insured is way lower than that it needed to be.

“So [there have been an issues caused by the fact] we have not been able to go out, not been able to see the surroundings [of a property] and go into houses and ask things like when did they have underfloor heating put in?

“When was the kitchen done and how much did that cost?

Earlier this month, Ecclesiastical warned about the explosion of home offices owned by HNW individuals and the fact they are a prime target for criminals.

Owen agreed that Aon had seen this trend too: “The man cave is now the working from the home office, and there are some policies that have a certain amount of cover for that.

“But do their employers know that they have confidential information at home? And what security have they got? Is it a padlock on the shed and digital alarms on the rest of the house?

“So we are increasingly talking to clients about what they are doing in [these home offices]. What have they got in there? Do they have clients come to visit them? Because these things change [the profile] of the risk completely.”

Spotting renovations 

Speaking about other home improvements that HNW individuals might have undertaken, and not told their broker or insurer about during lockdown, Owen commented: “It is only through having conversations with clients that they might casually drop in the fact that they spent a quarter of million doing this and that, and they did not tell us.

Now we are going out to meet clients we can spot things and note what is new, and make sure everything is accounted for [in a policy].

Alexa Owen

“Thankfully, now we are going out to meet clients we can spot things and note what is new, and make sure everything is accounted for [in a policy].

Moving onto the topic of which items had accrued the most value in recent years, Owen was quick to mention Rolexes.

“That is our biggest challenge at the moment – from a jewellery and watch point of view.

“Rolex prices increase year-on-year, and getting a replacement is a challenge in itself, so we have to encourage our audience to get these watches revalued more regularly,” she continued.

“So, historically, we might say get your [jewellery] schedule revalued every three to five years, and if they have a significant collection that comes at a price.

“But we are telling people to do it more often now because we are seeing significant pieces where the value is way off. We are seeing registers increase in value by 50% to 75% because someone has not had it revalued in three to four years.”

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