What do pizzas and risk mitigation have in common?
In the private client space, agents need to serve as advisors
The private client space isn’t immune from the mounting challenges in the property and casualty market. With high net-worth insureds facing steeper premium hikes and potential non-renewals, the advisory role of an agent or broker is more critical than ever, one leader told Insurance Business.
Carriers withdrawing or limiting business from key states such as California and Florida have ramped up pressure for private-client brokers to find coverage at any cost.
“It’s had a huge effect on the private client space, because sometimes those carriers, even if it was a captive carrier that was more mass-market focused, might have gone up to a $5-million or $10-million home,” said Heather Posner (pictured), associate vice president, national product leader for private client at Burns & Wilcox.
“Obviously, it shrinks the markets and the number of carriers that those private client individuals or high value homes can be placed in.”
Making risks attractive – the pizza dinner analogy
“Being an advisor, rather than placing insurance, is probably the most important thing that agents need to know,” Posner said. “They need to think ahead, plan, and work with the insured as a risk manager.”
The Burns & Wilcox leader also stressed the importance of promoting proactive risk mitigation. Advising clients to replace older roofs, update electrical or plumbing systems, or conduct regular maintenance in a home could reap rewards come renewal season.
For Posner, helping clients become more attractive risks for carriers to have in portfolios is like serving pizza for dinner.
“Say you had a tough week, and your honey said, ‘Let me take care of dinner’ and they pick up a pizza. They eat couple of pieces before they even get home, then they throw it on the table with some paper plates,” she said.
“Now picture the same pizza, but they also picked up a nice bottle of wine, set the table, put on a tablecloth, candles, music, and flowers.
“That’s how I feel about insurance right now. We need to spend time making sure that the risk is an attractive one. The better you can present the risk, the better you’ll be able to place it.”
Pressure continues to build amid hard market
The shortage of capacity could also push some standard homeowners’ risks into the excess & surplus (E&S) market, which in turn puts pressure on E&S carriers, according to Posner.
“Carriers in the E&S markets have more options and still only so much capacity. There’s less availability for more people to get insurance than in the past,” she said.
Retail agents’ biggest concern in today’s hard market is getting enough coverage for their clients.
“It was never about ‘will we be able to get coverage?’ in the private client space. It might have been ‘how much will it cost?’ or ‘how broad will the coverage be?’” said Posner. “Additionally, they’re just worried about having the conversation [on premium increases] with the insured.”
She also warned of the potential domino effect of continuing insurance price increases on the real estate market.
“If you want to sell your home, but the person buying it can no longer get insurance, it’s going be much more difficult to sell that home,” she pointed out.
“It’s getting to the point where they may not be able to get insurance, so it’s going to affect other markets if we don’t work together to find a way to avoid these losses.”
Do you agree with Posner’s perspective on the private client insurance market? Tell us about your thoughts in the comments.
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