High net worth families in U.S. underinsured: ACE survey

High net worth (HNW) families in the United States often do not carry enough liability coverage in a variety of forms, leaving their wealth unnecessarily exposed, notes a new ACE survey of independent insurance agents and brokers.

“Most wealthy individuals and families who insure their assets with carriers geared primarily for the average U.S. household overpay for coverage that leaves their wealth unnecessarily exposed to the risk of severe financial loss,” ACE Group notes a statement issued earlier this week.

Survey results are included in Wealth at Risk: How High Net Worth Families Overpay to Be Underinsured, a new whitepaper from ACE Private Risk Services, ACE Group’s high-net-worth personal insurance business. More than 600 independent insurance agents and brokers were surveyed about their new HNW clients previously insured by a mass-market carrier. The study includes comparisons to 2010, and shows the problem of overpaying and underinsuring has worsened.

ACE reports that HNW families’ homes and collections of jewellery, art, wine and other precious items are not adequately protected, and these families also overlook many savings opportunities, such as higher deductibles and package discounts. “By taking advantage of these savings opportunities and strengthening coverage against severe loss, HNW families can often achieve more effective protection without a significant increase in premiums,” the statement adds.

Some survey results include the following:

• 81% of agents report that families have homeowners and auto insurance deductibles that are too low;
• 62% say families do not take full advantage of discounts earned by placing multiple policies with one carrier; and
• half of surveyed agents believe families overlook credits available for safety systems such as burglar alarms, water leak detection and power back-up systems.

The survey also indicates some commonly underinsured risks, including that 92% of agents report inadequate liability coverage; 86% note ineffective coverage of jewellery, art, wine and other valuable collections; and 83% believe families have insufficient coverage of the main home and/or vacation home.

“Financially successful families and individuals often fail to adjust their personal insurance programs as they build wealth,” Robert Courtemanche, division president of ACE Private Risk Services, notes in the statement. “Unless they have a severe loss, they never realize their agent and carrier no longer have the expertise, insurance coverages and services to fully meet their needs. But by then, it’s too late,” Courtemanche adds.