Underinsurance is now a pressing concern with 25% of high net worth (HNW) clients having reduced their coverage during the past year, a 10% increase on the number recorded in 2022, new Ecclesiastical research has revealed. One hundred (100) brokers who place business with HNW clients participated in the survey.
The survey showed that 23% of brokers believe all HNW clients are underinsured, which is 4% higher compared to the data in 2023. The survey also revealed that buildings (66%), jewellery (62%), contents (59%), and watches (53%) are the areas in which clients are most underinsured.
The broker respondents said that the top reasons why HNW clients are underinsured were: out-of-date valuations (76%), lack of awareness of the value of their property and possessions (74%), lack of awareness of the rise in rebuild and repair costs (71%), and not reviewing and keeping up to date sums insured (70%).
What is more alarming is that there has been an increase in HNW clients wanting to reduce their insurance costs. The number shows that 67% of those surveyed said more of their HNW clients are asking to reduce their premiums than ever before and only 52% reported more HNW clients are choosing to take greater policy excesses than ever before.
Nonetheless, based on the survey, the majority of brokers (97%) are taking proactive steps to reduce the risk of underinsurance with their HNW clients: including advising on the risks of underinsurance (41%) and referring clients to a trusted valuer or surveyor (35%). However, 70% of brokers say HNW clients need more support and guidance to understand the risks of underinsurance, up 1% from the previous year, noted the Ecclesiastical survey.
“Underinsurance has always been an issue in the high net worth sector; however, our research suggests this is an increasing problem,” said Ecclesiastical art & private client business director Sarah Willoughby (pictured). “More HNW clients are choosing to reduce their insurance cover and 29% of brokers believe all HNW clients are underinsured. It’s vital that brokers speak to their clients to ensure they keep valuations up to date. While high net-worth clients may have existing valuations, the prices and values of many precious items can increase rapidly, and valuations can quickly go out-of-date. Brokers play a vital role in ensuring their clients have the correct cover in place.”
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