The high-net worth personal lines segment was a high priority for the insurance industry in 2013 as numerous insurers and specialists beefed up their product offerings and hired new staff to focus on this diverse risk. Perhaps some of the biggest news that came out of this segment last year, however, was the launch of a new high-net worth personal lines insurer, Crestbrook, and the first-ever Council for Insuring Private Clients (CIPC) conference put on by MarketScout that focused entirely on insuring high-net worth individuals.

Jerry Hourihan, executive vice president of AIG Personal Lines and founding board member of the CIPC, says the industry is waking up to the “enormous growth potential” in this space, as most affluent individuals are under or inadequately insured.

“Many clients – almost half or more – are not with proper insurance programs, with good risk managers in the form of high-net worth agencies,” he said at the CIPC conference last April. “I think our business, if well-managed, can be very profitable and very sustainable. It’s a business that independent agents and brokers – if they invest in it properly – can grow for a long period of time.”

Hourihan said the segment has moved away from the personal lines space and into the property & casualty arena because most affluent individuals’ needs are not met by traditional personal insurance carriers that typically just sell home and auto coverages.

“We’ve got clients who have working farms, who have family offices and professional liability exposures, who have family businesses with property casualty exposures. We have clients who sit on boards of directors, who have aircrafts and other traditionally commercial exposures,” he said. “In order to properly serve those customers, we need to have expertise and command of all those risk management products and services.”

Affluent clients also expect more from their insurers and are willing to pay for additional coverage and services if it means protecting their assets. They also want to “invest in risk mitigation on their properties,” Crestbrook President Jim Pedersen told Insurance Journal last fall.

“It’s really demonstrating to them that, as they do things to protect and manage their risk, you can provide both a policy and a pricing structure to represent that,” he said.

Crestbrook, a subsidiary of Nationwide Mutual Insurance, began writing coverage in Illinois at the end of October and plans to open in 15 more states in 2014 and an additional 15 in 2015.

Other high-net worth market news in 2013 included:

• In March, ACE Private Risks Services, the high-net worth business unit of The ACE Group, appointed Robert Courtemanche as chairman and Mary Boyd as division president. The company also released a study in March that found most wealthy individuals overpay for coverage that does not cover all of their risks.
• Policyholder-owned property/casualty insurer, Privilege Underwriters Reciprocal Exchange (PURE), began offering automobile insurance to its membership in Massachusetts in May.  Policies include PURE Member Advocates to offer concierge-level services as well as the ability to insure various types of vehicles on a single policy.
• Ironshore’s Personal Lines unit added an excess flood insurance endorsement for its high-net worth homeowner clients in December. The coverage provides protection above the $250,000 property damage limit offered through the National Flood Insurance Program (NFIP).
• Also in December, Fireman’s Fund introduced “death of an artist” coverage for high value collections. The new settlement provisions pay up to 200 percent of the scheduled value within 12 months of the artist’s passing. The coverage also includes a collector car endorsement for collector cars on display.