What's Happening?
A recent report by HUB International reveals a significant decline in risk appetite among high-net-worth (HNW) individuals, with only 25% willing to assume more risk for premium savings, down from 39% in 2023. This shift is attributed to market volatility and coverage gaps, prompting many to raise deductibles and invest in resilience measures like wildfire-resistant materials and cyber monitoring. The report highlights challenges in securing adequate property insurance, especially in regions prone to natural disasters. However, some areas, such as Florida, have seen rate improvements due to recent reforms.
Why It's Important?
The decreased risk appetite among HNW individuals has broader implications for the insurance industry, particularly in how policies are structured
and priced. As these individuals opt for more conservative insurance decisions, insurers may need to adjust their offerings to maintain profitability. This trend also highlights the growing importance of resilience measures and strategic risk management in the face of climate change and other emerging risks. The ability of insurers to adapt to these changes will be crucial in retaining HNW clients and ensuring long-term stability in the market.
What's Next?
Looking ahead, the insurance industry may see further adjustments in policy structures and underwriting practices to align with the changing risk profiles of HNW individuals. Insurers might focus on incentivizing protective measures and refining their models to better manage risks. Additionally, brokers have an opportunity to negotiate favorable terms for clients by leveraging variations in insurer comfort levels across different regions. As the market continues to stabilize, insurers and brokers will need to collaborate closely to navigate the evolving landscape and meet the needs of HNW clients.
