Dealing with high net worth clients at a time when down-scaling has become a reality

If you are involved in any segment of the financial services industry, the term “high net worth client” is not unknown to you. In fact, it is somewhat self-explanatory – high net worth clients are clients who hold financial assets and wealth exceeding a certain amount.

Individuals who fall within this valuable client segment tend to have a much wider range of concerns than your regular client since their taxes are higher, their investment portfolios are larger, and many have multiple properties or other unique assets.

Identifying high net worth clients assists companies to categorise them separately to provide exclusive services, cater for their special needs and offer various tailor-made features and benefits.

Most insurance products often set a client profile criterion for an individual to qualify as a high net worth client, such as meeting a minimum householders and houseowners sum insured for the policy and the insured being no younger than a certain age.

They view the world through different eyes and their unique position requires an individual approach. It is essential to think about how to cater properly for their needs, which often differ from other clients’.

Identifying high net worth clients helps companies to categorise them separately to provide exclusive services, cater for their special needs and offer a variety of tailor-made features and benefits.

High net worth insurance policies are designed to protect people with higher valued homes and higher valued possessions such as jewellery, fine arts, antiques, collectibles, and silverware. A standard insurance product would not necessarily be adequate for a high net worth individual to safeguard their assets.

An insurance product for a high net worth individual will therefore offer higher cover limits on an assets-based wording, which provides cover for all items removed from the insured address, as opposed to perils-based wording. Extended basic cover is a very common feature found in a high net worth insurance product, providing cover for loss or damage by any event not specifically excluded or limited under the policy. This offers the likes of entrepreneurs, business leaders and travelers the peace of mind knowing that they are covered, irrespective of whether they have specified items on their policy or not.

Clients of this nature expect a higher level of service, especially at claims stage, and often insurance products designed for these clients offer a dedicated home and motor assist line for streamlined processing of claims.

Right now, however, in the grip of the COVID-19 pandemic, a financial safety net has never been more important as individuals and companies come under unprecedented financial pressure.

The weakening economy has serious consequences for individuals reconsidering their budgets, which often leaves clients looking for ways to cut back on unnecessary expenditure. Unfortunately, cancelling or reducing insurance covers is seemingly the easiest and often the first decision made by clients – even high net worth clients.

Clients are re-assessing their insurance portfolios and are, in most cases, dialing their insurance cover back. We’ve seen examples such as requests for reducing coverage on older vehicles, adjusting retail values on motor vehicles, downgrading from comprehensive cover to third-party, fire and theft cover, or even only third-party cover. We have also seen a rise in requests for higher excesses and reduced premiums and cancellations on parts of their insurance portfolios, such as home contents.

Risk are not scheduled, however, and cutting back insurance could be more financially wounding in the long run.

Remember, insurance is not a luxury purchase and should not be viewed an unnecessary expenditure. Rather, it should be viewed as a financial tool to assist the insured in the protection of their assets, providing a level of certainty – especially in today’s economically challenging times.

Jessica Dos Santos Morelli

CIB Corporate Account Manager