The mid net worth market is likely to merge into core domestic household products says loss adjustor
Consolidation of the high net worth (HNW) market is on the cards as insurers realise that mid net worth coverage is “financially painful” said Mark Pierce, operations director at Guildford-based loss adjuster Criterion Adjusters.
Pierce told Insurance Times that he expects the boundaries for the HNW market to expand, while mid-net worth products are likely to be bumped into core domestic household offerings.
This will enable insurers to generate more HNW volume so that they can benefit from the associated higher premiums and attractive margins.
“You can’t increase the market at the top, the high net worth and ultra-high net worth. You’re not going to increase the spectrum in that direction, but you can if you lower the bar, you can increase volume by going lower down - essentially into what you might call mid net worth,” he explained.
“I think what some insurers have found is that expansion into mid net worth with the same type of wordings and coverage [as HNW] has become financially painful.
”We’re realising we can’t give this amount of cover for this amount of premium, so we’re seeing a number of companies exiting that space or changing the way that they designate the risks.
“There will be a consolidation in high net worth and it will go back to how it was probably 10 years ago in terms of where the insurers want to set their boundaries as to what qualifies as a high net worth risk.
“[Insurers have] seen that this is a good market to get into; [it] has higher premium levels, makes good margins.”
Coronavirus impacts
Pierce said that there have been fewer HNW claims as a result of the ongoing Covid-19 pandemic – as policyholders spend the majority of their time at home, escape of water issues and the like are picked up and dealt with quickly.
Burglary claims are also reduced as “thieves generally don’t like going into properties that are occupied. Their preference is unoccupied”.
Operationally, Pierce described the coronavirus outbreak as “a bit of a wakeup call”, however he added that Criterion has reacted well to the sudden need to work from home.
Owner Charles Taylor invested in laptops across the business a few years ago, so “for us to decant from the office and move all of our support team, nearly 20 people, to their home locations actually was relatively straightforward”.
He added: “We have no plans to return to the office, probably until September, and even that hasn’t been decided.”
Pierce continued that most loss adjusters worked from home prior to the Covid-19 pandemic, so their working patterns have not changed dramatically.
For support teams however, it has been a beneficial learning curve to facilitate home working – Pierce hopes this will continue to improve employee wellbeing.
He said: “Adjusters are generally home workers. So, their life has not changed too much other than they don’t get to go out on claims anymore, they’re having to do them from a desk with a camera.
“The support team structure has definitely changed and I think I can see a way forward potentially where there’s a change in working hours.
”There is a change in a working week. There might be more working at home time, less time in the office. Trying to find ways around the commute. The commute can be really painful.
“Being more flexible would have been a worry before Covid.
”If you’d have asked me ‘are you happy to let all of your support team work from home’, I’d have gone yeah, I trust them but I’m not sure it will work.
”Actually, it’s worked fantastically well and we’ve got to really grab that and take all the good things out of it that give our staff flexibility, an improved working week, a better life-home balance. And I think it’s really opened our eyes to doing things like that.”
Personal touch
The main change for loss adjusters as a result of the pandemic has been a switch from in-person visits to virtual visits, typically conducted via a smartphone camera.
Although this change successfully enables loss adjusters to continue performing their job roles, Pierce said it also strips the HNW market of one of its key differentiating factors – a personal touch.
“Adjusters in general have had to adapt quickly to the environment that we’ve been in,” he said.
“The reality of it is that in our high net worth arena, service and that personal touch is a really important part of it. You take that away and one of the big differentiators that we’ve got becomes less powerful.
“In the cold light of day, we are social animals. We all like that interaction and to my mind, there will be no substitute for that face-to-face visit, certainly for things like fraud, body language, the way people respond, the way a property is set up; all those sorts of things [are] very, very difficult to do through a lens of their camera.
“My personal view is that at the non-technical, lower value, higher volume end, I can see more stuff being done through the so-called virtual visits, with less physical visits being required.
”But I think in high net worth, higher value claims, more complex claims, really need that human touch. I can’t see that changing, I really can’t. But at the lower end, I think there will be some changes that I think are very positive.”
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