Brokers under increased pressure for HNW market share

Brokers are coming under increasing pressure from the competition for market share in the high net worth (HNW) space, an independent research firm has revealed.

Defaqto’s High Net Worth Home Insurance Guide, which was published today, stated that while the market has been dominated by the intermediary sector, a clear challenge had emerged from banks and direct providers capitalising on brand recognition and customer knowledge in recent years.

But the report explained that intermediaries will carrying on thriving in the sector if they continue to focus on providing clients with top personal and professional advice.

The study reported significant growth in the number of providers and products in the market, underlining the opportunities for intermediaries and providers alike.

The HNW market has reported a 41% increase in providers and a 28% rise in products between 2008 and 2012, said Defaqto.

“To meet this growing challenge, it is important for intermediaries to emphasise their unique selling points and become more aware of their competitors’ offering – in particular, they should focus on the bespoke needs of HNW individuals to appropriately position features and benefits that meet the unique requirements of their clients,” the report said.

The report found that standard basis of cover for buildings and contents is now on an ‘all risk’ basis for 100% of policies, compared to 83% in 2008.

Meanwhile for standard basis of cover for valuables, 97% of policies now offer cover on an ‘all risks – worldwide’ basis , versus 71% in 2008.

More than half (56%) of policies now offer alternative accommodation for up to three years, compared to 29% in 2008, the report revealed.

Where cover for money within the home was concerned, more than one quarter (28%) of this year’s policies provide between £7,500 and £15,000 of cover for money kept in a safe, compared to just 8% in 2008.

Defaqto’s insight analyst for general insurance Mike Powell said: “The dominance of intermediaries in the high net worth home insurance market is clearly being tested as more banks and direct providers enter the frame.

“In some respects, however, the entrance of banks and direct providers can be seen as good news for the intermediary sector as more competition provides opportunities for intermediaries to raise their profile.”