In recent years there has been a sharp increase in the number of millionaire households across the country. Taking into account property and private pensions, a report by the Office for National Statistics released earlier this year revealed that Great Britain is home to 3.6 million millionaire households.
The study showed that this figure had risen by an incredible 29 per cent in just two years. It also indicated that, on average, British households have a net wealth of £259,000, again a significant rise (15 per cent) compared to the previous two-year period.
High-net-worth individuals now make up a much greater percentage of the UK population. So much so that only China, Japan and the US have a greater concentration of millionaires than the UK.
These newly wealthy households represent a prime opportunity for the insurance industry.
Approximately 2.7 million households who should have premium GI policies are currently choosing standard cover. Many of these customers, who may need specialist home insurance products to cover collections of fine wine, artwork or even classic cars, are under-protected.
This may be because they are unaware that their existing cover doesn’t extend to their more valuable items or collections, or simply because they don’t know that bespoke insurance policies for mid-high net worth individuals exist.
This is where brokers come in. The importance of contacting back-books to ensure clients have the appropriate products in place has long been documented, and this sector is no exception.
As a broker, encouraging annual reviews with clients as best practice is key
For clients who don’t fit in to the mass market of insurance cover, tailored advice is even more paramount, especially for those whose circumstances have recently changed, pushing them into this elite bracket of general insurance.
For some households, the inheritance or purchase of additional big-ticket items will inadvertently cause them to be under-protected. Key points, such as Christmas or birthdays, can often be triggers for this.
Those who suddenly find themselves with expensive pieces of technology, valuable jewellery, or other premium presents, will likely be more concerned with enjoying their new gifts, and not with reviewing whether or not they are appropriately insured. As household possessions can vary wildly from year to year, the needs of high-net worth individuals are fast changing.
Significant home improvements, such as adding an extension or loft conversion, could also impact insurance policies – something not all customers will be aware of. As a broker, encouraging annual reviews with clients as best practice is key when it comes to ensuring they don’t fall into these unforeseen insurance ‘traps’.
Policies which may need more detailed underwriting or carry unique terms will no doubt require more specialist support, too – but this doesn’t have to mean more hassle or complexity for the customer.
There are providers out there who specialise in catering to these requests, offering clients bespoke products and a more attentive service than an ‘off the shelf’ policy would traditionally provide.
Here, networks need to play their part. Broker education is key to ensuring best customer outcomes. If the brokers themselves don’t have access to the tools and information they need to inform their clients, then the insurance gap in this sector will only grow.
As an industry, it’s our role to keep up with changing demographics and customer demands, and to educate and empower brokers to meet these opportunities head on. Providing protection and peace of mind to all end customers lies at the heart of the service we deliver.
Giving our brokers the tools that they need to carry out their jobs is one of the key ways we can all work together to best achieve this.
There are numerous events put on throughout the year which will enable advisers to network and learn what is working for specific audiences – be it first-time buyers, landlords or the high net worth.
As an industry, it is our role to keep up with changing demographics and customer demands, and to educate and empower brokers to meet these opportunities head on.
Toni Smith is chief operating officer at PRIMIS