High-net-worth insurance is facing big challenges as the risks tied to wealthy lifestyles and assets grow faster than traditional insurance models can handle. Celia Santana, president and CEO of Personal Risk Management Solutions, LLC, and president-elect of the Private Risk Management Association, shared insights about how this market is shifting.
Wealthy clients often have huge and diverse portfolios that keep changing. They try new things, buy assets in risky areas, and adjust their ways of living. But insurance companies are struggling to keep up. Santana explained that the industry has become less profitable, partly due to rising catastrophe risks. Insurers are cutting back on the coverage they can offer to stay stable. Because of this, some wealthy people now face fewer options, higher costs, and even cases where no insurer is willing to cover their risks.
A recent survey by Santana’s association shows that 20 percent of high-net-worth individuals struggle to find insurance, and in riskier locations, that number rises to 30 percent. Many find themselves with high deductibles or limited coverage—far from what they want.
To tackle this, Santana’s firm focuses heavily on educating clients. They teach them how to present their cases better to insurers and understand the insurer’s viewpoint. For example, one client in Colorado had a multimillion-dollar home with an old, flammable roof. The insurer wanted the roof replaced, but after discussion, the client chose to sell the house and buy a new one with safer construction, ensuring better coverage.
Managing risks has become more demanding because these clients’ lifestyles constantly change. Santana receives questions on topics ranging from shipping luxury cars to Europe to insuring fine art and yachts. She stressed that trust and communication are key since insurance is complicated, and clients need to know when to reach out for help.
Cyber threats worry many in this group. According to Santana, 88 percent of them are concerned about cyber attacks, 28 percent have faced such events, and many worry about weather risks and lawsuits. Lawsuits are particularly tough, with bigger settlement amounts and less sympathy from juries. Santana noted that two-thirds of her clients either lack sufficient lawsuit coverage or only have minimal protection.
The cyber insurance field is still developing. Some insurers rely on outside experts to handle claims, while others are building their own teams. This area remains a work in progress.
Wealth advisors and family offices are playing a larger role as insurance becomes tougher to secure. Many wealthy individuals upgrade their advice in investments, legal matters, and accounting, but insurance often remains overlooked. Yet, with fewer options and growing risks, these clients rely more on their advisors for guidance. Santana cited a study showing less than 30 percent of successful people have ever had a professional insurance review, yet 80 percent want their financial or family advisors to manage this area for them.
Santana sees insurance brokers doing much of the detailed work, analyzing risks and finding the right coverage. As insurance grows harder to get and understand, the support of these professionals is becoming essential for the wealthy.
In a more unpredictable world, high-net-worth insurance is no longer straightforward. Clients, insurers, and advisors all have to adapt quickly to a fast-changing landscape filled with new risks and fewer guarantees.