The market for insurance protection against kidnapping and wildfires is limited. But, when you throw in coverage against employee lawsuits, identity theft and other high-end risks, advisors may have something different to offer their affluent clients that make providing these specialty insurance products worthwhile. At least, that’s what a number of insurance companies are banking on.
“Risk has come out of the closet, especially for affluent individuals,” says Mark Schussel, spokesperson for the Chubb Group of Insurance Companies, which is offering wealthy individuals insurance that covers everything from identity theft and employee lawsuits to art and jewelry theft, even kidnapping. “It seems like there has been more of a focus on it since Sept. 11.”
One of the top risks that affluent clients are faced with is travel. Whether for business or pleasure, these individuals tend to travel more frequently to exotic, less-secure regions, says Schussel. Mexico, he adds, is a hot spot for adult abductions. The solution: kidnapping and ransom insurance.
Last year, Chubb launched its Signature Suite service that offers an array of complimentary risk-assessment services for high-net-worth individuals, including access to personal and travel security experts, in-depth background checks on domestic employees, software for maintenance of precious collections and other personal services.
The service includes a private interview with a specialist who assesses the client’s lifestyle and potential risks. Questions about the client’s homes, security systems, travel habits, use of the Internet and information about children to help the team determine what kind of precautions are necessary.
Chubb also offers packages including identity-theft insurance to many of the same clients, which, again, factors in their children’s activities. “[Children] are definitely very quick adapters to new technology, and they are not likely to necessarily practice safe measures,” Schussel says.
Identity theft was found to be a major concern among affluent households in a study last fall by Phoenix Marketing International, a consulting firm based out of Rhinebeck, N.Y. Of the 1,176 households surveyed, 48 percent said they are very concerned about identity theft. According to AIG’s Web site, which offers two identity-theft insurance products, one in every four households over the last five years and nearly 10 million individuals in the last year have fallen victim to identity theft.
AIG Private Client Group, which, like Chubb, offers extensive protection for high-net-worth clients, offers kidnapping and ransom insurance that includes prevention, training and advice to reduce the risk of a kidnapping scheme, as well as up to $50 million in coverage. Consultants are available 24/7 in the case of an actual kidnapping.
Andrea Bezark, an AIG spokesperson points out, “People with substantial wealth have insurance needs that cannot be adequately addressed in mass-market programs.” Indeed, AIG has developed an exclusive Wildfire Protection Unit for policyholders with homes prone to wildfire in California. The service includes on-site consultation to assess wildfire exposure levels, pretreatment at the onset of wildfire season and a mobile unit that is dispatched if a wildfire comes within three miles of your property.
Financial advisors who have discussed these types of insurance products and services with their clients have seen benefits in their relationship with them, says Michael Westheimer, president of Prime Advisors in San Antonio, Texas. It helps “add value,” he says.