Accenture research on the high-net-worth individual (HNWI) market segment shows that this is a very diverse market. Generally, this segment:
- Owns high-value primary residences on the West or East coast.
- Maintains liquid assets of $5 million or more.
- Requires multiple, complex policies to limit liability and protect collectibles, luxury vehicles and second homes.
- Prefers to purchase policies through non-specialist brokers.
Increasing risks and risk exposures
Despite the variety in this segment, there’s one thing that HNWI have in common: they’re underinsured. This is increasingly true as asset values and personal liability risks increase. In fact, industry analysts estimate that seven of ten luxury homes are underinsured. Furthermore, many HNWI don’t adjust their coverage limits in accordance with the value of the assets or risks.
Despite the increasing risk exposure of HNWI, there are only a few dominant insurers in this market. The top three players in the sector make up less than 15 percent of the premiums in the market. And while a handful of carriers specialize in the needs of HNWI, 75 percent of this market segment is served by independent agents and brokers. The combination of low market penetration and growing demand points to significant opportunities for insurers.
Developing a strategy to attract high-net-worth individuals
Within the HNWI segment, there’s a spectrum of insurance buying behaviors, so insurers must tailor their market strategy accordingly. Accenture recommends a three-phase strategy for insurers to pursue and penetrate the HNWI market:
- Phase 1. Acquire current HNWI customers from other insurers by offering a differentiated value proposition.
- Phase 2. Attract prospective HNWI customers who are underinsured and not yet loyal to a high-net-worth carrier.
- Phase 3. Target the next generation of HNWI customers before they become targets for existing high-net-worth carriers.
Growing the HNWI business
In order to grow business among the HNWI segment, insurers must:
- Enable flexible distribution channels.
- Engage mobility and other technology solutions.
- Maximize customer potential through analytics.
- Offer innovative pricing options.
To learn more, download A Path to Riches: Targeting High-Net-Worth-Individuals to Achieve High Performance Growth in Insurance (pdf; opens in a new window).