Equal Chance of Being Over or Underinsured
- As in 2010, about 30 to 40 percent of agents reported that clients likely had too much insurance for the other structures on their property (detached garages, swimming pools, fences, and so forth), minor losses (by carrying a deductible that was unnecessarily low), and the personal property in their home.
- But almost the same percentage of agents said these areas were likely underinsured.
Better Protection Need Not Cost More
Because HNW families overlook many savings opportunities, most agents say they can typically rebalance their personal insurance program to achieve more effective protection without significantly increasing premiums.
- Fully 51 percent said they typically reduce premiums by 5 percent or more when they place new clients with a carrier that specializes in serving HNW families (HNW-market carrier) and then rebalance the insurance program.
- Another 12 percent of agents say they typically keep costs within plus or minus 5 percent.
The rebalancing involves a thorough review of the client’s assets and lifestyle to identify risks as well as an assessment of tolerance for those risks. The agent must also have access to a HNW-market carrier — a carrier that: 1) specializes in serving the needs of HNW families and 2) has the flexibility and breadth of coverages to make a customized approach possible.
New Index Tracks Overall Problem
As one way of quantifying and tracking the problem of overpaying and underinsuring, ACE has created an overpayingunderinsured index by adding together the three averages of coverages being underinsured, overinsured, and savings opportunities missed. The index climbed from 84.8 in 2010 to 93.5 in 2012.
An index of zero would suggest that no problem exists. An index of 30 would represent a reasonable amount of play between perfection and reality, allowing for 10 percent in each of the three averages. An index above 80 dramatizes the widespread problem of overpaying and underinsuring among HNW families who use massmarket carriers.