What if I told you there was a way to craft an insurance portfolio that has the potential to enhance coverages and perhaps even reduce premiums? A way to get more value out of your premium dollars in terms of programs and higher-level advisory services? Whether you are a member of a multi-generational family office or simply have relatives with similar needs, you can leverage a collective approach into a rewarding situation for all when purchasing insurance.
Consider this scenario. You are the matriarch or patriarch of your family and you purchase insurance from an established carrier. Throughout the years, your children have grown and started families of their own. They have purchased homes, vehicles and liability insurance from the same insurance carrier (or different carriers within the same brokerage firm). There may be five families here that pay $15,000 each in insurance premiums per year. From an underwriting perspective, the insurance company sees five individual insurance buyers with a $15,000 premium each. Nothing stands out here. These are typical clients without distinctive traits.
Does the insurance carrier know who is related to the other? Likely not, and you may be missing out on several advantages if this is the case. Presenting collectively as one larger portfolio and a combined premium of $75,000 makes a bigger impact. The family’s exposures now become more attractive to the underwriters. They want to work harder to win and keep your business. They apply more consideration when posed with a unique exposure. This also likely opens the door for additional opportunities that each family would not otherwise be eligible for.
At these higher levels of paid premium, clients receive certain additional benefits. Some of those may include elite level underwriting teams and top-tier claims handling. Most high-net-worth insurance carriers have specialized teams in place for the more sophisticated needs of larger families. They understand that vehicles and homes may be more valuable, trusts & LLCs may have a financial interest, and much higher levels of protection are needed. There may also be concierge or whiteglove services available, including consultative services for security, travel, hiring of domestic employees, and even additional support for family members who have exposures in coastal or wildfire-prone areas.
Your broker may now be armed with additional leverage to negotiate your insurance premiums. While it is rare to see movement in personal insurance rates once the quoting process begins, thoughtful conversations by your broker can have a powerful impact. Should a client be unhappy with an increase in premium at renewal, the insurance carrier is almost forced to sharpen their pencil, as they could be at risk of losing the entire family if the coverage goes to market. Larger families are often an insurance company’s target consumer. They want to do their due diligence to keep them happy.
All in all, holistic reviews of your family’s personal insurance may be a good alternative to traditional insurance buying practices. Streamlining coverage while aligning effective/expiration dates, billing and annual insurance reviews can help eliminate many of the frustrations often associated with insurance. Consolidation with a single insurance carrier and/or broker allows for a single set of eyes to oversee exposures to ensure no gaps or holes. This is particularly important when family members have a shared financial interest. While each family would be individually underwritten, sometimes the out-of-the-box exposures are more carefully considered due to the relationship with the other family members. Group buying power is an advantageous perspective that may just modernize your family’s financial decisions.
This article also appeared on bizjournals.com.
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