In-depth - high net worth: The tech transformation?

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HNW should be ripe for a technological makeover, but the market may not be ready yet. Martin Friel investigates

As we have seen, the HNW market is in a relative state of flux. A normally steady and reliable area is experiencing capacity reduction, rate increases and an evolving client profile.

All of which could, in theory, open the door for technology and those wielding it to come in and disrupt this most traditional of markets.

Although there are direct offerings in this space, most notably with Direct Line and Hiscox, there does not appear to be any risk of HNW clients making a dash for online insurance. 

Personal service
They do, it would appear, still value the reassurance of the personal, bespoke approach to their risks provided by a broker.

Even at the lower mid net worth (MNW) end of this market, where it may be expected that an online offering could make the most impact, an expectation of hands-on service still exists, as John Lumley, chairman and MD of Lumley Insurance, has found.

“There is room for more automation to make the market more efficient but whether clients will move away from personal service at this end of the spectrum remains to be seen,” he says. 

“We thought that the MNW market would be less sticky than HNW but we found that not to be the case. The end of the spectrum you would expect to be under threat from direct carriers has the same retention as HNW.”

Technology is already having an impact in the background though, in the interactions between insurers and brokers. One example is new entrant to the market, Archipelago Risk Services, which has brought a digital approach to its proposition to overcome what its co-founder and MD, Richard Coleman, says is poor carrier service to brokers.

“One broker I spoke to had spent two weeks waiting to get a price for adding a 17-year-old to a car policy,” he says. 

He believes that the market is broken, with customers not getting the experience they should in a market that prides itself on service.

“It is not just helping brokers get better product. We collect the money from the client by direct debit, do monthly instalments, all documents are generated digitally, and all compliance paperwork is done for brokers too.

But technology has, of course, much broader applications than providing convenient online service. In fact, technology can actually help clients and brokers navigate a tricky hardening market and give brokers an opportunity to show their broader value beyond risk placement.

“Risk management is a real key message for brokers,” says Ade Ewington, underwriting and markets director at Home & Legacy.

“Of course, risk prevention is key in itself but, as the market hardens, customers who have got a track record of claims will find it more difficult to find competitive premiums or insurance at all.”

And advances in technology can assist with that preventative approach.

“Escape of water is the highest peril the HNW market suffers from and that does have an impact on whether you [as an insurer] are going to be profitable,” says Sarah Willoughby, art and private client development director at Ecclesiastical.

“We are trialling a leak detection device with our customers and brokers to try to prevent the destruction and loss of an escape of water claim.”

There is room for more automation to make the market more efficient but whether clients will move away from personal service at this end of the spectrum remains to be seen
John Lumley

A place for tech
This is just one area where the insurer is looking at the greater role technology can play in this market. Ecclesiastical has also been trialling drones as part of the surveying and risk management process and has even appointed a head of technology to look at other ways they can use the latest tech to influence this market.

The fact that an insurer as traditional as Ecclesiastical is investing so heavily in technology is evidence that this market is undergoing a slow but inevitable revolution.

The use of technology is creeping into the way brokers and insurers interact and it is helping insurers evaluate and manage the risks these high value assets carry. But for now, it would appear that brokers operating in this market are safe from any direct, digital onslaught. 

For the wealthiest in our society, service and security still seem to be winning out over speed and convenience.

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