Expert Identifies High-Net-Worth Risk Trends
Diane Delaney of PRMA has shared insights on the evolving risks facing high-net-worth (HNW) individuals. According to Delaney, HNW clients are increasingly concerned with emerging threats such as cyber attacks, climate-related events, and complex liability issues. This shift requires insurers and brokers to provide deep consultative expertise and tailored coverage solutions.
- The Private Risk Management Association (PRMA), a non-profit organization, provides education and resources for professionals serving high-net-worth (HNW) individuals. Diane Delaney, the executive director of PRMA since 2022, previously spent nearly 18 years at AIG, where she led the high-net-worth sales school. - Cybercrime is a significant threat, with worldwide costs projected to reach an estimated $10.5 trillion annually by 2025. A report from Campden Wealth revealed that almost 30% of ultra-high-net-worth families have been targeted by cyberattacks. The global average cost of a data breach in 2024 was $4.88 million. - Insurers are offering specialized cyber insurance for HNW individuals that covers risks like cyber extortion, legal expenses, and financial loss from online fraud. These policies can also cover the costs associated with reputation management in the event of an online data breach. - Climate change is driving up the frequency and severity of natural disasters, leading to increased insurance claims. In 2024, the economic cost of weather and climate events was estimated at $402 billion, with insurers covering about $151 billion of that total. - In response to escalating climate-related risks, some insurers are offering innovative solutions like parametric insurance, which provides a pre-defined payout based on a specific trigger, such as wind speed or rainfall levels, rather than a traditional damage assessment. - Liability is a major concern for HNW individuals, who are often seen as targets for lawsuits. Common sources of liability claims include auto accidents, injuries to guests or domestic employees, and accusations of libel or slander. - Judgments in liability cases against the wealthy have been increasing, with awards sometimes exceeding $10 million. To address this, insurance professionals often recommend high-limit excess liability or "umbrella" policies that provide coverage above the limits of standard home and auto insurance. - In some high-risk areas, the rising cost of claims has led some insurance carriers to reduce their exposure, making it more difficult for HNW individuals to obtain homeowners insurance. This has led to a rise in self-insurance or clients taking on higher deductibles.
