As summer approaches, our experts look at the key trends affecting the High-Net-Worth Insurance market.
Below, find the latest updates on household, home renovation, cyber, and fine art insurance:
High Net Worth Household Insurance
Various factors are driving changes in the Household Insurance market. Rebuilding costs continue to fall from the highs of recent years and homeowners are seeing a welcome decline in the rebuild sum insured.
Water leakage and smoke detection remain key concerns for insurers. Many are now requiring homeowners to install specific water leak detection systems for properties, especially those with basements. Without these in place, some insurers may refuse to offer terms.
Likewise, many insurers now require interlinked smoke detection systems – a step up from common smoke detectors. These are easy to install, either through a professional alarm installer or using devices purchased online.
In the case of valuables, the sums insured of gold continues to rise. Up to date valuations for jewellery and watches are now being requested every three years or less for high value items, as opposed to the typical five years. Consistent with this trend, insurers are now requesting specified higher-rated safes to be installed, dependent on the clients' jewellery and watches sums insured. Owners are urged to use only reputable safe companies.
For more information, contact Chyna Kenward (opens a new window).
Home Renovation Insurance
There is currently plenty of capacity in the market for Works Insurance, with reasonably broad insurer appetite. Rates remain relatively steady compared with last year, albeit with some insurers pushing through inflationary cost.
Escape of water is currently the primary concern among insurers. Claims are not only running at high severity, but also at high frequency. As a result, underwriters are applying ever-greater scrutiny to home renovations. Risk management reports have become a requirement for larger projects, including both fire risk management reports and water management plans. In both cases, these should be familiar to contractors and/or project managers. A failure here would constitute a significant red flag.
More than 80% of the projects we have seen this year have run over time on initial expected practical completion, while more than 70% have gone over budget.
For more information, contact Charlie Hannington (opens a new window).
Fine Art Insurance
The wildfires in Southern California in January 2025 have not had a major bearing on rates for Fine Art and Valuables Insurance, despite a tentative industry-wide loss figure of $40bn. Despite this, insurers are placing greater emphasis on pre-risk surveys if buyers are to achieve the best terms.
More broadly, the prevalence of natural catastrophes is increasing insurers’ sensitivity to climate-related risks, including earthquakes and floods. Insurers will most likely invest in more modelling systems and take preventative measures to minimise future losses.
In the London market, capacity remains strong, with an extra £2bn soon to come online through new MGAs. Terror rates remain unchanged, and there has been a welcome absence of any recent thefts or damage losses – although damage during transportation is still the main cause of losses.
For insurers, the biggest exposure is accumulation, with large value collections now held in designated storage facilities (most notably, Geneva Freeport). Insurers are considering ways to diversify the spread of their holdings, to protect against a significant large loss.
For more information, contact Charles Hamilton Stubber (opens a new window).
Cyber Insurance
Competition within the Cyber Insurance market continues to drive favourable terms for corporate buyers. In the past quarter, the average premiums have decreased 12% year over year, based on Lockton portfolio data. While insurers are hesitant to lower premiums for complex clients with loss histories, significant reductions (in excess of 15%) can be achieved for those with robust security controls and a clean claims record. Notably, insurers are increasingly offering lower retention options as an alternative to direct premium reductions.
To capitalise on these cost savings, many clients are choosing to acquire additional cyber insurance capacity, or to expand their coverage via extensions. This includes cover for property damage losses following a cyber-attack, which is typically excluded from the property insurance market.
This is a positive response to an increasing cybersecurity threat. Threat actors target all sizes: from the largest, most innovative, mobility and technology leaders, to those in research and development and on the path to commercialisation. Regulatory pressure, digitalisation, and the rising cost of cyber-attacks are all driving demand for cover.
For more information, contact Hannah Lipczynski (opens a new window).
Visit our Private Clients (opens a new window) page for further insights.
The above contents were originally delivered at a bitesize breakfast event, hosted by Lockton’s Private Clients team in May 2024. The breakfast brought together professionals from across the Private Clients space for food, coffee, and industry insights.
