As we reflect on the intricate landscape of risk management for successful individuals and families, a few key trends emerged in 2023 that are reshaping protection for luxury asset portfolios. Let's explore the trends that have redefined the insurance market this year.
Climate-resiliency. The surge in climate-related losses has prompted a paradigm shift in how to protect homes and the cherished belongings inside. In 2023, we've witnessed weather conditions that have prompted carriers to pull out of certain high-exposure markets. Yet, a few select insurers are starting to develop options that cover climate-specific exposures due to wildfires, hurricanes, and winter storms. The good news is that this trend encourages loss prevention rewards for proactively mitigating your risks by installing water sensors or optimizing landscaping. The result is doubly beneficial as you may be able to reduce the severity of a claim and receive premium offset credits for these risk reduction measures.
Supply chain challenges. Between the increasing cost of materials and a limited pool of skilled labor, supply-related expenses have surged. This year’s trends include much longer repair times, which become especially impactful for homeowner claims as time spent in rental accommodations contributes significantly to the total claim payout. When it comes to cars, supply chain issues can be so severe that appraisers are finding it easier to declare a total loss instead of dealing with a lengthy restoration timeline. Make sure to reassess your asset’s insurance-to-value – including luxury material replacement - to keep pace with these changes.
Kidnap and ransom. In an era where personal security concerns are on the rise, kidnap and ransom coverage evolved significantly in 2023 to address the dynamic nature of security threats. We are seeing a wider variety of sophisticated solutions, encompassing not only financial protection but also crisis management services. This trend takes a holistic view of personal security by including negotiation teams, secure transportation options, and even psychological support for victims and their families. Families have more choices than ever before when it comes to managing personal risk.
Digital asset protection. With the proliferation of digital assets - ranging from cryptocurrency to digital intellectual property – we’re starting to see solutions that protect digital properties from theft, hacking, and other cyber threats. While not yet widely available, this 2023 trend underscores growing recognition of securing not only physical but also virtual wealth in an increasingly digitized world.
Cybersecurity. On a related note, successful individuals and family offices are becoming increasingly reliant on technology for managing their assets, personal information, and even household systems. From hacking to identity theft, the trend itself is nothing new. However, in 2023 we saw more carriers respond by offering highly focused cybersecurity policies catering to the unique vulnerabilities of those who live affluent lifestyles. These protection plans span online privacy as well as cybersecurity for smart homes and their high-tech security systems.
Art and collectibles. Valuable art, antique, and high-end collectibles are on the rise. We can expect this trend to influence a wider range of policies that not only provide traditional coverage for damage or loss, but also account for market value fluctuation. Furthermore, insurers are working even more closely with industry experts regarding accurate valuation and restoration in the event of damage. Pre-purchase assessments are also trending upward as fraud becomes ubiquitous across most categories, particularly in designer couture and spirits.
Litigation. It’s not only the escalating volume of lawsuits that’s causing challenges: settlement amounts have skyrocketed. Combine those factors with soaring attorney fees and legal system abuse, and you face a perfect storm of financial consternation. As a result, excess liability policies are becoming increasingly popular, especially with high-profile individuals who are disproportionately likely to be hit with a lawsuit. This trend sees excess liability being written with higher coverage limits and additional protection for slander, libel, and legal defense costs.
Lockton takes pride in monitoring both trends and solutions to strategically apply enhanced coverage where it makes the most sense. By annually re-evaluating your portfolio, we can keep you apprised of cutting-edge options. This is how we help you stay one step ahead with innovative risk management programs that align seamlessly with your luxury lifestyle.
In order to look forward, it pays to reflect on the past year’s risk management developments. By capitalizing on trends – and the impact they have on the sophistication and variety of solutions – Lockton can help you better protect what you’ve spent a lifetime to achieve.
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The information provided in this article is for educational purposes only and should not be considered professional advice. Please consult with a Lockton representative for information regarding specific insurance products and services.
