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Adjusting Insurance to Fit Your Needs

January 8, 2011

The New York Times - 02/09/11
By Lynnley Browning

When a 1930 Duesenberg Dual Cowl Phaeton came up for bidding at a recent vintage-car auction in Scottsdale, Ariz., Jim Fiske, an insurance executive, surveyed the clutch of well-heeled bidders.

But Mr. Fiske, a vice president for Chubb & Son, was not thinking of how much the glossy emerald green car, with LeBaron coachwork and an original chassis, engine and bodywork, would fetch — anywhere from $1.2 million to $1.6 million (It eventually sold for about $1.5 million).

Instead, he was thinking about what he calls Scary 101 — the changing risks facing wealthy individuals, and the special kinds of insurance that cover them.

“The real issue for the high-net-worth and upper-middle-class consumer is that they have a lot more risk because of the lifestyle they lead,” said Mr. Fiske, who is also the United States marketing manager for Chubb Personal Insurance, a unit catering to the affluent.

Amid the financial downturn and growing risk of lawsuits against the wealthy, insurers that specialize in coverage for the affluent are taking a broader view of the potential pitfalls those consumers face.

“A big trend we see is more risk awareness,” said Jonathan Crystal, executive vice president of Frank Crystal & Company, an insurance broker for the wealthy. That means not just having the right amount of insurance for, say, the rare 1953 Fiat 8V Supersonic that went for more than $1.7 million at the Arizona auction last month, but also for personal liability that could arise from kidnapping, identity theft, potentially libelous postings on Facebook, even the toddler injured on a playground overseen by a local group where the client is on the board.

Definitions of high net worth vary, but one commonly used measure is anyone with investable assets of at least $1 million, not including a primary residence. But Main Street insurers that sell basic home and car coverage typically do not offer policies with enough coverage for that mansion in Greenwich or prized art collection acquired at Sotheby’s.

So the niche group of insurers that do, including Chubb, ACE, Chartis, Fireman’s Fund and Pure, is using the economic downturn as a talking point to tell would-be and current clients that their world has changed. Affluent people may pay hundreds of thousands of dollars a year in premiums for insurance of all stripes, but they are sometimes buying more insurance than they need, insurance experts say. Others, by contrast, are underinsured.

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