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Last year saw a significant rise in recorded crime in England and Wales. The government’s Crime Survey for England and Wales (CSEW) for the year ending June 2017 revealed a 13% increase in recorded crime on the previous year, pushing the total number of offences over five million for the first time. This constitutes the largest annual rise in a decade and should prompt specialist high-net-worth (HNW) insurers and brokers to review just what protection they are offering their clients.

In addition to the CSEW data, the Office for National Statistics reported that crime categorised as ‘violent’ rose by 19% in 2017, with increases in offences including stalking and harassment. While some of this can be attributed to improved recording, the increases in the most serious categories of violent crime reflect a genuine trend.

In tandem, police-recorded offences of ‘violence with injury’ rose by 10% to just under 0.5 million crimes. It is worth noting that, in previous years, an estimated one in three violent crimes reported to police were not ultimately recorded as such. This means that the true level of violent crime could be higher than reported.

All in all, the statistics point to a recent rise and this worrying trend is clearly on the minds of high net-worth individuals, particularly as the media has been highlighting the issue following a spate of murders in London this year.

Impact on the high-net-worth market

For society in general, these figures raise a concern, but how do the trends specifically affect high-net-worth individuals? Their profile and wealth can certainly make them natural targets for criminals who, given the ever-improving security protecting homes and cars, are increasingly resorting to physical attacks to carry out theft.  According to police figures, the number of burglaries in England and Wales rose by 32% last year, which also saw a series of headline grabbing incidents of aggravated burglary, including, tragically, one that ended in the killing of a wealthy business executive.

At Chubb, we constantly review the risks our clients face to ensure we continue to provide the protection they need. These statistics clearly show they are facing an increased threat to themselves, their families and lifestyles, so we took a closer look at how we can support them to protect what matters most. We commissioned independent research experts Longitude to do a study of over 500 HNW individuals, with the aim of understanding their perceptions of the threats to their lifestyles and the wellbeing of their families. Once fieldwork was completed, the data was analysed by both research agency Longitude and our own HNW experts. The results, to say the least, painted a fascinating picture of the competing desires and concerns in the minds of this demanding group of individuals.

Physical versus online risks

Overall, our research made it clear that this group felt increasingly vulnerable. When asked to consider a variety of environments – home, work, travelling – on average, 28% felt more vulnerable than five years ago, while only around 16% felt less vulnerable.

However, one of the most telling findings was that while much of the mainstream media – and much of the insurance market – has focused on the growing threat of online risks, the HNW individuals we spoke to were most concerned by the prospect of physical attacks and threats.

Asked to think beyond loss or damage to possessions, aggravated burglary remained their primary concern. The prospect of violent home invasion was the single most pressing worry and kidnap ranked second. While the number of kidnappings and abductions remains relatively low, the latest statistics place the UK at number 10 in the UN Office on Drugs and Crime global league table.

This is not to say that our HNW study group was unaware of the threat created by online activity in our increasingly connected world; quite the contrary. Affluent families are particularly vulnerable to this type of activity because their high profiles make them visible to criminals, as well as susceptible to threats of extortion based on reputational damage. Just under a quarter (23%) felt their status made them a target for extortion, while 16% believed it placed them and their family at risk of cyber bullying.

A newer area of concern for HNW parents was the growing problem of photo sharing among children and teens. Images swapped innocently between friends can take on a totally different hue if they fall into the wrong hands. Worse still, more intimate images shared between teenagers and young adults can cause problems for the sender as well as opening up both the sender and their family to the risk of extortion or bullying.

One factor strongly reinforced by our research was the importance of a comprehensive appraisal to the success of a HNW product. Typically, an insurer of affluent clients will conduct an appraisal of the client’s property as part of the underwriting process. But not all appraisals are created equal. 

At Chubb, we conduct comprehensive face-to-face appraisals that include buildings, outbuildings, land, furnishings, possessions – in other words, everything our client considers important to them. We also use the opportunity to review security, something that is clearly relevant bearing in mind the respondents’ concerns about aggravated burglary. An appraisal is vital for several reasons. It allows us to value assets accurately so that, should a claim be made, the replacement value of the item has been agreed in advance, hence no delays or unpleasant surprises.

Appraisals also allow us to assess the risks to which the client’s assets and lifestyle are vulnerable. We can then provide detailed and informed risk management advice, such as moving an oil painting away from a hot spot in a wall or strong sunlight that could cause it to fade. We may also recommend adding a ‘duress code’ to a safe so that it sends a silent alarm should the client be forced to open it.

Learning curve

The latest crime data has given us all an incentive to review and improve the protection we offer HNW individuals. But our research has highlighted another challenge – to educate the market. Far too many HNW individuals buy standard insurance products using online aggregators. These products, even with higher limits, are simply not suitable for these clients.

Yes, technology brings with it new concerns, new exposures. But the threat of physical and mental harm, combined with the core risk of property damage, still occupy a central place in the thoughts of these clients. As a market, we need to ensure cover evolves, but not at the cost of ignoring those core covers that provide real peace of mind.

Key takeaways for brokers

So what does this revelation mean for those serving HNW clients’ needs?

  1. Chubb can help alleviate concerns over rising crime with advice on how to keep clients safe.

  2. While the industry is focused on cyber threats, clients are more worried about aggravated burglary. Mitigating this kind of risk should be central to ongoing conversations with clients.

  3. When it comes to the digital landscape, young people sharing photos is a growing concern. Chubb HNW home policies automatically include cyber bullying coverage, which provides benefits of up to £50,000 to pay for a variety of costs.

  4. Policies bought online fall down at the appraisal stage as HNW clients have specific circumstances that can only truly be served by bespoke policies. Chubb uses the opportunity of a home appraisal to assess security and look at clients’ lifestyles to analyse specific risks and give peace of mind.

Visit our Private Clients page to read the full report.