If facing a liability lawsuit, nine out of 10 high-net-worth individuals are worried about the size of the potential verdict. That’s according to a recent Chubb survey of 800 affluent individuals in the U.S. and Canada.
Despite the concerns, only 36% of Chubb’s survey respondents said they carry excess liability insurance.
Auto accidents, allegations of assault or harassment, and someone working in their home getting hurt were the most cited reasons high-net-worth individuals are worried. Respondents had investable assets of at least $500,000, with the majority reporting assets of $1.5 million to $50 million.
“Economic damages historically were based on factors such as the extent of an injury and resultant medical expenses or past and future loss of income,” said Laila Brabander, head of North American personal lines claims for Chubb. “But we are seeing a rise in non-economic damages, such as pain and suffering and post-traumatic stress disorder, that overshadow actual economic losses.”
One way to describe that phenomenon is social inflation. Social inflation generally relates to how insurers’ claims costs exceed economic inflation and claim trends. What began in commercial liability is now migrating to personal liability cases.
“The same plaintiffs’ tactics to encourage large verdicts in commercial trucking, auto liability, product liability and medical malpractice suits are now being utilized to push for larger jury awards against our high-net-worth clients,” Brabander said.
Third-party litigation funding is also driving up the cost of settlements. That’s where private equity firms fund plaintiffs and their lawyers in exchange for a percentage of the settlement.
High-Net-Worth Clients Need Customized Insurance
High-net-worth individuals face intensifying risks and a growing gap in protecting what they value most. Increasingly, their insurance coverage requires more customization.
Choosing insurance is more than a dollar and cents decision. An experienced insurance advisor understands how to structure prevention and coverage to protect high-net-worth individuals’ lifestyles.
Contact Premier Private Client Insurance Services experts to speak with a high-net-worth insurance advisor about your situation.
