As 2024 comes to a close, our experts take a look at the key trends affecting the High-Net-Worth Insurance market.
Below, find the latest updates on household, specialist car, trustee liability, superyacht, and transactional risk insurance:
Household Insurance
The Household Insurance market has ample capacity, and a broad selection of high-net-worth insurers. However, the market remains challenging overall, with a reduction in appetite for complex risks.
According to the Association of British Insurers, the industry has paid out over £4bn in property claims up to Q3 2024 (opens a new window), the largest amount on record. Of that, over £100m has been paid for weather-related household claims, such as storm, heavy rain, and frozen pipes. Water damage claims are also up approximately 20% across the UK, with the average cost of a claim around £17,000. However, escape of water claims frequently exceed £100,000, typically in low-occupancy second homes. Many insurers will offer complimentary water leak detection devices at renewal or following an escape of water claim.
Flood restrictions, and declines to quote due to flood risk areas, are increasingly common. Many insurers use Flood Re (opens a new window) to provide flood cover, a government- and insurer-backed scheme. Pricing under the scheme is scaled in line with council tax banding, rather than the flood risk.
For more information, contact Chyna Kenward (opens a new window).
Specialist Car Insurance
Inflation increases have been felt across the motor insurance market, but specialist cars remain largely insulated against the effects.
Appetite for good quality classic car risks remains strong. However, supercars and hypercars are becoming more of an issue for many markets, with their carbon-fibre structures often leading to a high cost of repair for even minor damage. This is not only increasing premiums, but encouraging some insurers to withdraw altogether unless the vehicle forms part of a large collection. We remain one of the only brokers that can cater to standalone supercars and hypercars, albeit for the right profile of client.
With regards to claims, theft continues to be an issue in major urban areas. There has been a notable rise in Porsche thefts, especially the Macan models. Windscreen claims are also proving to be very costly. The average cost of a new windscreen on a supercar is circa. £3,000-£4,000. They must be fitted by original equipment manufacturers (OEMs), and often need recalibrating. For hypercars, the figure is always in excess of £10,000.
For more information, contact Simon Ambler (opens a new window).
Trustee Liability Insurance
Trustee Liability Insurance provides protection for various types of trustees, such as those overseeing charities, family trusts and pension funds. It protects trustees against legal claims alleging breaches of fiduciary duty, mismanagement, or errors in their decision-making by covering legal defence costs, settlements, and damages arising from potential claims. As trustees face ever growing scrutiny and more complex legal environments, having the necessary protection in place is becoming increasingly important.
The Trustee Liability Insurance market has evolved significantly in recent years, driven by regulatory changes, heightened awareness of fiduciary responsibilities, and economic volatility. Several years of price increases and tighter underwriting conditions have given way in the past 12 months, to a softening market driven by increased competition and new entrants to the market. Premiums have stabilised or decreased, and insurers have become more flexible with terms, offering broader coverage or reducing exclusions.
However, we have seen an increase in claims in some sectors. This is encouraging a continued focus on governance standards, with insurers assessing trustees’ risk management practices closely before offering coverage. This trend indicates a more competitive, albeit cautious, market environment.
For more information, contact Andrew Young (opens a new window).
Superyacht Insurance
Hull and Machinery Insurance is the costliest superyacht cover in terms of premium, and shows no immediate signs of decreasing. There were no significant new entrants to the market in 2024. Coupled with several claims – including the tragic loss of the Bayesian, for which the salvage operation is due to commence – ratings decreases remain unavailable, while terms remain similarly unchanged. Green technologies (such as hydrogen cells) are also increasingly being considered for new-build yachts. In the absence of historical data, insurers are likely to be cautions when it comes to these risks – so owners should enquire about coverage as early as possible.
Similarly, there have been no new entrants into the yacht Protection & Indemnity Insurance market, with stability in terms of premium and conditions. There are no large premium increases expected for the coming year; while underwriters are looking for small rises in premium, we are asking for flexibility on behalf of our clients. That said, due to the cost of reinsurance and losses, rises are generally being charged across the marine book.
With regards to accident, health and welfare, small rises are being asked for Crew Insurance, typically in line with inflation. Once again, no new entrants to the market have emerged.
For more information, contact Lynda Cotton (opens a new window).
Transactional Risk Insurance
The transactional risk market helps buyers and sellers reduce the liability that can occur in an M&A transaction. Warranty and Indemnity Insurance is the most widely used product in this space, and covers a buyer of a business for the unknown risks in a deal. There’s also an increasing market for insuring risks identified during a due diligence process, as well as cover for tax, contingent, IP or environmental risks.
M&A activity has been buoyant this year, following a very quiet 2023. We saw a push for deals pre-budget, with fears around tax rises. However, the overall theme of this year has been deals taking a lot longer to complete, with significant hesitancy from institutional capital. As a result, we are working closely with sellers to provide insurance packages that help present assets in the best possible light.
Pricing is at a historic low, with insurers increasing their coverage positions and appetite for risk. We are seeing some large claims hitting the market, particularly in the US, but the impact on pricing is yet to be seen.
Our recent UK Transactional Risk Market Update (opens a new window) has more in-depth analysis.
For more information, contact George Apperly (opens a new window).
The above contents were originally delivered at a bitesize breakfast event, hosted by Lockton’s Private Clients team in late November 2024. The breakfast brought together professionals from across the Private Clients space for food, coffee, and industry insights.