For an independent insurance agency looking for an area of specialization, high-net-worth personal lines can be an attractive opportunity. Successful business owners, executives and families with significant assets still need many of the same coverages as other personal lines clients. But the similarities can end quickly.
A higher-value home may come with unique construction or architectural features. There may be multiple residences, valuable collections, specialty vehicles or watercraft. Liability exposures can be greater. Property may be held in trusts or other entities. Household employees, travel, cyber risks and other exposures may also need to be considered.
Serving these clients well takes more than writing larger home and auto policies. For agencies interested in developing a private client practice, there are several questions worth considering first.
Do you have access to the right markets?
Carrier access is an obvious place to start, but don’t assume that building a private client practice requires direct appointments with every high-net-worth carrier.
Many carriers serving the private client market are selective about the agencies they appoint. Depending on the market and the agency, access may also be available through a specialized wholesaler, brokerage or market-access relationship. That can give an agency a way to begin serving private clients while developing the expertise and book of business that could support additional carrier relationships over time.
The bigger question is whether the agency has enough market options to address the types of clients it plans to pursue. High-net-worth business isn’t uniform. Geography, property values, catastrophe exposure, collections, automobiles, watercraft and other factors can all affect which market is appropriate.
Before going after the business, understand where you can place it.
Are you prepared to work across state lines?
Private clients are also more likely to have property in multiple states. A primary residence may be only one part of the account, with additional homes or other exposures located elsewhere.
That introduces another consideration for an agency building a private client practice: licensing. Insurance licensing is regulated by each state, and producers doing business outside their home state may need non-resident licenses. Depending on the state, the agency itself may also have licensing requirements.
Nonresident licensing is common and generally easier to obtain than starting from scratch in each state, but requirements vary. Agencies should understand where their prospective clients have exposures and make licensing part of the planning process rather than discovering an issue when it’s time to place the business.
Do you have the expertise?
A private client practice shouldn’t simply be a new label for the agency’s existing personal lines operation.
The more complex a client’s assets become, the more important it is to understand the complete risk picture. A coverage review may need to go well beyond home and auto to consider excess liability, valuable articles, cyber exposures, secondary residences, recreational assets and how properties or vehicles are owned.
That doesn’t mean one person needs to know everything on day one. Carrier partners, wholesalers and other specialists can be valuable resources. But someone within the agency needs to own the development of that expertise.
Training matters. So does experience. Each account can make the agency better at recognizing the questions it should be asking on the next one.
Who are you actually trying to reach?
“High-net-worth individuals” describes a market, but it isn’t much of a prospecting strategy.
An agency may have a much clearer path by identifying the types of clients it is particularly well positioned to serve. That could include business owners, physicians, executives, real estate investors or successful families within a particular community.
In fact, some of the best prospects may already have a relationship with the agency.
Look at the owners and executives of commercial clients. An agency that protects someone’s company may have never asked about the personal assets that sit outside that relationship. Existing personal lines clients may also have accumulated assets and exposures that their original insurance program hasn’t kept pace with.
The opportunity may be less about finding an entirely new audience and more about recognizing clients whose needs have changed.
Where will new relationships come from?
Private client business can also open a different approach to referral development.
Financial advisors, CPAs, estate attorneys, real estate professionals and other advisors frequently work with the same individuals and families an agency hopes to reach. They can become important sources of introductions, but those relationships have to offer value in both directions.
An insurance professional who understands complex personal risk can become a useful resource when an advisor’s client buys another home, adds a valuable collection, changes the ownership of an asset or encounters an insurance issue that affects a broader financial plan.
Rather than simply asking these professionals for referrals, consider what would make your agency someone they are comfortable bringing into an important client relationship.
Can your service model support it?
Winning a private client is only the beginning.
Clients with more assets and more complicated exposures may require greater coordination and more proactive attention. Their expectations for responsiveness may also be high. An agency needs to decide who owns these relationships, how accounts will be reviewed, how claims will be handled and what level of communication clients can expect.
That doesn’t necessarily mean creating an entirely separate department. An agency might begin with one producer and account manager developing a specialty, then build from there as the book grows.
What matters is being intentional. If the agency promises a private client experience, its processes need to deliver one.
Start with the opportunity you already have
Building a private client practice doesn’t have to begin with a new department, a new brand and a list of wealthy prospects.
Start by understanding the markets available to you. Identify someone who can develop the expertise. Look at the clients and relationships you already have. Talk with carrier and wholesale partners about the kinds of accounts they’re seeing and where they can help.
Then identify a few opportunities where your agency can demonstrate what a more comprehensive approach to personal risk looks like.
A private client practice isn’t defined by the size of the premium. It’s built around the ability to understand more complex risks, bring the right resources to the table and provide a level of advice and service that earns the client’s trust.