Navigating High-Net-Worth Property Insurance Amid Shifting Risk Appetite and Market Stabilization

Executive Summary

The latest high-net-worth (HNW) outlook from HUB International highlights a significant decline in risk appetite among affluent individuals, with only 25% now willing to accept greater risk for premium savings, down from 39% in 2023. This shift is driven by persistent market volatility, rising replacement costs, and coverage challenges, particularly in catastrophe-prone regions such as California, Florida, and the Northeast. Despite these headwinds, recent data suggests emerging stabilization in select high-value property insurance markets, offering cautious optimism to carriers and brokers alike.

For insurance professionals, this evolving landscape underscores the importance of strategic risk management, tailored underwriting, and client engagement. Insurers are increasingly aligning pricing with property characteristics and mitigation efforts, while brokers have a renewed opportunity to negotiate favorable terms and craft comprehensive coverage solutions. Understanding regional nuances, the impact of legislative reforms, and the role of resilience investments is critical to navigating this complex market effectively.

Key Insights

1. Declining Risk Appetite Among HNW Clients
   The HUB survey reveals a marked drop in willingness among HNW individuals to assume additional risk for reduced premiums. This trend reflects heightened sensitivity to coverage gaps and increased market uncertainty, prompting more conservative insurance choices such as higher deductibles and acceptance of policy carve-outs.

2. Market Stabilization and Regional Variability
   After several years of volatility, certain markets, including parts of Florida, have begun to stabilize or even soften due to legislative reforms attracting new carriers. However, this is not uniform; regions with significant wildfire, flood, or coastal exposure continue to experience limited capacity and rate pressures.

3. Enhanced Focus on Risk Mitigation and Underwriting Precision
   Carriers are moving beyond blanket rate increases and instead are refining policy structures and underwriting guidelines. Incentives for protective measures like roof upgrades, water detection systems, and wildfire defensible space are becoming standard, helping align pricing more closely with actual risk profiles.

4. Shift in Coverage Design and Deductible Structures
   Adjustments such as capping loss of use coverage relative to dwelling limits, and increasing deductibles for wind, hail, and all other perils (AOP), illustrate a strategic approach to shared risk. These changes help carriers maintain profitability while offering clients tailored options.

5. Opportunity for Brokers to Advocate and Customize Coverage
   With market conditions easing in some segments, brokers now have greater leverage to negotiate terms and conditions. Utilizing multiple insurer proposals enables crafting nuanced programs that address client needs while respecting carrier appetites, particularly in challenging jurisdictions.

Insurance Industry Applications

• For Carriers and Underwriters:
  Integrate detailed risk mitigation assessments into underwriting workflows. Reward insureds who invest in resilience technologies and property upgrades with more favorable rates or terms. Employ granular geographic segmentation to balance portfolio risk and avoid broad rate swings.

• For Brokers and Agents:
  Leverage the current softening in certain markets to advocate aggressively for clients, negotiating improved coverage limits and conditions. Educate HNW clients on the benefits of investing in protective measures to enhance insurability and premium outcomes. Utilize insights from multiple insurers to assemble tailored policies that optimize coverage and cost.

• For Claims and Risk Management Teams:
  Anticipate increased scrutiny on loss severity trends, particularly in personal umbrella liability lines influenced by litigation environments. Collaborate with underwriting to identify vulnerable exposures and develop mitigation strategies that can be communicated to clients proactively.

• Regional Strategy Development:
  Focus on micro-regional dynamics, recognizing that markets such as Florida may offer opportunities for expansion, while others like Los Angeles require more conservative approaches. Stay abreast of local legislative changes that impact carrier participation and rate environments.

Conclusion and Recommendations

The evolving high-net-worth insurance market is characterized by a more cautious insured base, nuanced carrier strategies, and emerging signs of stabilization after years of disruption. Insurance professionals must embrace a strategic, data-driven approach that prioritizes risk mitigation and individualized underwriting. Brokers should seize the current market dynamics to negotiate robust coverage programs, while carriers should continue refining policy structures and underwriting precision to sustain profitability and client satisfaction.

To thrive in this environment, insurers and intermediaries should:

• Promote and incentivize resilience investments among HNW clients.
• Employ detailed geographic and risk segmentation to optimize portfolios.
• Enhance client communication regarding coverage changes and risk management options.
• Monitor legislative developments closely to anticipate shifts in market capacity.
• Collaborate across underwriting, claims, and brokerage teams to deliver comprehensive solutions.

By aligning strategies with these insights, insurance professionals can better serve the unique needs of high-net-worth property owners while navigating the complexities of today’s market.

For a detailed analysis, see the original HUB International high-net-worth outlook at Insurance Journal.