Travel Risk

High Net Worth Travel Risks

High net worth travel parties are choosing increasingly exotic locales for vacations.
By: | November 6, 2017 • 4 min read
Topics: High Net Worth

One benefit of being well off is having the resources to travel more frequently, in fine style and to more exotic destinations than those with less wealth. But such travel may exceed the scope of traditional travel insurance.

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“The five top emerging destinations for travel for high net worth are places that probably they’d never go to in the past: Cuba, Iran, Iceland, Antarctica, and Mongolia,” said Heather Posner, director of high net worth at Burns & Wilcox.

“These are places that are unique and present unique exposures.”

High-value individuals and families are also more likely to travel with extended parties.

“When you have family trips where maybe they’re trying to get three generations of the family and there may be 35 folks traveling to Africa to do a safari… There’s a huge amount of things that can go wrong and could delay or cause that trip to be cancelled,” said Martin Hartley, executive vice president and chief operating officer of PURE Group of Insurance Companies.

“There are huge sums of money at stake.”

And while the risk of travel interruptions from terrorism or political instability is hardly unique to the high net worth, or to exotic locales, the wealthy can afford coverages that go beyond simple travel interruption coverage, providing assistance and logistical support, whether to restructure a trip to avoid trouble spots or to return home amid potentially trying circumstances.

Martin Hartley, EVP and COO of PURE

Other security concerns may be more specific to the high net worth, such as kidnap and ransom (K&R) coverage.

“We’re seeing a lot of inquiry around the area of kidnap and ransom,” said Susan Ogrodnik-Smith, Chief Sales Officer-Personal Insurance at HUB International New England.

While traveling with a security team remains largely limited to the ultra-wealthy, those with substantial assets are increasingly likely to take advantage of security training and briefings made available through their insurers, to proactively minimize such risks.

Another potential complication in coverages for these clients arises from support staff that may be employed to facilitate a particular lifestyle.

“Most of the workers’ compensation or employment practices liability coverage that somebody might have for their domestic help in the U.S. likely would not extend overseas,” says Lisa Lindsay, executive director at the Private Risk Management Association.

Because of this, some hire temporary help in their destination country, in which case a broker might need to partner with an overseas counterpart who has its own network and understands and can navigate local requirements and conditions.

Sailing trips can present particular challenges.

“The crew gets off the yacht and needs to go rent a car to go pick up supplies, and the minute…they’re on dry land doing work, they’re not covered,” says Lindsay.

“There’s a ton of complications around not just the vessel, but the liability and crew coverage. …It really absolutely requires that a high net worth individual be working with a yacht specialist and not just a not just a generalist.”

Heather Posner, director of High Net Worth, Burns & Wilcox

Medical coverage is another important aspect of travel coverage. High net worth insureds tend to be older than the general population and will want to ensure that accidents or illness abroad will be treated with the same high standards they expect at home, or that they can get home, if necessary.

Medical evacuation coverage, which generally only covers transport to nearby medical facilities, is often confused with medical repatriation, or transport back to the US, which is a much more costly coverage.

Increasingly, private clients look to medical concierge services to coordinate specialists, provide payment to providers (in cash, as is sometimes necessary), and, in the case of at least one company, to make comprehensive medical records instantly available.

“It’s nice to be able to have somebody there that will pay your bill [or] repatriate you,” said James Mead, CEO of PinnacleCare Private Health Advisory.

“But at the moment of the incident, it’s even better to have the information on your medical history available to you. That’s really one of the most valuable services we provide.”

As is true at home, one of the biggest issues when insuring high net worth clients abroad is liability.

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“Most high net worth insurance carriers would be providing their policyholders with worldwide liability coverage,” says Lindsay.

“But with any insurance policies, then come the exclusions, like aircraft, chartering a boat over a certain size…That’s why it’s so important to dig into the real specifics of, ‘How do you vacation?’”

And even if your liability coverage is worldwide, it is best to check with your broker, especially before traveling to unusual destinations.

“Different countries certainly have different rules and regulations that may impact how a claim is ultimately settled.” Lindsay adds.

Ultimately, most aspects of travel, including liability, may already be covered under existing policies, but some prefer a little extra peace of mind.

“We’re seeing some of our high net worth clients obsess,” said Lindsay.

“I think I have coverage, I’m sure I have coverage, but…I’d rather just purchase it and be double-protected.”

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.