Private Client

High Net Worth Risks

Personal liability judgments against the very rich escalated in monetary value over the past 20 years.
By: | April 4, 2016 • 6 min read

Competition among major insurance companies to cover high-net-worth individuals and their families is increasing, despite the complexities of this class of business.

Sam Cargill, CEO, Aon Private Risk Management

Sam Cargill, CEO, Aon Private Risk Management

The risks facing the wealthy are many, ranging from the challenges encountered when they travel abroad, often-costly personal liability cases, kidnap and ransom risks and  a sharp increase in cyber-related dangers.

In fact, the executives interviewed for this article cited cyber risk as the greatest emerging threat to high-net-worth families and ultra-high-net-worth families.

But the threat of liability for those with deeper pockets is ongoing.

New York-based Sam Cargill, chief executive officer of Aon Private Risk Management, said that personal liability poses the biggest issue for wealthy individuals and their families on a regular basis.


“The majority of liability lawsuits revolve around injuries from auto or recreational vehicle accidents or accidents in the home from guests or domestic employees,” he said.

“The size of liability judgments and the search for deep pockets has increased unabatedly in the past 20 years,” said Jerry Hourihan, New York-based president of AIG Private Client Group, U.S. and Canada.

“It’s not infrequent to see judgments north of $10 million. A few years ago $5 million was the most you’d ever see. That tends to be one of the catastrophic issues our clients face.

“The size of liability judgments and the search for deep pockets has increased unabatedly in the past 20 years.” — Jerry Hourihan, president, private client group, U.S. and Canada, AIG

“Risks from natural catastrophes also continue to increase,” Hourihan said. “Full catastrophe protection is important no matter what the catastrophe may be.”

Another clear-and-present danger that confronts wealthy families is the constant concern about possible kidnap and ransom situations.

“Kidnap and ransom is an important protection risk for high-net-worth individuals and their families, especially as the affluent live a more global lifestyle,” said Cargill.

Denise Balan, crisis management leader, Americas, XL Catlin

Denise Balan, crisis management leader, Americas, XL Catlin

“A solid combination of insurance and professional management services is the most holistic approach to use in responding to these risks, whether they are work- or travel-related.”

New York-based Denise Balan, XL Catlin’s Americas head of the crisis management kidnap and ransom team, said her group provides clients “with full access to security consultants for the full gamut of services, from travel advice for the clients and their families, to considerations about personal safety, to security around the home.”

There are many multinational-related risks that should be top-of-mind for high-net-worth individuals and their families, said Warren, N.J.-based Frances O’Brien, newly named division president, Chubb’s North America personal risk services.

Global Lifestyle Risks


“This is particularly true as it relates to buying homes abroad and domestic staff,” O’Brien noted. “Many high-net-worth families own homes in multiple countries. But international property and casualty laws differ from country to country.

“To mitigate multinational-related risk, high-net-worth individuals should consult with a specialized agent or broker who is licensed to issue policies abroad, understands the cultural differences and is well-versed in the local rules and language,” O’Brien said. “Seeking counsel before departure is the only way high-net-worth individuals and their families can be fully protected.”

Frances O’Brien, division president, North America personal risk services, Chubb

Frances O’Brien, division president, North America personal risk services, Chubb

But as noted before, the greatest emerging danger for wealthy individuals and their families is a rapidly expanding variety of cyber risks.

“The affluent usually are the initial targets for a hacking, identity theft or a reputational risk event,” said Cargill.

“Libel or slander pose another major threat stemming from the internet and social media engagement.”

New York-based Bob Courtemanche, senior managing director and practice leader for Risk Strategies Cos.’ eight-year-old private client group, said that “when it comes to cyber threats, hackers accessing emails of the wealthy to arrange money wire transfers to themselves is definitely a growing issue.”

“A solid protocol for phone voice verification from the client is a must. You can’t just rely on the email, because you can’t be sure if it’s really from the person named on the email,” he said.

Also, lawsuits growing out of social media behavior are a rapidly emerging risk area, said Courtemanche. “You’re seeing a rapid increase of social media use among the wealthy, whether it’s by the clients or their children on the web. Damaging comments are made and you end up with legal action.”

“A solid protocol for phone voice verification from the client is a must. You can’t just rely on the email, because you can’t be sure if it’s really from the person named on the email.” — Bob Courtemanche, senior managing director with Risk Strategies.

Reputational damage cases will find their way to the courts and ultimately threaten someone’s assets if real negligence is found, Courtemanche said. “Plaintiffs could also allege emotional distress or bodily injury claims or libel claims,” he said.

“The internet changes the dynamic of these types of lawsuits,” he said. “It’s no longer that someone made an allegation that could be contested. Now it’s electronically documented forever. So we’re counseling our high-net-worth clients to be more aware of this and to educate their children about these matters.”

Prized Clients

Insurers are in pursuit of these high-net-worth clients, but definitions for the category varies widely from insurer to insurer.


“Our benchmark for a high-net-worth family is their lifestyle,” said Cargill. “Typically, they own several high-value homes and additional assets, such as valuable jewelry, vehicles, art, and other interests requiring sophisticated insurance and risk management programs.”

Chubb’s O’Brien said the company defines the category as “someone who has a sizeable portfolio of assets consisting of one, or a combination of, fine art, valuable assets, yachts, homes and apartments, luxury automobiles, collector cars and jewelry.

“We do not assign a dollar value to the term ‘high-net-worth.’ ”

Jennifer Schipf, New York-based senior vice president of fine art and specie and the head of the luxury lines group at XL Catlin, said coverage combines specialty managed lines for equine, aviation, recreational marine (yacht), crisis management for kidnap and ransom, and lines specific to fine art and jewelry collections.

The company serves individuals and their families with liquid assets of $30 million to $50 million.

Jerry Hourihan President AIG Private Client Group

Jerry Hourihan
AIG Private Client Group

She said the coverage is “a combination of both property and specialty insurances, depending on the line of business. It’s a mixture of product types for each of the product lines.”

AIG’s Hourihan said the insurer defines “high-net worth individuals and their families [as] ones who typically have homes worth $1 million in value and up, with $1 million in investable assets,” said Hourihan.

“Ultra-high-net-worth individuals and their families typically have $30 million or more in investable assets.”

Studies indicate that the richest individuals are seeing huge growth in income. These insurers and others focusing on the challenging and diverse needs of wealthy families will surely see their specialty programs increase as well. &

Steve Yahn was a freelance writer based in New York. He had more than 40 years of financial reporting and editing experience. Comments can be directed to [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.


That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.


Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]