Insurance Tells Us How the Millennial Elite Spend Their Wealth

Shifts in the demand for collections insurance policies reveal generational differences in what constitutes “valuable.”
By: | December 19, 2018 • 3 min read

Shifts in the demand for collections insurance policies reveal generational differences in what constitutes “valuable.”

High-value items like art, jewelry and fine wine will always have a place in homes of the high-net-worth, but younger collectors are increasingly turning their attention, and their investment dollars, to more experience-based items.

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“We are finding that with our Millennial or younger emerging wealth client, a lot of them are inheriting nice collections of art, jewelry and furniture, but often they are not insuring them because to them the value is either purely sentimental, or because they see these collections purely as investments and don’t have the same emotional tie to them as their parents did,” said Laura Sherman, founding partner of BKS Partners.

“Instead, our Millennial clients are more focused on experiences, and so they are collecting things that are more active and dynamic.”

That includes things like whisky, watches, collector cars, private boats and planes, and travel.

“Instead, our Millennial clients are more focused on experiences, and so they are collecting things that are more active and dynamic.” – Laura Sherman, founding partner, BKS Partners

“Watches are a big collection item with our younger clients. When you think about jewelry collections, you only bring out those pieces for special occasions. But a watch is something functional you can wear every day,” Sherman said.

Likewise, with collector cars, clients want the freedom to drive them whenever and wherever they please. Many coverages come with usage or mileage restrictions that limit actual driving of the car to the occasional Sunday drive, local parade or car show.

“Car collectors increasingly are asking for more flexible coverages so they can take their Ferrari Spider to work on a nice day if they want to,” Sherman said.

Coverage challenges also emerge for clients building collections of rare whisky and even craft beer. According to the Vintage 50 Index, the value of rare whisky has appreciated 140 percent over the past five years. A bottle of Macallan scotch bottled in 1986 but cask-aged since 1926 today fetches $1.2 million. Fine wine, by comparison, has appreciated 19 percent over the same time period.

Dramatic fluctuations in market value necessitate a review of coverage, or in some cases, motivate collectors to get coverage to begin with.

“We’re talking with our clients about how the market is changing and how we need to make sure the insurance has kept pace with those changes,” Sherman said. “With younger clients, that often includes educating them about the limitations of a homeowner’s policy. Millennials are really new to purchasing insurance and may not realize that they’ve outgrown the coverage available on a homeowner’s policy and need to add a collections policy.”

As collections grow and change, insurers will be pressed to adapt coverage. Not every underwriter can manage the flexibility Millennials desire for their collector cars, for example, and many won’t take on rare spirits collections.

Demand for coverage for private aircraft and large watercraft is also on the rise — again pointing to the value ascribed to experiences over ownership — as well as travel insurance.

So what else are high net worth Millennials seeking coverage for?

“I has one client looking to insure an expensive craft beer collection,” Sherman said. “That’s tough because beer doesn’t have much of a shelf life, so it’s not something insurers are very excited about.”

Demand for coverage for private aircraft and large watercraft is also on the rise — again pointing to the value ascribed to experiences over ownership — as well as travel insurance.

“Millennial clients are a lot more attuned to the fact that they’re not just walking around museums. They’re sky diving, wind surfing, white water rafting, mountain climbing, rappelling,” Sherman said. “They’re much more inclined to buy travel policies that will protect them.”

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The shared economy also presents new travel risks. “I’ve had clients rent a big house for vacation using Airbnb or VRBO and ask if they need to purchase coverage because they have to put down a large deposit, and they’re concerned if the rental turns out to be fraudulent or they can’t stay there for whatever reason that they’ll lose that money.”

Sherman also said that while coverage demand among older clients for traditional collections of jewelry, art, and antique furniture remains high, she’s also seeing the choices of younger generations rub off on their parents.

“Older clients are also expanding their collections to include things like watches and other experiential things as well,” she said. &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

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.

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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.

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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]