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As thoughts turn to buying the perfect gift for loved ones this festive period, Ecclesiastical Insurance personal lines teams are on standby to support customers in updating their insurance cover.
Despite the continuing economic volatility and the Office for National Statistics data revealing UK retail sales fell 1.1 per cent in October, retailers are still hoping for a bumper Christmas following closely behind Black Friday and Cyber Monday deals.
Ecclesiastical Insurance carried out a survey of 250 HNW individuals earlier this year and found watches and jewellery were the most invested items over the 12 months for the second year in a row, followed by wines, whisky, books and handbags.
Ahead of the festive flurry of purchases, the insurer is encouraging HNW individuals to make sure they have the right cover in place before adding to their collections.
Underinsurance is snow joke
Research carried out by specialist insurer Ecclesiastical in 2024 found four in five (77%) brokers believed there is a problem with underinsurance in the high-net-worth (HNW) market.
Out-of-date valuations are a key risk for HNW clients. Three-quarters of brokers (73%) believe HNW clients have insurance based on valuations over five years old, and a quarter (24%) say clients have insurance based on valuations that are over a decade old.
Rising inflation, the cost-of-living crisis, and limited supply have meant the value of luxury high-end items, including Rolex and Patek Philippe watches, has continued to soar. Some clients may not realise their current values, and if the worst were to happen and they needed to purchase a replacement, they may find themselves significantly underinsured.
Ecclesiastical advises that HNW clients should review their sums insured annually to ensure their possessions are insured correctly. Fast-appreciating items, including jewellery and watches, should be revalued every three years, and those with more stable values, including fine art, porcelain, and antiques, every five years.
Where a customer does invest in new items, it’s important to let their broker or insurer know as soon as possible to make sure there is cover in place, providing adequate sums insured coverage and preventing any underinsurance issues.
Beware the Grinch
HNW individuals are also being advised to take precautions to avoid having items stolen by Grinch-like thieves who target them during Christmas time.
The findings from Ecclesiastical’s research revealed that more than three in four of the respondents (77%) were more concerned about crime than they were a year ago, with almost three quarters (74%) saying they were more concerned about their family’s safety than ever before – and almost half (45%) believing themselves and their family are a target for criminals.
Some reported thefts have involved wealthy individuals being followed home from shopping trips and robbed as they arrive, but it’s not just the threat of in-person theft that worries clients.
Cyber-crime concerns almost nine in ten (86%) of survey respondents, and the National Cyber Security Centre (NCSC) reported members of the public lost over £11.5 million to online criminals between November 2023 and January 2024, with each victim losing £695 on average.
The Government’s ‘Stop, Think, Fraud’ campaign warns of scams this Christmas as criminals resort to underhand tactics such as creating fake websites, targeting social media, auction sites and marketplaces and selling poor-quality or non-existent items.
Delivery scams via mobile phone messages have also been on the rise, with one courier claiming to have seen 10,000 cases of delivery fraud between November 2024 and January 2025.
Ecclesiastical is encouraging brokers to refer to its ‘Target Identified’ and Cyber guidance developed with Blackstone Consultancy and speak to their high-net-worth clients about how best to protect themselves and their households.
Bro-ho-ho-kers
The research also found 83% of respondents felt they needed to do more to protect their items, with more than eight in ten (81%) saying they’d benefit from more guidance from their insurers and brokers.
Encouragingly, more than half (53%) of the survey respondents said they contacted their insurers when they acquired new items for their collections, with just over a quarter (29%) admitting they were concerned their items were underinsured.
This presents an opportunity for brokers to speak to their HNW clients about the importance of regular valuations and setting and maintaining sums insured at the correct level to avoid the risk of underinsurance.
“Underinsurance has always been an issue in the high-net-worth sector, but now, set against a backdrop of continued high inflation, our research has found that seven in 10 brokers believe underinsurance is more of an issue for HNW clients than ever before. It’s more important than ever that brokers speak to their clients to ensure they are keeping valuations up to date.
“While high-net-worth clients may have existing valuations, the prices and values of many precious items are increasing rapidly, and valuations can quickly get out of date. Before clients invest in new items this Christmas, it’s really important they make sure they have the right cover in place by speaking with their clients.”