In the 1989 movie Field of Dreams, Kevin Costner starred as Iowa farmer Ray Kinsella, who famously heard a voice in his corn field tell him "If you build it, he will come." A decade or so later, AIG decided to build a Private Client Group and enter the high-net-worth personal insurance arena, long dominated by Chubb. Perhaps coincidentally, the few insurers competing in this marketplace quickly began introducing a series of risk management/loss mitigation services in an effort to provide more value to their policyholders. Part of the thinking: if they offered a series of value-added risk management services, new policyholders would surely come, just as the 1919 Chicago Black Sox eventually did in the movie.
For far too long, insurers and agents had been primarily focused on providing consumers with just two opposing risk management strategies—either transfer or retain their many risks. Not until the past decade or so have risk management strategies aimed at avoiding or reducing risk gained meaningful attention by risk advisers intent on crafting a more robust approach to managing personal risk. With a select but determined group of insurers allocating significant resources to develop a wide range of personal risk management services for their policyholders, one must ask whether these valuable services are being utilized by consumers, and if not, why not?
This article will provide a summary of the valuable personal risk management services offered by a few select insurers and urge the reader to become a more active advocate in helping consumers embrace strategies that can reduce the risk of loss and improve the safety of their families.
At this time, only the few insurers exclusively focused on serving either affluent or high-net-worth consumers have shown a real commitment to providing substantive risk management services. While it can be argued that there are insurers focused on the vast middle market that also provide similar services, those services pale in comparison to the far more robust services provided by a select group of insurers.
If readers are aware of midmarket insurers offering truly differentiated risk management services, I suggest making this author and others aware via IRMI's increasingly popular Personal Lines Insurance Forum on LinkedIn.
In alphabetical order, Ace Private Risk Services, Chartis/AIG Private Client Group, Chubb, Fireman's Fund, and PURE High Net Worth have all invested heavily in and distinguished themselves by developing an assortment of personal risk management services. Naturally, the scope and availability of services varies among insurers, and eligibility is often based on the size and location of the account. Rather than attempting to provide details of the many services offered by each of these insurers, this article will instead offer a brief summary of some of the many services available, with links to redirect those who are interested in accessing additional information.
While each of these insurers employs professionals with considerable loss prevention experience, they have also developed relationships with carefully vetted third-party professionals who provide highly specialized expertise. In some instances, insurers provide policyholders access to services provided by such experts on a complimentary basis, and in other instances, the insurer has negotiated substantial discounts for its policyholders to utilize the products or services being offered. The range of risk management services that are available can be classified under one of these primary topics:
While many consumers fear the risk of fire damaging their home, insurers know that the errant flow of water in a residence can produce as much damage as fire and occurs with far greater frequency. Especially for seasonally occupied homes, many insurers promote the use of systems that detect leaks in a plumbing system and send signals to the water main to shut off the flow of water and prevent catastrophic damage. Several insurers offer policyholders access to third-party vendors featuring products that work in different ways, with worthwhile premium credits for homes equipped with such devices. Helping consumers understand that there are a variety of solutions to help prevent a destructive plumbing leak in their home should be a major discussion topic for those providing their clients with personal risk management services.
For home owners residing in areas prone to wildfires, imagine the peace of mind knowing your insurer is providing you the services of a privatized wildfire protection unit charged with keeping your home safe should a fire approach. This win-win strategy benefits both the insurer and policyholder and has saved countless homes from destruction.
AIG Private Client Group began offering this Wildfire Protection Service in 2003, with other insurers following with their own version of this service over the years. Similarly, several insurers have also attempted to replicate the innovative Private Client Group's hurricane protection unit, developed to provide homes that are in the path of a hurricane with pre- and post-storm services to minimize damage and reduce the cost and inconvenience of a claim.
Services are available to provide policyholders with a wide range of international travel security and guidance. Several insurers offer comprehensive information on crime, political stability, terrorism, and other security concerns affecting individuals traveling in a wide range of countries. Why let eligible policyholders travel internationally without first reviewing these services?
In response to policyholder concerns about medical emergencies while traveling, Chubb provides policyholders access to Signature Passport. While not the only provider of such coverage, Chubb's policy provides a significant amount of valuable protection for emergency medical transportation, healthcare expenses not typically covered outside the United States, and baggage and trip delay.
For the many consumers who employ domestic help, there are services that provide essential background information on the criminal, driving, employment, education, and credit history of personal staff. Perhaps in response to Madoff-styled Ponzi schemes, a comprehensive screening service is even available through Ace Private Risk Services to help policyholders more closely review third-party vendors and professional advisers.
Got stuff? Valuable stuff? For those who do, keeping track of it all and protecting it from unexpected loss is a big challenge, and one that is often neglected. To help collectors, Chubb offers qualifying policyholders access to Collectify, a collections management software designed to help manage any collection. If a valued possession is lost, stolen, or damaged, detailed records about the item can aid in the recovery or insurance claim process. Collectify offers Chubb policyholders significant service enhancements and courtesies.
Of course, other insurers offer similar services to protect the collections they insure for policyholders. Often, services include professional guidance to assess vulnerability to loss, including proper storage, display conditions, and advice on shipping, securing, and protecting the collection. Even for clients who do not have access to collection management services through their insurer, there are numerous services available at a nominal cost. And, for consumers who own lots of stuff that is not of great value, assembling a good inventory of the contents of a residence is an essential yet often overlooked risk management strategy. Consider this easy to use and affordable program from Collectify.
Many insurers provide expert third-party assistance to examine and enhance the effectiveness of home security systems. Threat assessment services are also available to assist high-net-worth individuals in controlling risks before, during, and after a kidnapping or extortion event. PURE High Net Worth has distinguished itself by even offering member policyholders assistance on improving the safety of youthful operators. Among the services: access to a driving school conducted by BMW and preferred access to technology that saves lives by preventing unauthorized use of cell phones while a car is in motion.
While many insurers provide some form of identity theft restoration or resolution service as part of their homeowners coverage, it should be self-evident that helping consumers avoid having their identity stolen is a far better strategy. To assist in this area, select insurers have made a wide variety of services available to reduce exposure to identity fraud and electronic theft of personal data. Capabilities include evaluating and enhancing residential firewall security and services that monitor Internet content for malicious information.
Consumers should be reminded that the widespread and often carefree use of devices routed through a home network, especially by younger residents and household staff, can result in significant exposure. Making consumers aware of the importance of the many steps that can be taken to protect their identities should be a frequent recommendation, and directing them to this important list of protection tips from Identity Theft 911 can help increase awareness and preparedness.
Also consider making your clients aware of the many practical steps they can take to become better prepared for a wide range of natural (and manmade) disasters. This great article explaining the 10 ingredients essential to family disaster planning was first published in this column almost 10 years ago and is just as applicable today. The Insurance Information Institute provides a wide range of articles and videos that can educate and assist consumers. The Insurance Information Institute also provides free software to help consumers develop an inventory of their personal possessions.
Insurance professionals will encounter many instances where the services referenced above would be helpful, but the insurers that provide them are not well positioned to meet their clients' protection needs. In such instances, the third-party providers whose services are available through participating insurers are often happy to provide the same services direct to the public. While this eliminates the always popular "free" aspect of the offer, consumers who are inclined to embrace such services often find the peace of mind that is gained far outweighs the cost. Insurance professionals will also discover that clients greatly appreciate receiving advice and recommendations on managing risks they are often unaware of, regardless of whether their respective insurer provides such services or not.
Just as insurers have determined that providing such services can help them to "add value" to their policyholders, agents and brokers can also expand upon their traditional insurance-centric role by offering clients risk management strategies and services that do not involve the sale of an insurance product.
As mentioned earlier, this article has not intended to provide a complete list of the many personal risk management strategies and services available to consumers. Many readers will undoubtedly have experience with other strategies and services that can be valuable to share with others, and the aforementioned discussion forum on LinkedIn provides that opportunity. Please consider sharing with others your good ideas on how to help consumers manage their many risks.
See more current information on this important topic at Family Disaster Preparedness—Revisited.
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