Client Affairs
Changing Risks For HNW Individuals

Wealthy individuals have long been a target for criminals, what is new and changing however is the nature of the risks and challenges they are facing. Though as these risks change and evolve, so too do specialist insurance products.
The following article, which examines insurance risks and
high net worth clients, forms part of a theme that this news
service sees emerging in part as a result of COVID-19. Risk
management is being re-thought, such as the risk of taking an
enforced and costly absence from work (the lockdowns, etc). The
dividing lines of wealth and health have become blurred. At the
same time, greater reliance on digital work channels raises
dangers of cybercrime. Working from home may cut certain health
risks – in the short run, anyway – but boosts other
threats.
To examine how HNW individuals and advisors should consider risks
is Tara Parchment, head of private clients at Brit Insurance. The
editors are pleased to share these insights, and invite readers
to jump into the conversation. Email tom.burroughes@wealthbriefing.com
and jackie.bennion@clearviewpublishing.com
Money doesn’t solve problems, and in the case of wealthy
individuals it can often generate a whole new set of
difficulties. The affluence of such individuals often makes them
more of a threat when it comes to cybercrime, fraud and
theft.
Cybercrime, the ubiquity of social media and the coronavirus
pandemic is reshaping the risk facing wealthy individuals and
their families, making the need to insure and protect against
this risk even more critical.
High net worth individuals become targets
Over the past decade, corporates and institutions have ploughed
trillions into shoring themselves up against
cyber-criminals.
As business puts increasingly more sophisticated security systems
and protocols in place, wealthy households are becoming the
easier target for cyber criminals. Often sitting on assets just
as sizeable, but without the stringent security measures in
place, wealthy families are evolving a reputation as “lower
hanging fruit” by hackers.
The cyber threat facing individuals is often more personal than
for corporates, meaning it can bring both a financial and
emotional toll. While corporates are often targeted for data that
holds financial value, such as customer bank details, for
individuals, cyber breaches and attacks can often bring the loss
of personal data and information, stolen to blackmail or to
extort money from the victim.
Wealthy families need to educate themselves to the growing risks
facing them and, put into practice the same behaviours and habits
they’d have if they were a corporate entity. Encrypted passwords,
up-to-date security programs, and avoiding storing sensitive data
on the cloud are just some of the ways individuals can bolster
their defences. In recognition of the growing threat cybercrime
poses to wealthy families, cyber-insurance is now often included
in bespoke private client insurance policies, helping to cover
the financial toll of these breaches should they occur.
Social media leading criminals straight to wealthy
targets
Technology is not only an entry point, but an enabler when it
comes to criminals targeting affluent individuals.
Burglaries, kidnapping, carjacking and blackmail are in no way
new or novel threats facing high net worth individuals. However,
the increasing use of social media and the divulging of personal
information has heightened the prevalence of these threats,
giving criminals crucial insight they previously wouldn’t have
had. Social media has therefore given criminals a sizeable
advantage, enabling them to be far more sophisticated, targeted
and strategic in terms of how they approach their
crimes.
The highest profile and widely cited example of this in practice
being Kim Kardashian’s gun point burglary, in which millions of
dollars of jewellery was stolen. Famously it was her social posts
publicising her location and the sizeable jewellery collection
she had in tow that led the burglars straight to her hotel
door.
When posting on social media, all users could do with paying more
thought to the level of information they’re sharing online, but
for wealthy clients where there’s far more at stake this is even
more so the case. This vigilance should also extend to friends,
children and family members who may also inadvertently be sharing
compromising information online.
While closed profiles can limit the number of people gaining
insight into your clients’ personal life, it’s important to not
let this offer them a false sense of security - and that they
remain hyper vigilant as it’s not difficult for a criminal to
masquerade as a familiar face through a fake profile.
Stay at home, but which one?
While the advent of social media and new associated risks may
have taken a decade to manifest, the pandemic has brought change
and new risk almost overnight.
With lockdowns coming into action all across the globe, billions
of people have been spending an unprecedented amount of time at
home and around their possessions, meaning theft or undetected
damage to their home or possessions is now far less
likely.
However, for wealthy individuals that own multiple properties
across the globe, the pandemic has forced them to stay in one
place, leaving their portfolio of properties unattended for
significant periods of time. Sitting empty month after month not
only makes these properties vulnerable to opportunistic burglars,
but also damage that has the potential to go unnoticed and
unresolved. A leaking pipe or loose roof tile could be left
undetected for months, racking up significant damage and a
sizeable repair bill.
Exacerbating this matter for wealthy individuals is the fact that
the value of these homes and contents are far more sizeable than
most, meaning the cost of repairing or replacing could run into
thousands if not millions.
Pandemic or not, comprehensive insurance cover for the home and
contents is essential. However, for wealthy individuals and their
families in particular, the virus has demonstrated the need for
comprehensive and bespoke insurance that accounts for the often
priceless assets their homes can hold as well as their
lifestyle.
Prevention is better than the cure
Wealthy individuals have long been a target for criminals, what
is new and changing however is the nature of the risks and
challenges they are facing. Though as these risks change and
evolve, so too do specialist insurance products.
Private client insurance is evolving to address the changing
risks facing wealthy families and is therefore worth considering
if your clients are concerned about the security of themselves,
their family and possessions.
In all scenarios however, prevention is better than the cure, and
that’s also the case when it comes to insurance. Through services
such as partnerships with security consultants, defensive driving
courses or ethical hackers, private client insurance can not only
ensure that clients are protected should the worst happen, but
also minimise the chance of these events happening altogether.