New report from Chubb probes the millionaire mindset to find what matters to them
High-net-worth individuals in Canada and the United States are feeling challenged by weather risks, the economy, and potentially ruinous lawsuits, according to a new survey.
Two thirds of respondents with investable assets of at least US$500,000 with the majority reporting assets of $1.5 million to $25 million told the inaugural Wealth Report from Chubb that it’s harder than ever to build and protect their wealth. They worry about their investments losing value amid volatility driven by the economic environment and the uncertainty around it.
Affluent North Americans are working harder to maintain their wealth with 83% of participants employed and almost one third saying they don’t want to retire. This is not all about money though as many are able to do work that they enjoy because of their wealth, even those who inherited it.
But beyond the economy, respondents are concerned about their property with 76% citing climate-related extreme weather as the top risk to their homes, 63% concerned about water damage, for example from hurricane or flood damage, and 31% saying wildfires are too close for comfort.
"We have experienced the consequences of increasing frequency and severity of weather-related property damage across the country with more powerful storms, wildfires, and the unexpected occurrence of deep freezes in southern states," commented Jennifer Naughton, EVP and Risk Consulting Officer for Chubb Personal Risk Services. "While weather has received substantial attention, damage within the home from internal sources such as plumbing line failures, leaky waterlines to an appliance or AC units can be destructive and often require long and costly repairs for those impacted."
Treasured collections
Four fifths of poll participants own treasured collections such as fine art, jewellery, cars, fine wines and other valuables, and the poll reveals concerns about keeping these safe.
This is not just about the value with 62% being passionate about what they collect compared to just 38% who see them mostly as investments.
Concerns include listed art fraud (87%), damage during transportation (86%), natural deterioration (79%), and theft/loss (76%). Fire, storms, and floods are among the top concerns regarding loss of their collections.
"It's important not to lose sight that external climate, weather-related risks and vulnerabilities specific to particular items can also impact collections," said Laura Doyle, SVP, Fine Art, and Valuable Collections Product Leader at Chubb. "We counsel that there are steps collectors can follow to help preserve their collections, including the installation of centrally monitored alarms, climate control systems and emergency preparedness planning."
Lawsuit risk
Apart from possessions, nine out of ten of the 800 wealthy Canadians and Americans polled said they are concerned about the size of a potential verdict against them if they were to face a liability lawsuit.
Little more than one third of respondents have excess liability insurance coverage, with almost half believing they would not be at greater risk of a lawsuit due to their wealth. Injuring someone in an auto-related incident is a concern of roughly four in ten poll participants.
"We have observed that many homeowners aren't aware that liability policies are available that go beyond the basic coverage offered in a homeowner's policy,” Robic added. “This is where an agent or broker can add value to closing the protection gap by providing expertise and advice to identify vulnerabilities and recommending the right coverage to protect assets and, most importantly, prevent losses from happening in the first place."
