Interview: James Long, Criterion MD

Have you noticed the number of high-net-worth claims rising over the last year?

Claim numbers are increasing because there are more HNW individuals. Over time there are an increasing number of people becoming wealthy and as a consequence, the HNW population is expanding. This means that the number of HNW insurance policies that are sold is growing and so the number of claims is rising.

Are the types of the claims changing?

The most common HNW claim is still escape of water, which is the most common general property claim. Somewhere between 60% and 65% of HNW claims are for escape of water.

Are you seeing much fraud in the HNW space?

There is probably less fraud in HNW than in other classes of business in the UK property market. But when it does happen it tends to be on a much grander scale and it tends to be for larger amounts of money.

We came across a fraudulent case where we made some inquiries and the customer had a schedule of specified items of jewellery, which were valued in total at about £200,000, but individually they weren’t particularly valuable. The insurer had never asked for any proof of ownership or valuations on these items.

So we had a list of jewellery and it turned out that the customer had raised a lot of money through loans, which were secured by these items and the customer had shown the list of items on his insurance policy schedule to various banks and used that as security against a number of loans that got turned down, but none of the items actually existed at all.

What are some of the challenges the sector is seeing?

The challenge now is to provide a service which matches the expectations of the HNW customer. By that I mean the demographics of the HNW population are changing.

There are younger HNW customers around nowadays. For example, a You Tube influencer is someone that now is potentially a very wealthy individual who will have a HNW policy. That person may have a very different expectation as to how they would want their claim handled, compared to perhaps a member of the landed gentry who might be in their 60s or 70s.

That creates a real challenge. How do we deliver the service that would match both of those individuals’ expectations? The way that we need to do that is to create more choice in the way that HNW claims are handled. Traditionally, loss adjusters have always visited the customer, but the challenge that we now have is to provide more technology-based solutions to handle claims.

HNW is all about choice and flexibility. So if you are a HNW customer paying a very high premium, you don’t necessarily want your insurance company to say this is the way they’re going to settle your claim. What you want is a menu and a range of services so you can choose the nature of the service, which is most suited to you.

What are your predictions for 2020?

There will probably be continued polarisation between mid net worth, HNW, and ultra-high-net-worth. In other words the nature of customers and the way their claims are handled will be increasingly different.

That has been a trend over the last year or two and that will probably continue. So more differentiation between policy wordings and philosophy between those sectors. There will probably be an increasing emphasis on controlling indemnity spend, which again has been a trend during the course of 2019. And as ever, there will be more and more emphasis on services and providing choice to the customer.

What are Criterion’s plans for 2020?

We are to continue to grow during 2020 and beyond. We’re planning to have a menu of services available to our clients and to their customers, which will provide them the choice on how they want their claim handled. We’re working on various technology lead projects at the moment to be able to deliver on that.

We’re also looking to develop the residential real estate side of our business, which is very much allied to HNW claims. For example, when escape of water occurs in a block of flats this can cause huge inconvenience to both tenant and landlord. Often for these types of claims there are several insurers and loss adjusters involved in handling building and contents claims for the different parties. This type of scenario can be time-consuming, inhibit good communications and if not handled properly increase an insurer’s indemnity spend. So we are offering to handle the loss adjusting for all claims in these types of scenarios which will deliver clear savings to insurers while reducing the lifetime of the claim.