RISK FOCUS: CATASTROPHE
Disaster Resiliency for High
Net Worth Homes
Having a resiliency
plan and practicing
it can make all the
difference in a disaster.
By Jon McGoran
Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resilience. But help is on the way.
Armed with loss data, innovative new programs, technological advances, and
a growing army of niche service-providers aimed at addressing an astonishingly
diverse set of risks, insurers are increasingly determined to not just insure against
their high net worth clients’ losses, but to prevent them.
Insurers have long been proactive in risk mitigation, but increasingly, after the
recent surge in wildfire and storm losses, insureds are now, too.
“Before, insurance was considered the only step in risk management. Now,
our client families realize it is one of the many imperative steps in an effective risk
management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn
And especially in the high net worth space, preventing that loss is vastly
preferable to a payout, for insurers and insureds alike.
“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars
… whatever they have spent in a year is money well spent. Plus they’ve saved this
important asset for the client,” said Bruce Gendelman, chairman and founder
Bruce Gendelman Insurance Services.
HIGH NET WORTH VULNERABILITIES
As the number and size of luxury homes built in vulnerable areas has increased,
so has the frequency and magnitude of extreme weather events, including
hurricanes, harsh cold and winter storms, and wildfires.
“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger,
SVP Risk Management, PURE group of insurance companies. “In the western
states alone, a little over a million homes are highly vulnerable to wildfires because
of their proximity to forests that are fuller of fuel than they have been in years
Such homes are often filled with expensive artwork and collections, from fine
wine to rare books to couture to automobiles, each presenting unique challenges.
The homes themselves present other vulnerabilities.
“Larger, more sophisticated homes are bristling with more technology than
ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss
Prevention for AIG’s Private Client Group.
“A lightning strike can trash every electronic in the home.”
NICHE SERVICE PROVIDERS
A variety of niche service providers
are stepping forward to help.
Secure facilities provide hurricane-proof, wildfire-proof off-site storage
for artwork, antiques, and all manner
of collectibles for seasonal or rotating
storage, as well as ahead of impending
Other companies help manage such
collections — a substantial challenge
anytime, but especially during a crisis.
“Knowing where it is, is a huge part
of mitigating the risk,” said Eric Kahan,
founder of Collector Systems, a cloud-
• Highly secure off-site storage
for art and other collectibles is
• Disaster prevention measures
that can be installed during
construction will cost less.
• The average value of homes
enrolled in AIG’s Smart Build
program is $13 million.
“Before, insurance was
considered the only step in risk
management. Now, our client
families realize it is one of the
many imperative steps in an
effective risk management
— Laura Sherman, founding partner, Baldwin
Krystyn Sherman Partners
High-end homes are increasingly built in remote areas prone to catastrophes.