Fresh research just carried among brokers found a lack of clarity around what constitutes a MNW (mid net worth) or HNW (high net worth) client in terms of household insurance. This is important for consumers as expertise levels can be demonstrated to accommodate and reflect their categorisation effectively, according to Home and Legacy.

Apparently, some of the confusion comes from the absence of a consistent definition of clients. With bank accounts, the levels of income are very much the definition of which accounts are relevant, and attractive. But roughly 60% of those surveyed said insurers use different terms – even those who thought there was consistency gave wildly different descriptions of each product.

However, just under 20% of respondents were comfortable with it, explaining that it assisted create a healthy market, encouraging competition among insurers and emphasising the importance of advice and giving clients more choice.

When asked who would be considered a HNW client, respondents set the minimum sums insured at a mean average of £117,864 for contents and £636, 000 for buildings which is surprisingly low. Whilst there isn’t an industry-wide product entry point for this market, this is considerably lower than the levels insurers set – £200,000 for contents and £1 million for buildings.

Surprising Key findings

• 97% of respondents said their mid and HNW clients had underestimated their sums insured, with almost half of these stating that at least 60% of their clients regularly underestimate their sums insured by an average of 43%
• Sums insured for contents, collections such as fine art or antiques and buildings are regarded as the most important factors when categorising clients into mid or HNW. This is closely followed by the client’s appetite for enhanced cover.

Their research also highlighted developments with the definition of MNW customers. As a result of the fall in the perceived entry point for a HNW individual, there is an extremely footprint for the MNW category. Insurance brokers said this group had sums insured between £75,000 and £99,000 for contents and £350,000 to £499,000 for buildings.

MNW policies often have a number of features not available with standard home insurance. As well as providing cover for items such as fine art and antiques, MNW policies often include:

1. worldwide cover for contents
2. cover for students’ contents when they’re away from home
3. parents or grandparents’ contents if they’re in residential care and
4. accidental damage as standard.

In addition, cheap empty property insurance on second homes or cheap vacant property insurance ( or sometimes known as cheap unoccupied property insurance) is far more palatable for insurers to add as a secondary policy.

For unbiased advice and quotations on all Mid or High Net Worth property risks, contact Grafton Insurance Risk Solutions on 01932 450154 for an appraisal.