Austyn Tusler, Hiscox's new
Head of the UK Art and Private client group

How high is high?

How do you define high net worth? Different insurers have created a variety of pigeonholes into which they can slot clients who have above-average wealth. ‘Mid net worth’ and ‘ultra wealthy’ are used alongside ‘high net worth’.

From Hiscox’s perspective, Austyn splits wealth into two categories. There is the ‘emerging wealthy’, with home contents worth at least £50,000. Then you move up the ladder to high net worth, who need to insure contents worth £150,000-plus.

On his definitions, there are around five million people in the UK who fit into the emerging wealth category, with roughly 2.5 million household policies in force. Then there are about 700,000 genuine high net worth individuals, who account for 400,000 policies.

Austyn says: “I think high net worth as a terminology is a barrier to entry. Clients themselves might not be comfortable with the phrase. I think quite often people are very modest and so don’t like to say that they or their peers are high net worth.

“But it is a phrase that has been coined and adopted by the industry and it is difficult to change.”

A growing number of underwriters have tried to move into this market, and no wonder. If managed well, high net worth books are generally more profitable for both brokers and insurers.

So how can brokers sort the wheat from the chaff? Austyn says it is down to the credibility of the insurer.

“Look at the length of time someone has been in the market, the quality of their claims service and their pedigree,” he advises. “We try to communicate with brokers in a way that makes it easier for them to identify these features and highlight them to the consumer.”

Winter 2007 > home > Features

A second look

John Watson talks to Austyn Tusler about how his time away from Hiscox has changed his views on the industry

Have you ever had a dream where you float up above your body and find yourself looking back down, seeing yourself as others do? Austyn Tusler, Head of the UK Art and Private Client Group at Hiscox, has been through the insurance equivalent of this out-of-body experience, and he feels he has learned a lot from it.

Austyn rejoined Hiscox last August after leaving in 2003 for a three-year stint at rival AIG. He says: “Once you get outside of a business, people tell you things that they wouldn’t have while you still worked there. You come back in with a far more pragmatic view of the reality of where your business is.”

This renewed sense of perspective has helped Austyn to shape a vision for how Hiscox should operate in the high net worth (HNW) market. He manages the company’s 506 and 606 household policies, while Charles Dupplin continues as Chairman of the Art and Private Client Division.

Austyn says: “There has been a change in how the market looks. Historically, HNW insurance was geared towards old money. In recent years, the growth in wealth is coming from new money, not inherited money. People are getting richer quicker, through changing commerce.”

This means there is a growing number of customers – what Austyn calls “the emerging wealth” – who may not always be identified by traditional definitions of wealth.

He says: “Historically we’ve missed a trick, not picking up clients earlier in their life, for example the professional who is earning a high salary but who doesn’t necessarily have the property that might normally signal they are a client for us.”

Austyn cites the opportunities for the broker in the revenue these customers can generate. While emerging wealth clients are probably insured, they may have bought insurance through a bank or building society and may be unaware of the quality of cover and level of service they could get by taking a specialist policy such as 506.

He says: “It is for the broker and the insurer to educate the customer as to why they might want to buy a premium level of service and exceptional cover, often at a similar price.”

Getting the word out
This education process is one reason why Hiscox last year used television advertising for the first time to help build brand awareness.

“We hear reports that clients are now coming into brokers asking for a Hiscox quote,” says Austyn. “This brand awareness benefits the whole sector.”

As clients accumulate more wealth, their insurance needs become more complex. Brokers and underwriters are able to afford to devote the time to both assessing risks more fully and providing comprehensive risk-management advice.

Austyn says: “We want brokers to be involved in this process, and we very much encourage them to attend all the surveys. It helps them to better understand their clients’ needs and different lifestyles.”

And there is more scope to demonstrate the benefits of a dedicated HNW cover. Hiscox, for example, has recently added a kidnap and ransom extension to the 606 policy and has also introduced risk-awareness training for customers or their children who are about to embark on a gap year trip or extended holiday. Austyn says: “As the rich get richer, the world gets smaller and people are looking to visit ever more exotic locations.”

Friendly faces
One of his business targets is delivering solid underwriting results, yet he is keen for customers to claim because he feels it turns them into ambassadors for the brand. He says: “We like our customers to have a claim. That’s when you get to enjoy the Hiscox experience in terms of speed of response, the speed of reinstatement and our ability to call in the appropriate specialists.”

The challenge for the broker in this market is to clearly demonstrate to discerning clients that they are adding value. Austyn, who spent eight years as a broker with CE Heath, is familiar with this challenge.

There are challenges for insurers too. Austyn says: “What Hiscox does, we do very well, but we acknowledge that if a client wants a portfolio quote for their home and their motor together, it is often the case that we are not going to be asked to quote.”

Hiscox took the opportunity to discuss this in more detail with brokers at a series of road shows last autumn. A portfolio approach, including motor, is now under active consideration for 2007.