Watch: Expert strategies for high-net-worth protection

Mark Colegate: Hello, welcome to this Insure TV Masterclass in association with Aviva Private Clients. We are looking at the outlook for high-net-worth individuals. What are some of the trends in the market when it comes to insurance? Well, to discuss that, I'm joined today in the studio here in London, by a panel of three experts. Let's meet them. They're all from Aviva Private Clients. Tom French is head of sales, Simon Goddard is head of underwriting and Stephen Wilkinson is head of risk management for the south of England. Let's get things straight underway. Tom, can you tell us a little bit about the origin story of Aviva Private Clients?

Tom French: Yes, sure, Mark. Aviva has always had a big reputation as a personal lines insurer in the UK. And have always had a Private Clients business but has not been specialist in the Private Clients world. In the last three or four years, there’s been a huge investment in the private client team. There's been two acquisitions. We bought a business from AXA XL, which was a Private Clients specialist side. And we also bought an MGA called Azure, who bought private client capability along, but really good technology as well for us. So, the sum of our parts now is a really big team, full of expertise and history in the market, lots of knowledge. And we're absolutely a force in the private client market and someone who's really focused on delivering for customers in this segment.

Mark Colegate: Okay. And Simon, head of underwriting, what are some of the trends, some of the developments that you're seeing in the high-net-worth individual market at the moment?

Simon Goddard: Well, like a lot of things in the current climate Mark, you find that theft claims increase when financial hardship is affecting parts of the country or most of the country. We have seen a rise in theft claims for a start. And it's generally the usual things that get stolen when thieves do get into homes. But in addition, you're seeing a rise in motor theft as well, not only of regular vehicles, but also high valued vehicles, which are being particularly targeted by organised criminal gangs.

Mark Colegate: We're talking about high-net-worth individuals, but have you got a working definition for us, what does that mean from Aviva Private Client's perspective?

Simon Goddard: There's no formal definition of a high-net-worth client. But ultimately, I think really, the common trait that we see is somebody either a person or their household that's got substantial wealth and investment. So essentially, these are the kind of clients that have at least one home, if not more, a number of vehicles, they'll have a good art collection and a good jewellery collection. And generally, the demographic is various occupations, but often the lead person in that family is often over 40 years of age.

Mark Colegate: Thank you. And Stephen as head of risk management, would you go along with some definition of what some of those trends are? He's mentioned theft, anything else to add?

Stephen Wilkinson: Yes, absolutely, Mark. So, think one of the key issues that we see as a risk management team when we're going out and meeting our customers in their properties, is the level of underinsurance. It's quite a consistent theme with regards to not just the buildings, but also their contents and their valuables as well in their various collections. So really having those conversations with our customers about the importance of having annual reviews with their brokers, but also having professional valuations every sort of three to five years subject to what their collection might be.

Mark Colegate: Well, let's pick up on that. You've mentioned theft and underinsurance. So, Stephen, if we've picked an area to jewellery handbags, you can see that's not really my area. Can you give us some idea of what the inflation has been in terms of, or the asset inflation has been in there and how that's built up over the years?

Stephen Wilkinson: Yeah, sure. So, certainly the handbag market has increased substantially over the last few years. The handbag market is sort of controllable, in terms of the integrity of the luxury brands, so the Chanel's, the Prada’s, Louis Vuitton, etc. They tend to almost sort of restrict the production of certain handbags, which obviously has an effect on the demand and the price of those, and then the knock-on effect of those at second-hand value as well. So, there's a lot of auction houses now that are having specific sales in fashion and handbags. Social media and the influences on social media have also impacted the value of collections of handbags. I would say, in terms of theft of handbags, handbags aren't really as secure as something like jewellery, for example, which will tend to be kept in a safe. The handbags tend to be out on show, so in the event of a burglary, it tends to be a lot easier, obviously, for thieves to take those handbags and actually use those handbags as well to take jewellery with them.

Mark Colegate: Tom, get your thoughts on that. If you're out and about talking with brokers, what are some of the issues that throws at?

Tom French: Well, yeah, accuracy of the valuation and making sure that they're insured properly is the key thing, and as Stephen talked about and as part of his role is making sure that the assets, we can try and advise the clients as much as possible and get the brokers to advise the clients as much as possible to keep things secure and hidden away and just be careful of where they're leaving their assets in the home because, unfortunately, they are targeted.

Mark Colegate: Well, from an underwriting point of view, Simon what sort of issues does that throw up? And how often would you want somebody to revalue a handbag? Is it after every high-profile online auction of second-hand bags takes place? And these things, because presumably, a bit like modern art or traditional art, these prices can move around quite quickly.

Simon Goddard: Yeah, very much so. We do ask clients to keep their, certainly, their specified items valued at least every three to five years. The handbag market hasn't moved as swiftly up in the last few years as perhaps the jewellery market and the price of gold. But what we do ask for them is to make sure that they've got the box and the certificate, a lot of these very high-end designer fashion handbags, will come with a certificate of authenticity to prove that you're buying the right thing and not a knock off from down the local market, as it were. So from that side of things, obviously, when we do go into houses, we, and Stephen's job, obviously, is to evaluate the content side of things in the house. What we sometimes find is that people have forgotten to actually value their collection of handbags because it's something they might have bought two, three, five, ten years ago. And then you look in the cupboard or the walk-in dressing room, and you realize there's also 80 pairs of designer shoes and designer clothing in the wardrobes, none of which has properly been assessed for their value. So we really impress upon our brokers who are in front of our customers to make sure they are talking about all these different designer goods that our high-net-worth clients might have in their wardrobes.

Mark Colegate: And these certificates of authenticity, do they tend to be physical certificates or increasingly is this something that's digital? And again, does that throw up particular issues as to how you securely safeguard them?

Simon Goddard: Still pretty much a paper document, actually. But obviously, most clients, when they're buying these very expensive handbags and purses from the high-end fashion houses, will often have an invoice that we can go back to, which will have a serial number effectively on there. The one thing we do comment on is around, and again, where Stephen goes out to the properties a lot more than I do, you notice a lot of people that have got the real significant handbag collections might have them on bespoke display cabinets that have been specially built in the dressing rooms. And of course, none of those are under any kind of security device like you would put your jewellery in a safe, for example. So you might have your client come home, put the replacement bag in the specific cubbyhole for that specific bag. But if a thief manages to get into that room, the chances are they'll find a hold-all, they'll put all the handbags in that hold-all, and they'll sling it out the window. So they're very easy to steal as well.

Mark Colegate: So it must be quite a difficult conversation to say to somebody with a big handbag collection, lock it all up securely.

Tom French: It can be. Completely. One of the biggest problems our brokers face is then is providing the correct advice to the customer, but they're not being too intrusive or too impactful in their life. So it can be a very difficult conversation. And actually, the best brokers we deal with are probably most skilled at having those conversations and being able to advise the client correctly, even if it's a difficult conversation.

Mark Colegate: Well, just on that, and I think this is probably not just about handbags, but I'm sure every client says, "Absolutely, I'm doing that 100%. I always put everything in the safe. I always switch the burger alarm on. I always put the handbag away in the right place." As a broker, do you just have to take people on trust after a while? Or is there a nice way of turning up with a bit of paperwork every three or four months and having a nose around?

Tom French: I think completely trust is a big thing in our field. And we trust our brokers that we, the brokers have to trust their clients and have the faith that they listen to the advice and they're taking it the right way. Now, obviously, we do get to claim scenarios where the client hasn't left the handbag or the jewellery where they said they would. And we just have to deal with the claim and treat that customer as fairly as we would treat anyone. And that's just down to the way we view our clients and the way we work in the market. Trust is a very important thing, and we absolutely trust our clients and our brokers.

Mark Colegate: When you say that, is this the sort of the, if I won't say the M&S promise, but you'll always refund the goods when they come back and not ask questions?

Tom French: That's a very, very good for our claims promise and very, very good at delivering. It's all about service in the High-Net-worth space Mark. So it's not just, we'll pay the claim, but it's how quickly you can respond and how much help you can offer very, very quickly to the customer. And we're very, very good at that, of course. I think you have to be in the high-net-worth market as a private client specialist, you just want to survive, if you haven't got that customer focus at the heart of everything you do.

Mark Colegate: I'd like to come back to the claims process a little bit later in more detail, but the other thing you mentioned, Stephen, was jewellery and particularly this whole issue around safes.  Again, I've seen safes of all sorts of conditions and all sorts of prices on offer.  How do you make sure your clients got the right one?

Stephen Wilkinson: Yeah, absolutely. So, the safe market can be a difficult market in terms of the level of claims that are openly available online, which are coming in. They tend to be cheap safes coming in from the continent that don't meet the European standards. So, one of the main things really is to ensure that if you're buying a safe, it is purchased through an accredited company, it meets the appropriate standards that are required for the level of jewellery that is going to be stored inside those safes, make sure that the safe is fixed into position in line with the manufacturers' guidance and that it's actually being fitted in by an approved safe company. It's not just being fitted in by a builder, which is sometimes what we will come across. But I think the security needs to be looked at in layers. It's not just the safe. So when we are looking at advising our clients on the security of the property, we'll start on the perimeter and the outside of that property. So we'll be looking at the perimeter walls, the fencing, the electric gates, just to make sure that those are all fit for purpose. And then as we sort of work our way back towards the house, it’ll be CCTV cameras and any external alarm systems.  And then when we get to the property itself, it’s assessing the physical security, i.e. door locks, window locks, and then also the technical security, which will be the alarm systems themselves and access control. And then once we're in the actual property itself, it's then securing those collections, whether that is jewellery and safes, or whether it might be a nice art collection with individual alarm contacts on those pieces. And even down to garden statues as well out in the grounds, how are they fixed into position? Are they covered by cameras? What's the sort of distance from the house, etc? So we have an all-encompassing review of the security that’s on site and safes is one small part of that.

Mark Colegate: But suppose on the camera point, does that just mean that when something bad has happened, you’ve got footage that, you know, yes, somebody did turn up and pinch it, or are there lots of people watching these cameras the whole time, and reacting very, very quickly?

Stephen Wilkinson: Yes, it's a little bit of both. So, the one area of technology that's really improved is the quality of the CCTV over the last five to ten years. But what we're increasingly seeing is that the cameras are now coupled with audio challenge systems on them, so that if the cameras are being monitored, or they're connected to somebody's mobile phone, and they can see that there's some kind of activity on the cameras, then they're able to issue an audio challenge via a speaker on the camera, and the success rates of those systems are very, very high.

Mark Colegate: And Simon, just talking about security properties, but I mean, there are obvious trends that you see as an underwriter in properties as if I say to where they are. So, if you're in an expensive terrace house, it’s actually much harder to break into because unless you've got the terrace on the end, it’s hard to get into the gardens. I don't know, do they tend to be less likely to be broken into something like that, where there's more people around than, say, having a very nice house out there in the countryside with lots of trees around it?

Simon Goddard: Strangely not, thieves will find a way in, and whether you live in the wilds of Scotland or whether you live in central London, if a thief wants to get into your home, they’ll probably find a way in. A lot of what we find, certainly of recent examples, are where people have actually been in the home when they've been broken into, but they didn't realize they've been broken into. So if they're still in the home, the chances are the safe, sorry, the alarms won't have been set because they're still living in the home. What thieves can sometimes do is they'll be monitoring the house somewhere from afar, but nearby, they'll see the family leave the residence, and then within a few minutes they’ll be scaling up onto the first floor jumping in a bathroom window that might be partially open. There might still be somebody in the house at a different level of the property, but it only takes between five and ten minutes for them to ransack a few rooms, take a few items of jewellery that weren't put in the safe, go for the handbag collection, throw everything in a hold-all, and they'll be out with a property within five to ten minutes. So we see that happening fairly frequently now.  If you have got a property that's perhaps more in the country or outside of a city, then a lot of, again,  similar methods of gaining entry to the property will be through porous boundary fencing or hedges. They might hide in the fences or hide behind the fences and hide in the woods watching the people until they go out and leave, and then they'll kind of come in and break into the house. So what we're seeing is the advance, as Steve mentioned on CCTV is really important. A lot of people put CCTV cameras in, which records thieves in action, but doesn't necessarily alert them to when they're actually there or approaching the property, and that's where we're advising our clients regularly on improving their CCTV cameras.

Mark Colegate: And what's the implication that, because I think you mentioned at the start, often it's people not just with one property, but with several. Let's say you had four and it's all wired up to your mobile phone. I mean, isn't there a danger you could sort of go mad having, you know, ultimately, about 80 of these remote cameras linked into your iPhone?

Simon Goddard: Yeah, more often than not, if you've got four properties, you’ve got somebody doing that for you. Yeah. So clients, obviously, they can pay to have professional security companies monitoring their alarms, monitoring their CCTV cameras. A lot of the larger risks that we go to is actually have an onsite team of private security doing that for them. So there'll be a rotational group of two or three security guards that work 24/7. They sit in a room somewhere in the property or in an outbuilding on the property. They'll be might be monitoring up to sort of 20 cameras at once, depending on the size of the property. So some clients will do that. If you've just got a smaller risk, perhaps, with a client that's got their main home in the UK and they might have a small holiday home in France or something, chances are they've probably got live-in, or at least a local concierge that will come and actually check on that property on the regular basis for you.

Mark Colegate: And Tom, in addition to physical security, which we talked about, what else can brokers do to help secure property and goods?

Tom French: Well, I think a good broker would be all over the security measurements and implications as a pair of our chaps have discussed. And so they would get really under the skin of the lifestyle of the client, understand what's going on and provide the right advice to the customer around how they are managing their day-to-day lives. Actually, it might be good I think to bring Steven in at this point and talk about how some of the bigger clients with their family offices and how they would vet their staff.

Stephen Wilkinson: Sure. Yep. I think the staff vetting is really important. So we have customers that will have up to 30, 35 staff, varying from your gardeners to your housekeepers to close protection officers. And it's really important that those members of staff are vetted. Background checks are carried out. And DBS checks are carried out as well. And that their backgrounds are fully assessed.  And the other week I was out visiting a client actually, and their staff were actually asked to sign non-disclosure agreements as well because of the level of profile of the client, and on their first day of work, they were taken through an induction program, which interestingly also included some training on their own social media profile and what they shouldn't be posting as part of their role really, just to ensure that the family remains secure, safe and it's private.

Mark Colegate: Just a quick follow-up, if I may, on the staff point that you mentioned. I mean, when you do look at things like thefts, to what extent, what percentage, roughly speaking, will be inside jobs, what percentage is really opportunistic, what percentage will be professional gangs that, you know, this is how they make their money and how they operate. Simon, can I get your thoughts on that?

Simon Goddard: Yeah, we don't see too many thefts in terms of inside jobs, I think, these days. We've seen a few in the last few years. We've probably seen a couple of big burglary claims where people's second homes overseas, which they thought were very well protected by a kind of a complex of security team operating on the complex in which their villa might be situated in somewhere in Europe. We see a few of those kind of cases, and you think, well, how did the thieves bypass the security and the local police to get to our property to burgle it? So we've seen a few of those, but not too many.  Inside jobs, in terms of understanding staff, those are the kind of cases that more often than not will only come around once that staff member has left. And suddenly, a piece of jewellery that that client is looking for can't be found anywhere. Now, it's easy to blame, obviously, other people, and especially if people have left, but sometimes they just can't be accounted for. So we do see some claims like that, luckily, not very often.  So it's only a small percentage, I would say, more of the percentage is the organised criminal gangs.

Mark Colegate: We've talked a bit around some of the trends around particularly jewellery, handbags and so forth.  But I wanted to move on to cars. I mean, huge area. Tom, what are some of the trends that you're seeing, or as you're talking to brokers, they're telling you about it.

Tom French: Well, the motor, high net worth motor market, Mark has been significantly impacted by theft in the last few years.  In the last year, we've seen some big trends on types of vehicles and marks that perhaps would never have been targeted before. I think the global conflicts, the war in Ukraine as an example, has definitely created a new black market for supercars and hypercars to be targeted and stolen. And around a year ago in London, we had a significant number of cars, not just with Aviva in the high-net-worth market, were getting targeted by very sophisticated thieves. It was a big problem. And we've worked very closely with our broker partners, particularly the specialists in the motor world to make sure that we're using the right storage locations, the right garages, the right security measures in place. There’s lots of high-tech kit and equipment now that can immobilize us to stop the car starting unless a key, certain keys in the car.  And we have trackers as well that we require to be installed so the car can be followed and tracked quickly by the police if stolen. But it remains a big issue. Thankfully, the supercar and hypercar thefts have calmed down, but we still have some marks that have consistently targeted for theft.  And we have to work without broker partners to really understand where those cars are kept and how they can be secured safely so that we can insure them properly.

Mark Colegate: What was the connection between the war in Ukraine and this spike in theft?

Tom French: Well, I mean, this is all, I wouldn't say anecdotal, it's certainly a theory, a working theory that because of the sanctions in Russia that they're not allowed to trade with certain brands around the world. So, your Ferraris, Lamborghinis, Rolls-Royce vehicles that were no longer able to be sold in Russia were being targeted for theft and taken out of the country via ill means and sold on the black market into Russia.

Mark Colegate: Thank you. And one of the other trends I suppose that we are seeing a lot of is this extraordinary rise in the number of electric vehicles. I strolled through Mayfair a couple of weeks ago and surprised I'm still alive. You can hardly hear the Tesla's sort of heading for you. But what are some of the trends in electric vehicles that you're seeing? And fundamentally are they easier to steal than an old-fashioned car with a key?

Simon Goddard: They generally are. Keyless entry cars accounts for, they believe up to 90% of motor theft in the last year. And that's because the thieves are using what they call a relay attack method in order to steal the vehicle. So let's say you've got your nice high-valued Range Rover, you've parked it on your drive, you’ve put the key just inside your front door. What thieves can do is they can use a relay machine which is just a small bit of electrical equipment that can be purchased on the black market. And they'll have a team of two, somebody will be standing with that relay device. And basically what they're trying to do is pick up the signal from the key to the vehicle. And that can be quite a distance as well between where the car is actually parked. And so what can happen is they'll use that relay device to essentially clone the key. It allows the person standing by the vehicle to enter the car and actually start the vehicle without the key even being there. And before you know it, you can drive that vehicle off very easily. So that's part of the reason why when we're looking at insuring high-valued vehicles, we're always looking around where that vehicle is parked overnight specifically, because you find more thefts overnight than you do during the day. But what we've also found is that certain car parks in London where high net worth clients might primarily park their vehicles on a regular basis, because there's no parking places outside their terrace properties in a lot of the high-end parts of London, is that using certain car parks, and even those are being targeted now. One particular park in Hyde Park was actually targeted by theft, we had three different vehicles go from one particular car park in the space of about two months.

Mark Colegate: So they have to wait until the individual with the actual key is somewhere near the car, and then they can work it out. Or can you get into one of these electric vehicles without worrying about the electric key at all?

Simon Goddard: Sometimes you can even do that. Yeah, so the key doesn't actually have to be present sometimes. What you do tend to find with the kind of keyless entry vehicle theft is that the vehicle damage is very minimal, because more often than not, they've actually got into the vehicle without accessing the key. But the next stage of that is a lot of these high-valued vehicles will have some kind of tracking device on them. So the damage to the vehicle comes when the thieves have actually got hold of the car, they've driven it away from the property, and then they start ripping parts of the car apart to try and find the tracking device in order to disable or remove that from the car. So if we do recover a vehicle that's been stolen, more often than not, there is actually damage to that vehicle that needs to be repaired, which has been caused by the thieves in trying to trace the tracker.

Mark Colegate: And if you've got one of these electronic or electric keys, is there the equivalent of a sort of safe, you can put it in to make sure that it's not a beacon giving out information to the sort of people you don't want to give it to?

Stephen Wilkinson: Certainly the Faraday pouch, it's something that is actually very cheap. It's sort of six, eight pounds, I think.

Mark Colegate: And it doesn't matter that it's not like a safe, so it doesn't matter that it's cheap.

Stephen Wilkinson: No, it should work. It should work. And that blocks what the thieves are able to do in terms of obtaining the data that they need to off the keys. And then again, it’s looking at the bigger picture of the security, so the tracking devices, sort of installing rising bollards, anti-ran bollards, around garages, and then obviously alarm systems and CCTVs again, is the best way to protect those vehicles.

Mark Colegate: And Tom, I suppose one thing with electric vehicles is how you charge them. I mean, are there any particular issues, again, when you're talking to brokers and going on with their clients as to where charging points are, if these are points of weakness in a system?

Tom French: Yeah, they can be. Absolutely. It's important that the charging points are away from the main home and away from any flammable sources elsewhere in a property. I believe Stephen, a place in Italy recently, it was a charging point in a location that was not very healthy.

Stephen Wilkinson: Was not very healthy. So we've seen an explosion, really, of electric vehicle charging points at clients' properties, but also other products that are using lithium-ion batteries as well. So a lot of bicycles now and scooters and so forth. So it's important to make sure that those products are being purchased from the manufacturers that meet all the right standards. The main risk of battery fires is really physical damage, overcharging and sort of manufacturers' defects. And those battery fires tend to burn at a much higher level for longer. And there's a risk that they could reignite as well. So it's been a real challenge for the fire brigade in the UK now, actually, to put procedures into place how best to fight those type of fires. So they all come really with the main tips, really, in times of protecting against fires from those sort of batteries, really, make sure that you're using the right charging cables, you're not overcharging, try not to charge overnight, ideally. If it's a bike, make sure that it's not being charged in an access route in and out of the house. That may be the only escape route that's available and absolutely make sure that they're being charged where there is a smoke detector so that it's interconnected into the wider fire alarm as well.

Mark Colegate: Is it worth letting the local fire brigade know what you have in terms of lithium-ion batteries on the property? So if they ever do get called out, they don't think, "Well, we'll pull water over this and see what happens."

Stephen Wilkinson: Yeah, I mean, certainly, it's quite hard to get fire brigade to come out now and visit properties. It's very much down to county level on that. But I would say that if there's a large collection of vehicles, or indeed, if it's a large collection of art or any other valuables, and it's a larger estate in particular, then it's definitely worth requesting the fire brigade to try and visit. Or there are professional fire risk assessment companies that would also come out and be able to advise on the protection of vehicles and so forth.

Mark Colegate: Thank you. Well, we're talking about electric vehicles being the trend and the way of the future, but is it having any impact on the pricing of conventional petrol cars? Because I suppose if you've got a really nice classic car, every year it gets older, you don't want to get rid of it, but presumably, in the back of your mind you're thinking, eventually, it might be quite hard to get your hands on petrol for this thing. At what point does that have an impact on resale prices and the value and how much you insure it for?

Tom French: Well, the big impact on pricing in the market at the moment for insurance, but also the resale value of the car and sourcing the cars, is down to the parts. At the moment, the petrol cars are still a healthy amount of that in the market. We've not gone completely electric just yet Mark, but in the future, that will be an issue and they will become true classics. But really, repairing those vehicles, dealing with a claim for those vehicles - what has caused big issues for us in the market in the last few years, following the pandemic, issues with Brexit, supply chains, again, global conflicts - these have all really impacted the market in terms of availability of parts, availability of resource to help prepare the vehicles. So the thing that's increasing the costs of buying new cars and sourcing new cars and dealing with the classics and repairing the older cars purely comes down to the supply chains and the lack of available parts and the cost of parts as a result to get them in.

Mark Colegate: Well, given there’s finite number of parts, perhaps, for classic cars, shall we say - I mean, have you ever been in a position where someone puts in a claim and says for my classic car and on reflection, it kind of isn't, sort of parts of it are a classic car, but actually there's been so many replacements over the years as this superficial wonderful 1930s vehicle - it's not real.

Tom French: Well, yes, but I think part of the wide variety of collectors that we deal with in a classic car space, Mark, and a lot of the brokers that we deal with, whilst it might not be 100% an original vehicle, the passion in the collectors and the types of clients we insure is that they source parts that are as close to the original as possible. So there's still an element of a classic engine in the car, even that might not be the very original one. And so they're restored very lovingly and very, you know, with a lot of care and with a lot of passion. So they're still very valuable items to insure because of how well they've been renovated and looked after.

Mark Colegate: Okay, thank you. Now, we talked a little bit about movable property and cars, but let's talk about property that doesn't go anywhere, sort of real estate. Simon what are some of the trends that you're seeing there in terms of where either people are making claims or where the price of risk is moving quite dramatically at the moment?

Simon Goddard: Well, I think what we see in terms of, we look at our new business and where are we getting new business coming into our business? And it tends to be developers or investors outside of the UK, more often than not, are buying the largest, most valuable properties, especially in London. More often than not, those properties come with a team of staff, a team of security staff, but also they don't just move into them straight away. So you do find the trend is that the house will be purchased, but then you might have a period of work somewhere between six months and six years, depending on what that person wants to do to that property. Some parts of London are being bought purely with the investment in mind. And therefore, they might buy two substantial properties next to one another and then convert them into one super home. So it's not unusual to see sort of very big headline numbers being put in the newspapers and things around house sales. What that also means is those properties are being fitted out with very, very high end bespoke fittings and fixtures. We saw some risk recently that a client had some kind of Swarovski crystals embedded into the carpets around the house along with their family logo in certain parts of the property into the polished concrete, etc. So people are putting their real sort of personal touches on these properties because they can afford to. And when you come to having a claim, that obviously is going to increase our costs. Because ultimately, if a property is made, for example, uninhabitable because of a water damage loss or a fire, we're going to have to put that person in an equivalent home when we when they move out for us to repair their property. Now, obviously, you can't do that with a person that might have their family logo embossed into everything, but they still want to be in a big home similar to the size of their own. So that's one cost that we have to factor into our claims, is that the cost of actually renting them a home for a few months might be considerable. And that's before we even consider repairing the property that's been damaged.

Mark Colegate: How much could it cost to put someone up, I don't know, three or four bed house for three or four months, six months, some where in the West End of London?

Simon Goddard: So we insure lots of properties in West London. And if you look today, the average four bedroom property in Belgravia, would cost you about £16,000 a month to rent. So if you think of a client being out of a house for six months while we deal with their water damage claim, that's £100,000 added onto the cost of that claim before we even paid for the cost of replacing the parts or repairing the property. So it's considerable. And some of the properties that we insure, which clients do rent out, we know that our commanding rents are over £20,000 a week. That just puts it into some perspective.

Mark Colegate: And when somebody puts, let's say, crystals in concrete in a certain pattern, to what extent is the person that puts them in an artist in their own right. So you're not just saying, I can get somebody, I can get an artisan with certain skill level to put some more crystals in the same pattern, or are you sort of saying, we've got to get Damien Hurst back to do this. Part of the value was the person that put them in.

Simon Goddard: Absolutely.

Stephen Wilkinson: Yeah. I mean, that's one of the challenges, absolutely, that we face is a lot of the buildings that we are insuring are listed buildings. And the bespokeness internally is quite extraordinary. And part of the claims cost is to often have those artisans to come back and redo the work that has been damaged. We've recently had a claim for a ceiling which had been originally painted by a company based in Paris. And part of the claim cost is now to have those specialists come back from Paris to redo their original work following a water damage claim.

Mark Colegate: On this basis, I mean, how often should you be as a broker sort of encouraging your client that somebody comes around and just has a bit of a walkthrough? And just, you know, whether you're repairing a house or you've got it up and fully running, you just get somebody to come in and give it the once over and make some recommendations.

Tom French: We can often send Stephen and the team out to reappraise if there's been significant work. So, I think a lot of it is obviously we get the sum insured and the property and understand what assets are there and what the value to rebuild that property will be. Then we have to have a conversation year on year. We obviously increase the sums and short in line with inflation and make sure that we're collecting the right premium each year. But we do often speak with the broker and just understand that if they've done any work to the property, if they've done anything significant since we last visited, that might mean that we should go back and have another look at what the sum insured is. There's a lot of collaboration with our broker partners to make sure that we stay on top of that.

Mark Colegate: How do you communicate what the level of inflation is? Because headline inflation for the UK, it might be influenced very much by eggs or the cost of rice, which is possibly a very different measure of inflation to somebody who's had all sorts of extraordinary expensive things insured.

Tom French: We have pricing analysts who work within our business. We really monitor the indexation market to make sure that we're following buildings, replacement costs, contents costs. We look at certain matrices to make sure that we're following the right path. Then we work with Stephen and the team as well to account for what we think the inflationary impact would be on bespoke, high net worth, ultra-high net worth properties. Then we look at our own claims data as well and we make an assessment based on that. But inflation in the household market across all markets, but certainly in the household insurance market over the last few years, has been higher and the high net worth market is not exempt from that. In fact, obviously you have to really sure that we're collecting the right amount of premium each year to account for the increased claims cost that we incur because of impact of inflation.

Mark Colegate: One thing I did want to come back to on real estate is obviously headlines with climate change and the impact that that's having, be it floods or in London, a clay city that can dry out and you've got a lot of buildings on top of it. What are some of the trends that you're seeing there? Simon do you want to pick up on that?

Simon Goddard: Yeah, water damage is never going to go away and it's not just a winter problem. You might have seen more freeze events, obviously, because they make the headlines and they affect certain parts of the country. Obviously, you will get a lot of water damage claims caused by pipes freezing in lofts and outbuildings, etc. But the problem never goes away. So if you're looking at a modern house or a house that's had a modern extension, chances are you'll have a plastic push-fit plumbing system in the house. The problem with that is those pipes can work loose over time or the pressure can build up and force the pipe apart. So we see water damage in there, but similarly in the older properties that have got lots of welded copper piping throughout. You'll find that those over time can develop very tiny pinhole leaks. And of course, they don't often erupt in a very large volume of water. They're more of like a slow leak where somebody notices a damp patch that's just not getting any better. And if that's, for example, in your kitchen, that's got a wonderful stone flooring and a bespoke fitted kitchen, the only way for us to get to that underfloor piping is to basically take the kitchen out, take the floor out, and then drill down to find the cause of the pipe. So those kind of claims can be considerable. But similarly, if you've got a pipe that bursts in your third floor, third story of your property, and it runs all the way through the house because you're away for the weekend, that water continues feeding through the mains. Then again, that's going to be a considerable claim, and it's come through three or four stories of the property. So water damage, unfortunately, is not getting much better at the moment. Do you want to talk about devices that…

Stephen Wilkinson: yeah, I was just going to say fortunately the leak detection devices have improved hugely, actually over the last 5 to 10 years. So we would, the type of detections that we generally come across are leak cables and probes that you would tend to find in plant rooms, just raised slightly off the floor, but will detect any moisture and they'll set off an alarm if there is an issue, right through to individual detectors that can be placed under baths and other at risk areas, right through to systems which can be put on to the mains water, and they will monitor the average flow of water in that property. And if, for whatever reason, there is a sudden surge in pressure, burst pipe, etc, they'll shut the water down. And obviously you'll still have a bit of water in the system that will come out, but essentially it's not going to be pumping out for the next two or three days whilst our customers are away on holidays and long weekends and so forth. So the leak detection market has greatly improved the situation. And I think the architects and quantity surveyors and so forth when they are doing works in existing properties or building from scratch, they too are now much more aware of these devices that can assist because it can be exceptionally disruptive for our customers if they've got a leak that's ongoing for two or three days in the property.

Mark Colegate: But just thinking ahead on this, Simon, if there is a client that's thinking of getting something built, does it make sense to talk to the insurers before they even start the building? I mean, is there a point where you can say it looks wonderful, but if and when, because it will happen, a pipe goes, that's 150,000 pounds of knocking through concrete, we'd have to do. If you structure it this way, it'll be 5,000 pounds and it will take you a week. Which do you want?

Simon Goddard: No it's very true. And we have that conversation quite frequently. Luckily, the brokers that we work with as well are very switched onto this too. So a lot of brokers will be advising their clients when they very first go and meet a new client, they'll be asking them around their physical security, the occupancy of their property. But they will ask questions around, do they have a basement? Is there non-return valves on the pipes in the basement? Is there a water leak detection device in the property? And whether it is just a standard alarm or if it does shut the water system down? So we rely on our brokers giving us this information. But obviously, when we do write a risk, well, we haven't got everything chapter and verse. Then obviously, Stephen's job as the risk manager is to go around and look for these things and ask the person on the ground exactly what they've got in the house. But certainly when it comes to new build properties or extensions, if we can be involved in that process, then it's fantastic because it shows that the client is working with us and really wants to mitigate the risk of something happening and disrupting their life.

Mark Colegate: So we're talking a lot, obviously this whole conversation is around high net worth individuals. But Aviva as a group must be generating and collecting data all over the world from all classes of clients. Is there anything you can do with that dataset that's particularly useful here in the pricing of risk or in, I guess, sort of thinking about anticipating services you can provide these clients?

Tom French: Yeah, certainly being part of the Aviva group is a big benefit to us in the private client business, particularly data science and big data. We've got a lot of access to information around flood, and flooding has been a big issue in the last 10 years. I think it's going to continue to be a big issue. So we've got more information than we've ever had before using that as an example around how we underwrite on risks that are particularly susceptible to flooding. So yeah, there's a good example there of how being in the Aviva group has definitely benefited us.

Mark Colegate: I suppose the other angle with that as well is geographic reach. And again, if you've got a high net worth individual and they've got properties and interests around the world. I mean, do you get examples where something just isn't an issue in the UK just because of the legal structure and the way we do things here but actually, when you look at it and they say, oh, we're doing something very similar in Germany, you go, that could be an issue because they just do things slightly differently in Germany. And there are different consequences if something goes wrong.

Stephen Wilkinson: Sure, I think that from the risk management perspective, the risks in some of the countries, a lot of the clients and their properties will be in similar sort of areas. So they'll tend to be in the south of France or maybe in Tuscany, in Italy, Spanish islands. We see a lot of properties out there, Portugal as well. And because we're going back to the same areas to carry out our surveys there, we get a really good understanding of the risks that are local to those areas. So wildfires, for example, in the south of France, Portugal, Spain, obviously we don't have that much of an issue over here in the UK, earthquake as well. So our data analysis and our general knowledge of the earthquake data for Tuscany in Italy is another area that would be very different to the UK. There's laws in France around outdoor swimming pools, which have to have a certain standard of security around them to prevent people from falling in. And if customers or clients don't have that level of security product around those swimming pools, there's some quite large fines. So there's different rules, there's different regulations in all of these territories. And just based on the number of surveys that we're doing in those areas, it allows us to really understand the local laws.

Mark Colegate: We're almost out of time, but I did promise right at the start, that I'd come back to claims. So we've talked about a huge amount today, but when you put that together into the claims process, how long it takes, the detail you have to go into with high net worth individual clients, what are some of the trends that you're seeing? Is it getting quicker to get claims processed, or just taking longer?

Tom French: It's much, we've got an excellent claim service, but it's much, much harder to deliver a really fast and slick claim service than ever before. When we spoke about the motor trends earlier in the conversation, the same issues are impacting the general household insurance market in the UK. So Brexit, Covid, the global conflicts, they are really impacting supply chains, the cost of materials, and what might have been an escape of water loss a few years ago, where you can quickly get someone in to tidy up, restore the property, dry it out, and then we'll get in and redecorate it - it's taking a lot, lot longer, which impacts then the cost of alternative accommodation, which was something Simon alluded to earlier in the conversation as well. All of this is impacting the end value of the claim, which obviously then has an impact on the pricing at renewal for customers as we come around on an annual cycle. So it's a really, really tricky market at the moment. It's very, very difficult for our brokers to navigate in, and we often talk internally on how we can position ourselves to support brokers as best we can. Very, very challenging. I think our claims team do an outstanding job, as I said, but it's a very tough time to be an insurer and to deliver great service.

Mark Colegate: Thank you. Now, you've all got a slightly different perspective, I think it's fair to say in insurance, you're coming at it from different parts of the ecosystem. A final thought from each of you, if there's one piece of advice you'd give a broker, either in or thinking about the high net worth individual market, what would it be? Stephen, can I start with you and I'll work my way down the line?

Stephen Wilkinson: I'd say to ensure that you have a conversation with your customer every year, at renewal, and really discuss the levels of insurance that they require, making sure that there isn't any underinsurance on their buildings and content.

Mark Colegate: Simon, from the underwriters perspective.

Simon Goddard: The underwriters perspective, it's really just to make sure that the broker is furnishing as much information about that client and that risk that they can give to us, so that we can make sure we're providing the right cover for that client.

Mark Colegate: Tom.

Tom French: I think I mentioned earlier in the conversation, the most important thing I think is, and the best brokers we deal with, are those that are prepared to have a difficult conversation with customers. Don't shy away. My advice would be, don't shy away from discussing a potentially difficult issue with a customer. If you're able to navigate difficult conversations well with customers, then that's the path to success.

Mark Colegate: We have to leave it there. Thank you so much for watching, my thanks to our fantastic panellists today: Tom French, Simon Goddard, and Stephen Wilkinson. From all of us here, thank you for watching, and goodbye for now.