A new survey from Chubb finds that more than three-quarters of wealthy Americans and Canadians believe damage from severe weather stemming from climate change poses the biggest threat to their home. That’s among the key findings of the inaugural Wealth Report from Chubb, which gauges perceptions of affluent people about their passions, mindset about wealth and the risks they face in protecting what matters most to them.
“The Wealth Report provides an insightful lens into the concerns and pressures the affluent are facing. It shows a shift in how they value and invest their wealth, who they seek advice from to protect it and what keeps them up at night,” said Ana Robic, Chubb Division President, North America Personal Risk Services.
The key findings are based on a survey of 800 high-net-worth (HNW) individuals in the U.S. and Canada. The survey was conducted by iResearch Services on behalf of Chubb and has a margin of error of +/- 4%.
Building wealth is more challenging than ever before. Two out of three (66%) affluent Americans and Canadians say it’s more challenging to build and protect their wealth. Survey respondents are also working harder to keep it: the vast majority (83%) are employed, and almost a third of those say they would prefer never to retire. That’s true whether their wealth is inherited, self-made or a mix of both.
The HNW are aware of the threats to their homes – and some are taking action to protect them. Over three quarters (76%) perceive exposure to extreme weather due to climate change as the top risk to their home, while 63% named weather-related water damage (e.g. hurricane, flood) as major concerns. The risk of wildfire was a risk too close for comfort for 31% of respondents.
Within the home, over half of respondents (54%) indicated burst pipes and plumbing water leaks is a worrisome top risk. Many are proactively mitigating the climate and internal home related risks. For example, almost half (48%) of respondents installed whole-house generators and smoke and heat detectors, while nearly one quarter (22%) implemented wildfire mitigation (e.g. defensible space around the home perimeter.) Nearly half of the respondents (49%) installed water-leak detection sensors.
“We have experienced the consequences of increasing frequency and severity of weather-related property damage across the country with more powerful storms, wildfires, and the unexpected occurrence of deep freezes in southern states,” commented Jennifer Naughton, Executive Vice President and Risk Consulting Officer for Chubb Personal Risk Services. “While weather has received substantial attention, damage within the home from internal sources such as plumbing line failures, leaky waterlines to an appliance or AC units can be destructive and often require long and costly repairs for those impacted.”
Homeowners have a passion for their collections – and want to keep them safe from threats. Four out of five respondents are collectors of fine art, jewelry, cars, fine wines and other valuables. Most (62%) say they have a passion for what they collect while 38% see it primarily as an investment. Over- three quarters of respondents (87%) listed art fraud as the top risk to their collection, followed by damage during travel/transportation (86%), natural deterioration (79%) and theft/loss (78%). Climate and weather also figure into concerns of respondents regarding their collections, with nearly three quarters identifying loss/damage from fire (74%), followed by loss/damage from storms/floods (64%).
“It’s important not to lose sight that external climate, weather-related risks and vulnerabilities specific to particular items can also impact collections,” said Laura Doyle, Senior Vice President, Fine Art, and Valuable Collections Product Leader at Chubb. “We counsel that there are steps collectors can follow to help preserve their collections, including the installation of centrally monitored alarms, climate control systems and emergency preparedness planning.”
The wealthy are worried about liability risks, including the potential for a big jury verdict. Nine out of 10 respondents are concerned about the size of a potential verdict against them if they were to be a defendant in a liability lawsuit. Despite that level of concern, just one in three (36%) say they have excess liability coverage. This could be due to the fact that less than half (48%) believe they could be an enhanced target of a lawsuit because of their wealth.
Auto liability risks are also on their minds, with 45% expressing concerns about accidentally hitting a pedestrian and 40% were concerned about liability issues should they be involved in automobile accidents in which they cause bodily harm.
Robic added, “We have observed that many homeowners aren’t aware that liability policies are available that go beyond the basic coverage offered in a homeowner’s policy. This is where an agent or broker can add value to closing the protection gap by providing expertise and advice to identify vulnerabilities and recommending the right coverage to protect assets and, most importantly, prevent losses from happening in the first place.”
The complete 2023 Chubb Wealth Survey report findings can be found here.