Navigating a hard market: Fresh insurance strategies for the Ultra-Wealthy

Date: 11 Dec 2024

Karen Jones

The landscape of insurance for ultra-high-net-worth individuals and their luxury assets—ranging from yachts and private jets to expansive art collections and international real estate portfolios—is undergoing a seismic shift.

A confluence of factors, including intensifying weather events, political instability, and complex cross-border ownership structures, have given rise to a “hard market.” In this environment, insurers are not only dramatically raising premiums, but also imposing stricter underwriting criteria, limiting geographic coverage, and increasing deductibles to manage risk. At the same time, families and individuals are exploring alternative solutions, from self-insurance and captive insurance companies to innovative policy structures that align with today’s global uncertainties. Against this backdrop, emerging wealth hubs in Asia—such as Vietnam and Indonesia—are seeing a surge in millionaires and billionaires who face the same complexities in managing insurance costs. Additionally, sophisticated instruments such as Private Placement Life Insurance (PPLI) are gaining traction for estate and tax planning, including for digital asset holders. As noted in expert commentary compiled by Citywealth, the industry’s response is multifaceted, blending traditional underwriting with more personalized, flexible partnerships designed to reflect the increasingly mobile, diversified, and risk-aware lifestyles of UHNW individuals.

High seas, higher costs

Simon Dixon, Director, Moore Dixon Brokers, based in the Isle of Man is a risk specialist who works with brokers at Lloyd’s of London and other UK and overseas insurance companies explains the current market problem, “The luxury yacht market, particularly for vessels of 65 feet and above, is facing a “hard market” as rising insurance costs reshape the landscape for UNHW individuals. The ‘perfect storm’ of weather-related incidents and increased global uncertainties have raised rates. Insurers are tightening their coverage, with policies now more restrictive regarding lines of longitude – where a yacht may safely travel – and storm damage protection. Premiums have surged, with some windstorm damage deductibles reaching as high as 10% of a yacht’s value (normally between 2.5% and 5%) — adding to the financial outlay. Yacht owners, particularly Florida, Bahamas and Caribbean yacht owners who face a high risk of windstorm damage, are having to navigate these challenges.”

Dixon who helps clients with superyachts, private aircraft, and luxury assets, continues, saying, “Finally, after the devastation from the weather events of 2017/2018, Lloyd’s of London addressed profitability concerns in the yacht insurance market. In the subsequent nine months, there was a staggering 70% reduction in market capacity in London alone. This reduction had a cascading effect, prompting U.S. admitted carriers to tighten their underwriting guidelines and appetite to avoid taking on the business that was exiting the London market.”

Taking control of risk: Self-insurance and captive structures to combat escalating premiums

Joshua Rubenstein, Partner and National Chair, Private Wealth Department, Katten Muchin Rosenman, New York adds his thoughts, “There is no question that insurance costs for luxury assets have been skyrocketing. Weather related incidents and political instability have particularly affected the cost of insuring yachts. But the phenomenon is by no means limited to yachts.”  

Continuing Rubenstein says, “Weather related instability is causing a huge increase in the cost of insuring luxury homes, which tend to be near water or deserts, where climate change is wreaking havoc. Many insurers are excluding flood insurance, or insurance from ground water damage. Hurricanes now are factors in parts of the world that they had never touched. Political instability is affecting all luxury assets, including art and jewellery, as in some parts of the world where being wealthy is becoming regarded as being a crime, making the ultra-wealthy particularly subject to attack.”  

He explains, “In response to this, many ultra wealthy families are exploring the possible benefits of self-insuring, either on their own or in conjunction with a similarly situated families. Self-insurance is a risk management technique where an individual or business sets aside money to cover unexpected losses. It’s an alternative to traditional insurance, where the policyholder is their own insurer. Many large companies set up captive insurance companies to manage their self-insurance activities. Captive insurance companies are special insurance subsidiaries that are owned by the business.”

“In terms of self-insuring, the rules vary from jurisdiction to jurisdiction” Says Rubenstein, “but you create a captive and pay annual premiums to your own insurance company. It must qualify under applicable insurance regulations, but it saves commissions and other fees and can be worth it if the cost of insuring is otherwise high. One can also consider having an extremely large deductible, so that only catastrophic losses are covered.” I ask if people might consider not buying and renting to deflect insurance, but Rubenstein says, “The problem with renting is that you are making someone else wealthy, and you still need renters’ insurance to cover those risks that belong to the renter.”   

Leveraging life insurance contracts to cover estate and inheritance taxes

For his final point Rubenstein adds, “In the US, companies regularly promote life insurance to cover estate and inheritance taxes, particularly on estates that are highly illiquid so, if you didn’t have that the only way to pay the taxes would be to sell your business, for example. So, with this strategy, the insurance would pay the funds needed to cover the IHT without having to sell the asset to pay the tax. Its best also to have the insurance owned by and payable to a trust that is not includible in the estate, so that the insurance does not also become part of the estate subject to tax.”

Asia’s emerging millionaires and the complexities of their insurance needs

Shane Dillon, Managing Partner of General Insurance Broker Asia, a speciality broker focused on clients across SE Asia and part of the Tenzing Pacific Services Group, an independent insurance and financial services agency in Vietnam and Thailand, gives us a download on the growth of wealth in the region. “Between 2013 and 2023, Vietnam experienced a 98% increase in the number of millionaires, the highest growth rate globally. By the end of 2023, the country was home to 19,400 millionaires, including 58 centi-millionaires and six billionaires.”

“This rapid wealth accumulation is attributed to Vietnam’s economic development, market reforms, and expanding investment opportunities,” says Dillon. “Projections indicate that the number of millionaires in Vietnam will continue to rise, potentially doubling over the next decade. Likewise in Indonesia between 2013 and 2023, their millionaire population grew by 63%, reaching approximately 178,000 individuals.”

Dillon continues, “In the post-COVID landscape, insurance for ultra-high-net-worth individuals’ assets such as art collections, jewellery, luxury cars, yachts, private jets, and high-value real estate has faced rising costs and increasing complexity, particularly in Asia. The volatility in asset valuations, supply chain disruptions, and inflationary pressures have driven up premiums and replacement costs. Additionally, cross-border ownership has added layers of complexity, especially as UHNW individuals frequently support residences, vehicles, and assets across multiple jurisdictions.”

“These challenges are compounded by evolving regulatory frameworks, geopolitical shifts and rising wealth and the growth UHNW families in Vietnam and Indonesia. As China tightens capital controls and Hong Kong adjusts to its new economic dynamics, wealthy individuals are diversifying into regional hubs like Singapore and Thailand. We see this reflected in global insurers doing more local partnerships to bring in risk products into these markets specifically targeting the protection of fine arts, jewellery, luxury goods, super cars and yachts.”

“Moving forward, insurers are adapting to these changes by offering more flexible, tailored solutions that address the cross-border nature of UHNW lifestyles, while ensuring coverage keeps pace with the volatility and growth of asset values in the region.”

Dynamic insurance: A powerful tool for overseas investors navigating UK inheritance tax

Tim Searle, Managing Director at UHNW Tax and former Royal Naval Officer, jet-setter, classic car enthusiast and entrepreneur who helps UHNW clients with tax says, “The recent Budget offered no good news in terms of inheritance tax whether you are a farmer or an overseas investor in London realty. However, the latter have options open to them that most Brits do not in terms of planning for this eventuality. There is though, another option, which is using an insurance contract to pay the IHT bill.”

He explains, “The challenge is that most of the insurance contracts that deliver this result are not in the UK, are not widely known or understood by UK lawyers or trustees and, therefore, regularly overlooked. These are dynamic insurance contracts that grow in line with the ever-increasing IHT bill liability with the ability to recoup all premiums should the property be sold in future. In my mind it should feature in any planning discussion with wealthy overseas investors of UK property to give them the confidence to tackle this tax and hopefully keep them investing in UK.”

As to who is offering this type of insurance, Searle says, “It is the major insurance groups like SwissLife, Manu Life, TransAmerica and Sun Life who are all A+ companies with billions in assets and are more than 15+ years established. Each insurance company offer different policies are best used through an advisor. In terms of UK inheritance tax, I favour cash value policies and these typically derive from jurisdictions like Luxembourg, Singapore and Hong Kong.”

Crypto-Enabled Cover: Leveraging PPLI to shield Bitcoin holdings and gains

Samy Reeb, Group CEO, Head of PFI, Switzerland and Hong Kong, has held senior roles as a CEO in an international PPLI brokerage and as a wealth planning advisor in a major Swiss bank, adds a view on how to use insurance in the new world of digital assets, “With Bitcoin reaching new all-time highs and recent tax changes, including the abolition of the UK’s Non-Domiciled (RND) regime, there is renewed interest in Private Placement Life Insurance (PPLI) as a tax planning tool.” PPLI is a type of variable universal life insurance that is sold privately to people with high net worth and complex financial situations.

Reeb explains, “PPLI allows Bitcoin holders in high-tax jurisdictions to use tax deferral, protect investment gains, and it can be used for wealth transfer. This structure reduces exposure to income and capital gains (tax deferral) while providing a compliant and flexible framework for managing digital assets amidst shifting regulatory landscapes.”

To qualify for Private Placement Life Insurance in Switzerland, you must be an accredited investor. These requirements include having a certain net worth or annual income and demonstrating that you have the financial experience to understand the product and its risks.

Beyond fine art: Safeguarding the new wave of high-value collectibles

Tara Parchment, Head of Private Clients at Brit Insurance, steers us onto a different topic. “One trend we are seeing is the increased interest in collecting high-value memorabilia. While fine art has always been a big focus for UHNW insurance, we are seeing a far broader spectrum of collectables. This can be anything from original film props to vintage sports items. These items are often valuable due to their cultural significance or connections to iconic events or figures. A signed football shirt from a major sporting event, for example, or a rare vintage action figure can fetch surprising amounts at auction.”

Parchment elaborates, “Amid dynamic market conditions, full collections and individual items are increasing in financial value. Clients often hold a mixture of these items. As a result, they are increasingly turning to brokers to help them understand the true value of their items and take out appropriate insurance cover, as part of home insurance plans. This helps prevent underinsurance, and avoid financial losses in the event of theft, loss or damage.”

“Of course, there are several challenges that come with collecting or investing in collectables, explains Parchment, these include the lack of guaranteed profits, high prevalence of fake memorabilia, lack of clear ownership of items and high replacement costs. Given this, clients need to work with their insurers to proactively take steps to manage risks including conservation services, professional restoration, and storage, as well as regular appraisals to ensure accurate insurance coverage.”

Citywealth frequently underscores the importance of informed advice and strategic, holistic wealth management for UHNW individuals. Recent commentary suggests that proactive engagement with global insurance carriers, legal professionals, and family office advisors is increasingly critical. Citywealth experts note that transparency, regulatory compliance, and local-market expertise are paramount when selecting insurance solutions. They also highlight the value of forging relationships with top-tier insurer, those with A+ ratings and substantial balance sheets, to ensure both the reliability and longevity of complex insurance arrangements.

In an age marked by unprecedented climate volatility, shifting geopolitical landscapes, and rapid wealth creation in emerging markets, the UHNW insurance ecosystem is evolving at remarkable speed. Insurance now plays a vital role in everything from sustaining a long-held family business to safeguarding newly acquired luxury assets in frontier markets. The tools for managing risk have diversified, ranging from self-insurance strategies and captives to PPLI solutions that can integrate digital assets. As premiums rise and coverage tightens, the goal remains the same: to preserve wealth, mitigate risk, and ensure long-term stability. With expert guidance, be it from global brokers, wealth advisors, or leading industry commentary found on platforms like Citywealth’s Leader List, individuals can navigate these challenges and adapt their insurance strategies for the climate realities of today’s world.

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