The feedback from clients over the past two years has been consistent: insurance premiums are up, coverage terms have tightened, and in certain markets, particularly coastal and high-value property markets, certain types of coverage are simply harder to find. This is not a perception problem. The property and casualty insurance market has gone through a meaningful repricing, and the effects are showing up in household budgets and financial plans for high net worth families across the country.
We want to offer a framework for thinking about this that goes beyond shopping for a better rate, because for some clients, the right answer is not just a different insurer.
What Is Driving the Market Shift
Insurance companies price risk based on their historical loss experience, reinsurance costs, expectations about future claims, and many other outside factors. Several of those inputs have shifted significantly: catastrophic weather events have increased in both frequency and severity, construction and repair costs have risen sharply, and litigation costs have climbed. Insurers have responded by raising premiums, tightening coverage terms, and in some cases exiting certain markets altogether.
For clients with coastal properties, older homes, or properties in markets with concentrated exposure to natural disaster risk, this has been particularly pronounced. Policies that renewed routinely for years are now coming back with materially different terms or significantly higher premiums.
Risk Transfer and the Role of Insurance in a Financial Plan
Insurance is fundamentally a risk transfer mechanism. You pay a premium to transfer the financial consequence of a potential loss to an insurer – not a new concept. That transfer makes sense when the potential loss is large relative to your ability to absorb it, when the premium represents reasonable value for the coverage provided, and when the risk being transferred cannot be meaningfully reduced through other means. Overall, it is a statistics and math game (trust me, I studied this in college).
When premiums rise to the point where they represent poor value, or when coverage terms no longer address the risks that matter most, it is worth revisiting the risk transfer decision rather than simply accepting the new terms. This is a conversation we are having with high net worth clients who own policies from carriers like Chubb and Pure and are seeing their renewal terms change meaningfully.
Also examine why your premiums may have decreased upon renewal. It may be legit, where certain volatile markets like Florida Coastal Markets have more carriers entering the marketplace offering more competitive rates. But it could be that your agent watches a lot of TV, and really believes that you’d rather spend 15 minutes to save 15% than get the right coverage.
Self-Insurance as a Planning Concept for High Net Worth Families
Self-insurance does not mean going without coverage. It means taking a deliberate position on which risks you are financially prepared to absorb and which genuinely require transfer to a third party. For clients with significant liquid assets, raising deductibles substantially can reduce premiums meaningfully while retaining the protection against catastrophic loss that insurance is primarily designed to provide.
This is a financial planning conversation, not an insurance recommendation. The right approach depends entirely on your asset base, your liquidity, and your overall risk tolerance. But for clients who have the means to absorb a significant loss without jeopardizing their financial security, paying high premiums for low-deductible coverage may not be the most efficient use of capital.
We are raising this not to suggest any specific course of action but to make sure the conversation is happening. Insurance costs are a real and growing line item in many of our clients’ financial plans, and treating them as fixed rather than as a variable worth optimizing is leaving money on the table.
