Competition is coming from all sides in the high-value market

In the high-value market, Thomas Scharen notes that for new business, competition is not coming from the major players. “There is clearly an offensive by direct insurers in this segment that we didn't see before 2022,” says the broker at Fort Insurance and Group Benefits. 

"My biggest competition, when I request quotes from high-value insurers, comes from TD, Beneva, and BélairDirect. They had to adapt their products. Home insurance policies designed for everyone were not suitable for this clientele. There are still major gaps," adds Scharen. 

But for homes valued at $4 to $5 million, or even $10 million, the premium is double between high-value insurers and direct insurers. “Water coverage is insufficient, there are significant limits, but their prices are so attractive. Customers didn't look at this before, but the trend is there; they have become aware of the possibility of shopping around for insurance,” says Scharen. 

"Instead of paying a premium of $8,000 to $10,000, if it costs them $4,000, customers who have never made a claim might be tempted by this cheaper product. Wealthy customers are paying more attention to their spending because there is a lot of economic tension right now," he says.

Scharen notes that brokers must now spend more time than before keeping track of changes to home insurance policies, including those for high-value properties. "In the past, when policies were changed, they remained that way for several years. Now, we see two or three new riders and exclusions every year. If a major insurer adopts a new measure, as Intact did with the roof rider in 2024, other insurers follow suit," he says.

Brokers are required to inform their clients about the coverage offered and any exclusions, Scharen points out. If they fail to highlight the product's features, the client may discover that the coverage is incomplete when they make a claim. According to him, brokers who do not keep their product knowledge up to date become vulnerable to the risk of errors and omissions covered by their professional liability insurance.

At Intact Prestige 

Achraf Louitri, Vice President at Intact Prestige, makes no secret of his team's growth ambitions in the high-value market. “Our partner brokers tell us that, five years after the launch of our Intact Prestige brand, we have an exceptional claims service that is well suited to the needs of high-value customers,” he says. 

“The expertise of our underwriting teams and the quality of our products are excellent,” he says. “Add to that Intact's reach across Canada, which means that no risk is too complex or too big for us. When you take all these factors into consideration, we are confident that we will be the number one choice for high-value customers in the next five years in Quebec and across Canada.”

Despite the many catastrophic events that have occurred in Canada in recent years, many of which have affected large urban areas, Louitri says that claims for damage to high-value property are handled quickly by teams dedicated to this purpose. “Each case has its own particularities,” he says.

“The needs of high-value clients are complex, and so are their claims. Our brokers and claims adjusters must demonstrate understanding,” adds Louitri.

To brokers who want to submit policyholder files to Intact Prestige, he says, “It's like selling personal insurance products, but preparing as if for commercial insurance. Because of the complexity, you need specialized expertise.”

An Intact Prestige underwriter reviews the file with the broker “to ensure that we have the right limits and the right levels of protection, if there is a work of art or other property that has increased significantly in value since renewal. This must be reflected in the coverage,” emphasizes Louitri.

Direct insurers are also entering this niche 

The Co-operators General Insurance Company also offers additional coverage for more affluent clients. According to information provided by the insurer to the Insurance Portal, the Prestige Plus program includes the same riders as those offered by high-value insurers: wine cellars, water damage, flooding, valuables, and works of art. Only cyber risk does not include additional coverage beyond that offered to all individuals. 

In an interview with Insurance Portal in early October, Vice President Patrick Décarie explained that eligibility for Prestige Plus begins with a property valued at $750,000, not $1 million or more as is the case with high-value insurers. He acknowledged that the average value of homes in several major cities across the country already exceeds $750,000.

"This includes several types of coverage, but the one that was recently changed concerns limitations on coverage for items such as jewelry, works of art, collectibles, wine collections, and lock replacement. “A total amount of $100,000 is provided.” This really gives people peace of mind. They don't need to insure the property specifically at that point," he explains.

When insuring their home, customers can decide in advance that in the event of a total loss, the house will not be rebuilt. “The customer receives compensation that allows them, for example, to move into a private retirement home,” he says.

In general, the insurer's personal insurance policy allows customers to purchase additional coverage for a specific item at any time, up to $30,000. The goal is to provide protection for items that have been recently inherited, for example. “And it's a very inexpensive rider to add to a policy,” explains Décarie. 

For all of these policyholders, including those in the Prestige Plus program, The Co-operators has created a “Water Damage” rider that covers all types of damage, including losses related to flooding. “The customer decides how much coverage they need in addition to the basic protection.” Décarie reports that 95.7% of Prestige Plus customers purchase this rider, compared to 84.5% of personal insurance customers.

“Pricing is based on risk exposure, but we wanted to have a simple product. We don't want any surprises when a claim is made. Being insured for water damage means being insured for all water damage,” adds Décarie.

The same agents are working to get consumers to sign up for the Prestige Plus program. The agents are supported by a more detailed underwriting platform to avoid misjudging customer needs. There is no upper limit on the insurable value; each file is evaluated on its merits, explains Décarie.

He was unable to say whether the frequency of claims is similar or lower among Prestige Plus customers. “The severity is higher, that's for sure, because the insured property is more valuable,” says Décarie. 

He also states that eligibility for this program does not give access to a separate or faster compensation plan. “All our policyholders who report a claim are treated the same way.” He points out that the rates for all policyholders are determined by claims.

Décarie admits that there is an inflationary trend in personal insurance pricing that exceeds the consumer price index. “The frequency is higher due to extreme weather events. And the severity is greater because of inflation in reconstruction costs. So yes, there is an impact on pricing,” he says.

When the high-value property program was launched a few years ago, the group aimed to meet all the needs of affluent families. “We also offer financial services and insurance to businesses. It's always advantageous for us, and for the customer, to have all the products in one place,” he says. “It's good for us. When clients have more products with us, they are more loyal to us. That's a proven fact.”