Financial Planners Pay More Attention to P/C Insurance and Risk Management

Property/casualty insurance and risk management increasingly play a role in financial planning, according to a survey by the Chubb Group of Insurance Companies.

Fifty-seven percent of the 102 financial planners surveyed indicated that they evaluate their clients’ asset protection through property/casualty insurance. An even higher number, 72 percent, said they determine if their clients have an appropriate level of liability insurance.

These numbers compare favorably to the results of a similar survey conducted by a Chubb unit in 1998. Nearly 40 percent of planners then said they regularly evaluated their clients’ property/casualty insurance.

“This is great news for financial planning clients,” declared Eric Pruss, senior vice president of Chubb & Son and strategic marketing officer of Chubb Personal Insurance. “People, especially affluent individuals and families, are facing a larger variety of more acute risks today stemming from litigation, new technology, globalization and other societal changes. A financial plan that does not include property/casualty insurance and risk management potentially leaves a client’s entire asset base at risk.”

When this year’s survey asked planners to rate the importance of a variety of risk-related planning areas, life insurance was deemed the most critical. Close behind was personal liability exposures. Planners considered property protection and personal/family security significantly less critical.

Despite their involvement, property/casualty insurance and risk management only provided planners with an average of 3 percent of their revenue, about the same amount as education planning. On average, planners draw nearly half (49 percent) of their revenue from investment planning; 16 percent, retirement planning; 11.5 percent, life insurance, 10 percent, estate planning estate; and 7.5 percent, tax planning.

Thirty-four percent of the planners hold a license to sell life insurance, while only 9 percent have a property/casualty agent license. Forty-four percent noted that they had a referral relationship with an independent insurance agent. Yet only 8 percent said agents are a significant source of new business, compared to 65 percent for estate attorneys and 59 percent for tax professionals.

“We were surprised to find so many planners indicating that they had a relationship with an independent insurance agent. Based on our discussions with them, it is clear that some planners are mistaking captive agents, who work for direct writing insurance companies, as independent agents and brokers, who often have access to products from several insurers,” Pruss said.

“Many financial planning clients likely need the broader products and services provided through the independent agency channel. Both planners and their clients should take a closer look at whether existing agent relationships provide coverage and services in line with the assets at risk.”

Source: Chubb Group of Insurance Companies