Win clients with employer-sponsored liability coverage
People are worried about their money, paying their bills, and how potential events could deplete their savings.
With inflation at a four-decade record high, the Federal Reserve increasing interest rates, and analysts signaling a potential recession on the horizon, consumers are spending less and worrying more — specifically about their money and their families.
To gauge consumers’ opinions about these concerns, Chubb recently conducted a nationwide survey about personal finances and personal excess liability insurance. In this July 2022 survey, we found that people are worried about not only their money and how they’ll pay their bills, but also about potential events that could substantially deplete their savings. In fact, the survey found that 65% of respondents are worried about inflation, 58% are worried about monthly expenses and the cost of living, and 29% are worried about unexpected accidents or lawsuits and how those events might affect their financial situation.
In the same survey, over 75% agreed that their employer should offer benefits related to financial protection for employees and their families. When asked if they would opt into an insurance policy that could protect their financial assets if they were in an accident or found legally liable for damages, more than 87% said they likely would elect such a policy. One policy that might be a great fit for these risks is Group Personal Excess Liability insurance (“GPE”).
How group personal excess liability works
Personal excess liability insurance provides coverage if an accident or lawsuit judgment or settlement amount exceeds the limits of the underlying homeowners, auto or watercraft insurance, for example.
Consumers can purchase personal excess liability coverage on their own. However, if their employer elects to offer GPE, the employer’s program may provide more streamlined pricing and underwriting. Depending on the GPE program, it may also offer higher limits and more expanded coverage than may be available to an individual through their personal insurer. For example, some insurers may only offer $1 million to $3 million in excess liability coverage and may not offer excess uninsured or underinsured motorists’ coverage — an important coverage to include in an individual’s insurance program.
GPE policies are available and best suited to businesses with highly compensated professional employees or board members. Specific businesses that brokers and agents might want to approach include financial and law firms, accounting and consulting firms, medical groups, and pharmaceutical companies. According to the Chubb survey, 57% of respondents strongly agreed that the safety and protection of themselves and their families is more important now than ever, so businesses that offer an expanded suite of employee benefits that includes GPE may have an easier time attracting and retaining highly paid key employees than those that do not.
Accidents and lawsuits are frequent and commons.
These days, certain types of claims are occurring and costing more than expected. For example, traffic accidents are becoming more severe due to distracted driving and excessive speeding, with traffic accident fatalities increasing by 18.4% from 2020 to 2021. In addition, increasing frequency of litigation and social inflation — with increasing size of jury awards — is having a greater impact. According to Swiss Re, the median size of large awards rose by 26% for general liability cases and by 32% for vehicle negligence cases between 2010 and 2019.
Regardless of whether a person is at fault or in an accident with someone who is underinsured or uninsured, GPE coverage can help protect their hard-earned assets. Agents and brokers may want to share examples like the following actual Chubb GPE claims:
- Fire spreads to surrounding apartments: In one Chubb claim, when the client accidentally left the flame of his gas stove unattended, a fire started in his apartment and spread to neighboring units, causing considerable damage. His homeowner’s policy covered $400,000 but his GPE policy took care of the other $2.8 million in liability damages.
- Painter falls while working on a home: The GPE client’s house painter leaned over a railing and fell 15 feet. Because the painter had no medical insurance or worker’s comp to cover his expenses, he sued the homeowner. The case settled for $900,000. The client’s homeowners policy paid $300,000 and his excess liability policy paid $600,000.
- Client gets in accident with underinsured motorist: The GPE client’s spouse got in an auto accident and severely injured his arm, requiring multiple complex surgeries. Because the other driver didn’t have sufficient liability coverage, the Chubb client’s GPE Uninsured/Underinsured coverage paid more than $1 million for his medical bills and lost wages.
The claim scenarios show the types of situations that may result in claims, but whether a particular loss is covered depends on the particular facts and circumstances involved, the terms and conditions of the policy as issued, and applicable law. Agents and brokers should be prepared to discuss these issues with their clients.
What to look for in a GPE policy
Not all GPE policies are alike. Therefore, agents and brokers — and their clients — may want to consider looking for a policy that has high limits, worldwide protection, flexible enrollment options, and backing by a company with broad experience, claims expertise, and reliable financial strength.
Benefits to an agent’s business
Offering GPE is a great way for both personal and commercial lines agents and brokers to grow their business, increase retention, and open doors to other lines of business. Agents may want to cross-sell GPE to existing commercial clients, promoting retention of those accounts. They could differentiate themselves with a new product line and add to their personal lines business by building relationships with high-income group participants and their networks.
Make GPE part of the conversation
Consider building GPE into your business calls and renewal discussions. In today’s litigious society, when you never know what may happen, agents and brokers can help commercial clients attract and retain employees and individual clients protect their assets and their families from the potentially massive expense of unforeseen accidents or lawsuits.
Mary Parsons (mparsons@chubb.com) is executive vice president and Sales & Distribution Leader at Chubb Personal Risk Services.
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