In an era of uncertainty, and with ever evolving client objectives-insurance and risk management for Ultra High-Net-Worth (UNHW) families require more than traditional solutions. Here, we highlight planning trends widelyexpected to continue in the coming year including:
1. Switch Dollar Split Dollar and “Wait and See” Funding for Life Insurance
2. Rising Insurance Premiums and Record Growth of Excess & Surplus Lines
3. Dog Bites, Cancel Culture, and Emerging Liability Trends
4. Underwriting Ozempic and other “Wellness” Drugs
Split Dollar and “Wait and See” funding strategies offer flexible solutions for clients who are hesitant to commit to long-term planning due to uncertainty, limited liquidity, or constrained gifting capacity.
Split Dollar Arrangements provide a gifting-efficient way to fund life insurance, create a receivable that allows for partial or full premium repayment to the grantor during their lifetime, and facilitate a gradual transition of ownership.
“Wait and See” Funding Strategies offer adaptability in deciding when and how to commit capital, helping families maintain control, optimize liquidity, and align life insurance planning with broader wealth transfer goals.
Switch Dollar Split Dollar combines premium funding flexibility, tax-efficient wealth transfer, and the eventual release of obligations to further reduce taxable estates. This strategy often begins as an economic benefit split dollar arrangement and transitions into a loan regime split dollar arrangement, depending on the estate plan’s evolving needs.
Key considerations of the switch dollar strategy include the timing of the switch. Generally, Economic Benefit Regime is most economical when the insured(s) is young and the economic benefit cost is low. As the insured ages, the economic benefit cost increases with the probability of death in that year and at a point, dependent on the interest rate environment, switching to paying interest in a loan regime plan may be more economical. Because split dollar plans create a receivable for the premium payor, there should be a plan to extinguish that receivable in the future. For example, the policy accruing enough cash value to support repayment and ensure sustainability. There are administrative requirements to this strategy to consider, such as determining the economic benefit or loan interest cost and maintaining accurate documentation. With proper planning and execution, Switch Dollar Split Dollar arrangements can unlock significant advantages in modern estate planning.
Step-pay and skip-pay strategies provide UHNW families with the flexibility to fund, typically, second to die life insurance policies, in a way that aligns with their liquidity planning and evolving financial landscape. Unlike traditional level-pay structures, step-pay allows for gradually increasing premium payments over time, while skip-pay enables policyholders to control the timing of premium payments in certain years without jeopardizing coverage. These strategies are particularly valuable in uncertain economic or legislative environments, where clients may want to defer larger financial commitments while still securing long-term protection.
As an illustration, a client using a step-pay approach might start with minimal premiums in the early years, increasing payments as their wealth expands or as liquidity events—such as the sale of a business or a significant investment distribution—occur. Conversely, a skip-pay strategy could be beneficial for a client with fluctuating income, such as a real estate investor or private equity partner, allowing them to fund the policy more aggressively in certain years and reduce contributions in leaner years while maintaining policy performance. These flexible funding techniques ensure that life insurance remains a dynamic and adaptable tool in estate and wealth planning.
The U.S. property and casualty insurance market continues to experience significant upheaval, marked by a dramatic rise in premiums, particularly within the high-net-worth segment. Factors such as increased frequency and severity of extreme weather events, escalating replacement costs due to supply chain disruptions and inflation, and a hardening reinsurance market are converging to create a challenging environment for both insurers and policyholders.
The rise in premiums within the high-net-worth insurance space is being driven by several interconnected dynamics. The increasing frequency and severity of natural catastrophes, exacerbated by climate change, have led to significant financial losses for insurers. According to Munich Re, global natural catastrophe claims in 2022 totaled $270billion, exceeding the average of the previous five years. These losses are driving insurers to reassess their risk models and increase premiums to reflect the heightened exposure. Further, supply chain disruptions and inflation have significantly increased the cost of rebuilding and repairing properties, pushing up insurance payouts. The rising cost of labor and materials, coupled with extended timelines for repairs, makes insuring high-value homes more costly. Finally, the reinsurance market, where insurers transfer a portion of their risk to other companies, is also hardening. Reinsurers are facing their own challenges, including increased catastrophe losses and lower investment returns, leading them to charge insurers more for coverage. These increased reinsurance costs are passed on to policyholders in the form of higher premiums.
One of the most notable responses to this hardening market has been the record growth of the excess and surplus (E&S)lines sector. E&S insurers specialize in covering risks that traditional admitted carriers are unwilling or unable to underwrite, often due to theirunique complexity, high value, or challenging loss history. As standard market capacity contracts and premiums climb, we see more UHNW clients turning to E&S carriers for coverage. In 2023, direct written premiums reached a record$115.1 billion, marking a 16.8% increase from $98.5 billion in 2022. This upward trend continued into the first half of 2024, with the E&S market posting year-over-year growth of 12.4%.
The sustained expansion of the E&S is attributed to several factors:
This growth is not only fueled by UHNW individuals seeking coverage for unique or high-value properties, but also by businesses facing complex risks that traditional insurers are hesitant to underwrite. The E&S market's ability to provide tailored solutions and its willingness to underwrite risks that fall outside the standard market's appetite makes it an increasingly attractive option for those struggling to find adequate coverage. The increased competition within the E&S market is also leading to innovation in product development, with carriers offering more specialized coverage options and enhanced services to attract clients. This dynamic environment is likely to continue shaping the insurance landscape, with the E&S market playing a crucial role in providing solutions for complex and challenging risks. While the E&S market's growth trajectory remains strong, there are indications of a potential slowdown. The annual growth rate peaked at 32.3% in 2021 and has since moderated to 20.1% in 2022 and 14.5% in2023.
Liability risks for UHNW families extend far beyond traditional concerns, with seemingly routine exposures—such as dog ownership—leading to significant financial consequences. In 2022 alone, there were 17,595 insurance claims related to dog bite injuries, costing insurers over $1 billion in damages. Given the rising costs of medical care and legal settlements, a single incident involving a household pet can result in six- or seven-figure claims, particularly if high-profile individuals or guests are involved. Many insurers have breed restrictions or exclusions, making it crucial for UHNW families to proactively assess their liability coverage, consider excess or umbrella policies, and implement risk mitigation strategies, such as training programs and secure enclosures, to prevent costly incidents.
Celebrity "cancel culture" insurance is an emerging niche, designed to protect public figures, entertainers, and executives from the financial and reputational fallout of being "canceled" due to public backlash, scandals, or accusations that damage their professional standing. At a high-level:
The pervasiveness of social media and the 24/7 news cycle has heightened the risk of public figures facing widespread criticism or losing business relationships due to viral controversies. While this is still evolving, the first policies of this kind have gained traction in the entertainment and business industries, where high-profile individuals face significant financial risks tied to their public personas. This type of insurance caters to a small but growing demand among UHNW and corporations seeking to mitigate these risks.
Additional, and perhaps more prevalent risks that UHNW families face, include a range of unique and often overlooked liability risks that can lead to substantial financial exposure, including:
1. Household Staff Liability – Employing private staff (nannies, chefs, drivers, security teams) comes with employment practices liability risks, including wrongful termination, discrimination, wage disputes, and even harassment claims.
2. Event Hosting & Liquor Liability – Private parties, fundraisers, and events at personal residences or yachts can expose hosts to liability for injuries, alcohol-related incidents, or even foodborne illnesses among guests.
3. High-Value Hobby Risks –Activities like flying private aircraft, yachting, equestrian sports, or even collecting exotic cars can lead to unique liability concerns, especially if guests or employees are involved in an accident.
4. Philanthropy & Board Memberships – Serving on nonprofit boards or funding charitable ventures can result in personal liability for fiduciary mismanagement, regulatory violations, or reputational harm tied to the organization.
5. Art & Collectibles Lending –Loaning valuable artwork or rare collectibles to museums or galleries carries the risk of damage, theft, or even liability disputes if third parties are injured while viewing or handling the pieces.
6. Cyber & Identity Theft Risks – With extensive digital footprints and reliance on private networks, UHNW families are prime targets for cyberattacks, wire fraud, and data breaches that can lead to significant financial and reputational losses.
7. Children & Young Adult Liability – The actions of UHNW children—whether reckless driving, social media activity, or even hosting underage gatherings—can create substantial legal and financial exposure for parents.
underwriting Ozempic and other “wellness” drugs
From an underwriting perspective, Ozempic (semaglutide) and similar GLP-1 receptor agonists present important considerations for clients purchasing life insurance. Originally approved for type 2 diabetes, Ozempic is now widely prescribed for weight loss, even in non-diabetic individuals. For diabetes management, underwriters assess A1C levels, complications (neuropathy, kidney disease, cardiovascular issues), and coexisting conditions, as diabetes generally increases mortality risk. For weight loss, insurers consider obesity-related comorbidities like hypertension or sleep apnea. Significant recent weight loss, whether through medication, bariatric surgery, or lifestyle changes—may lead to postponement or a higher rating until stability is demonstrated.
Underwriters evaluate the reason for use, overall health profile, among other factors. Documentation from the prescriber is important. And yes, it is possible to obtain preferred or even best rates, when taking these medications.
Emerging prescribed wellness drugs like ketamine and psilocybin mushrooms are evaluated by underwriters based on medical vs. recreational use, underlying conditions, and risk factors. Physician oversight and monitoring play a critical role with both.
Ketamine, FDA-approved for anesthesia and treatment-resistant depression, raises concerns based on the severity of the underlying condition (e.g., PTSD, major depression) and treatment history, including hospitalizations or suicide risk.
Psilocybin, still a Schedule I substance, is gaining traction in clinical research, with jurisdictions like Oregon, Colorado, and D.C. approving its use in certain settings. If used in a controlled, prescribed setting (e.g., clinical trials),underwriting may mirror ketamine assessments. However, recreational use is often classified as substance abuse or high-risk behavior, typically leading to postponement or decline.
conclusion
As we move through 2025, the landscape of insurance and risk management for UHNW families continues to evolve, requiring a proactive and strategic approach. Rising premiums, flexible funding strategies, and emerging liability risks all highlight the need for tailored solutions that go beyond traditional coverage. By staying ahead of these trends and working with our firm, UHNW families can protect their wealth, preserve their legacy, and maintain the flexibility needed for a holistic risk management program.
Andrea Dykes serves as Managing Partner at Howard Insurance. She can be reached at adykes@howard-insurance.com.
This paper is strictly for educational purposes and does not amount to legal or tax advice.
Citations
1. Munich Re. "Climate change and La Niña driving losses: the natural disaster figures for 2022." Munich Re, 2023.
2. Insurance Business America. "US surplus lines premiums surpass $81 billion in 2024, up 12.1%." Insurance Business America, February 6, 2025.
3. Insurance Journal. "Slower Growth but Surplus Lines Premiums Still Up 12% in 2024." Insurance Journal, February 6, 2025.
4. Fitch Ratings. "Strong Growth Trajectory for U.S.E&S Insurers." Fitch Ratings, September 11, 2024.
5. Insurance Information Institute. "Excess and Surplus Lines See Growth in Recent Years Due to Admitted Markets Pulling Back or Exiting Markets: Triple-I." Insurance Information Institute, September 23,2024.
6. Insurance Business Canada. "Global climate disastershit record $320bn – Munich Re." Insurance Business Canada, January 10,2025.
7. Reuters. "International, domestic insurers push intocatastrophe-hit US property markets." Reuters, December 16, 2024.
8. The Wall Street Journal. "There Is a Safety Valve forPrivate Home Insurance in California." The Wall Street Journal, January2025.
9. Barron's. "The Pacific Palisades Inferno Won't Engulfthe Insurance Industry." Barron's, January 2025.
10. Insurance Business America. "Global nat cat losses soarto $120 billion in 2024, Munich Re reports." Insurance Business America,October 2024.
11. S&P Global Market Intelligence. "US excess &surplus premium growth outpaces admitted market during H1 2024." S&PGlobal Market Intelligence, October 2024.
12. Statista. "Munich Re: losses from natural disasters2008-2023." Statista, October 2024.
13. Risk & Insurance. "Stamping Offices Report 12%Growth in Surplus Lines Premiums in 2024." Risk & Insurance, February9, 2025.
14. Insurance Insider US. "Surplus lines premium reachedmore than $81bn in 2024." Insurance Insider US, February 6, 2025.
15. PropertyCasualty360. "Report: E&S insurance marketdemonstrates ongoing strength." PropertyCasualty360, September 18, 2024.
16. S&P Global Market Intelligence. "2024 US InsuranceExcess & Surplus Market Report." S&P Global Market Intelligence,2024.
17. Munich Re. "Natural disaster risks - Rising trend inlosses." Munich Re, 2024.
18. Reinsurance News. "Munich Re pegs global insured natcat losses at $120bn in 2022." Reinsurance News, 2023.
19. Insurance Business America. "Global nat cat losses soarto $120 billion in 2024, Munich Re reports." Insurance Business America,October 2024.
20. S&P Global Market Intelligence. "US excess &surplus premium growth outpaces admitted market during H1 2024." S&PGlobal Market Intelligence, October 2024.
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