Insurance premiums for umbrella policies have surged by an average of 15% in recent years, driven by traditional risk factors and a phenomenon known as “social inflation.”
“As people have more wealth,” says Brian Weiner—founder and CEO of the Family Office Resource Group (FORG), a 4100FS portfolio company—”they buy more expensive things. And those expensive things require higher insurance premiums and more coverage.”
The relationship between wealth and insurance needs has become increasingly complex, with liability settlements rising 57% over the past decade. The escalating costs reflect a broader transformation in America’s risk landscape, where expanded definitions of liability and larger jury awards have become the norm. While high-net-worth individuals may face increased targeting in lawsuits, Weiner emphasizes that the risk extends beyond just the wealthy in today’s litigious environment. This shift has forced insurance companies to evolve their underwriting approaches, considering both property ownership and the growing spectrum of potential liability exposures.