Katherine Frattarola is the head of high-net-worth personal lines at Hub International, a global insurance broker and financial services firm that provides risk management, insurance, employee benefit, retirement and wealth management products and services. She talked with Crain Currency about how family offices and ultra-high-net-worth individuals are insuring their homes and assets in the wake of disasters like the Pacific Palisades wildfires in California.
The Pacific Palisades wildfires, flooding in Florida and other forms of extreme weather have devastated residential properties. How are wealthy families and high-net-worth individuals adapting to climate risk?
These disasters are truly catastrophic events. And when you look at inflationary pressures in the market, that all finds its way into risk management. So the cost to replace or to rebuild because of labor shortages and product shortages — which with the tariffs could potentially inject even more pressure into the system — makes it more expensive during a loss. As a result, you wind up seeing insurers paying more money out in claims than they have before, and then they seek rate increases. Rates have to be consistent with risk.
It's particularly important for our ultra-high-net-worth clients and families because they're the ones that are often buying the homes that have unique features. They're the ones that are living on the cliffs in Malibu, on the beaches of Palm Beach, on the ski slopes of Aspen surrounded by forest and brush. Those homes that have unique features often have outsize risks, and outsize risks means outsize costs.
These families should think about how to build and/or manage homes that are more resilient. That's the silver lining, because there are ways to better fortify your homes to manage that risk.
What are some of the ways that you're seeing that are becoming more popular?
It depends. Broadly speaking, homes that are built in the sort of mid-2000s and beyond wind up withstanding wind surge far better than homes that were built prior to that time period. And it's better building materials. So if I were an ultra-high-net-worth family or a family office looking to purchase another property for my portfolio, while the 1930s Mediterranean villa in Coral Gables may have a lot of appeal, it will be much harder to insure, even if the insides have been beautifully restored. It's about the building materials, the roofing materials, the windows, the doors.
As it relates to storm surge and water, negative-elevated properties don't usually fare well. So if you're living on a barrier island — which is really nature's response to protect the mainland — because they're beautiful and you're negatively elevated, you have to go into the decision understanding that you are absolutely taking a risk. There are certain ways to fortify your property against storm surge with various retaining walls and duct systems and pipe systems that go underground.
When it comes to wildfire, folks think it's impossible to protect properties. I challenge them to look at the Getty Museum. It is a masterpiece in architecture that was built as a challenge to nature's wildfires, and it's incredible and largely survived the recent wildfires.
It’s about roofing, using things like ember-retardant ducts, using foliage that's resistant to fire because it absorbs water and holds water closely, not using mulch but other types of materials, having your own fire hydrant that doesn't just pump water out from the public system but potentially from your pool, using water suppression systems that are built onto your house.
Are you seeing clients move assets such as collectibles away from their homes?
Be prepared as you start to look at the risk assets located in the house. That could be collector cars. It could be art collections. It could be jewelry.
All of our family offices and ultra-high-net-worth clients have the opportunity to work with our internal risk management team to build a disaster plan, and that will include assisting with locating vendors who will do things like remove art collections, who will take boats out of water, who will provide security for your jewelry, who will provide security for your home in your absence.
Given the winds with the Palisades fires, the smoke traveled for miles and miles. And so even if your home was intact, the things within your home could still withstand smoke damage.
Water damage can be really devastating. And if you experience a significant water loss, the time to recover could be immense; because once water seeps into the walls of your home, it becomes a very significant undertaking, particularly in a large home. It’s important to have water shut-off systems that monitor for water usage. If you decide to travel away from your home during winter months, it’s good to have a caretaker ensure that there aren't any frozen pipes, to use thermostats where you're able to control the temperature to ensure that your home stays warm enough.
Some of these measures are more expensive, such as installing a fire suppression system on the roof of your home. Others, like replacing plastic gaskets, can be very easy to do. If you have a family office manager, this is something that is easily coordinated and can often be coordinated directly with your insurance carrier.
Do you see people maybe avoiding some of the more risky areas to move to — maybe not building on that cliffside in Malibu but somewhere a little more safe?
Certainly, because in many cases, the cost of insurance has outpaced the savings of living in states that have historically been tax havens for high-net-worth individuals.
As people spend down their retirement, the question is whether they would be just as well-suited in the Carolinas as they are in southern Florida. And so we're seeing that all the time, and as we work with financial advisers around the country, they are also working with their clients to understand the trade-offs of living in areas where there are high premiums associated with their homes and their belongings.
We are also seeing the pursuance of self-insurance. You may have $100 million on your balance sheet; but if you have a $30 million property in Malibu that you've decided to self-insure because in the moment it seemingly made sense, if a fire destroys that home, then you're out $30 million — which is 30% of your balance sheet. Are you prepared to carve out those dollars to rebuild? Are you mentally prepared to try and harness all of the resources necessary on your own to rebuild? When you have a carrier, you have the ballast of them working as your advocate with the right vendor to help get you back on your feet. And so as a lone ranger, so to speak, you're working against the tides of the big insurers like Chubb.
2025 outlook for luxury real estate: A defining moment
By NIKKI BEAUCHAMP
Real estate has long been a cornerstone of wealth preservation and generational legacy. But as we move deeper into 2025, family offices and ultra-high-net-worth investors are redefining their approach. It’s no longer just about acquiring trophy properties — it’s about strategic positioning, diversification and long-term capital efficiency.
This shift comes amid economic uncertainty, geopolitical shifts and the largest intergenerational wealth transfer in history. According to Cerulli Associates, $124 trillion in wealth will transfer by 2048, with $105 trillion flowing to heirs and $18 trillion directed toward philanthropy. Nearly 81% of this shift — almost $100 trillion — will come from baby boomers and older generations, reshaping portfolio strategies for decades to come.
With my families, I’m seeing this transition firsthand. Younger generations are stepping up earlier, driving real estate strategies with a distinct set of priorities: sustainability, technology integration, liquidity and diversification.
The key question in 2025 is not just where to invest but how to structure and optimize investments for resilience, adaptability and opportunity.
The shift toward selectivity
The global economic landscape is changing, requiring a more strategic, data-driven approach. Interest rate fluctuations, inflationary pressures and evolving capital flows are pushing family offices to think beyond static asset allocation.
While many families prefer to operate in cash, expected global rate cuts could create opportunities for selective leverage and asset repositioning. At the same time, prime real estate remains one of the most effective inflation hedges — especially in supply-constrained, ultraluxury markets where demand remains resilient.
The next generation sees real estate as both a preservation tool and an active investment lever. Their priorities reflect a departure from traditional trophy asset accumulation. Wellness-driven properties that integrate sustainability, design and smart-home automation are in demand. AI-powered security and operational efficiency are becoming essential, and privacy and digital integration are paramount. Younger investors are also diversifying geographically beyond legacy markets such as New York, London and Paris. Their interest is less about status and more about liquidity, agility and exit strategies — real estate must function as part of a dynamic portfolio.
New York City remains a global center for ultraluxury real estate, but families are more selective, focused on long-term value. At the close of 2024 and into early 2025, sales of properties priced over $10 million surged by 85%, showing that prime assets still attract capital. These trends mirror late 2020, when real estate served as a store of value amid broader market volatility.
For many families, holding rather than selling is now the preferred strategy, especially in New York’s tight rental market. Median Manhattan rents hit $4,500 in February, a 6.4% annual increase. Hold-versus-sell decisions depend on timing, tax structure and reinvestment plans. Demand remains strong in legacy neighborhoods like the Upper West Side, Upper East Side, Tribeca and the West Village, while Brooklyn continues to capture next-generation interest. Waterfront and boutique developments with sustainability features and smart-home tech have become strategic entry points for younger investors.
Expanding globally
New York remains a core market; but families are increasingly deploying capital globally, weighing tax efficiency, lifestyle and geopolitical risk along with return on investment.
In Dubai, $4.4 billion in luxury real estate transactions reflect strong demand, driven by zero-income-tax policies, advanced infrastructure and a luxury-first model. In London, despite post-Brexit shifts, families are acquiring assets in Mayfair and Knightsbridge, taking advantage of currency movements and long-term value opportunities. Monaco, where $1 million buys just 19 square meters, remains a haven for privacy-driven investors.
Top-performing family offices are not overconcentrated. A multicity, multi-asset strategy is the best hedge against volatility. Balancing core holdings in ultraluxury markets with high-yield rentals and opportunistic buys ensures portfolios stay resilient in changing conditions.
As heirs take a more active role in shaping strategy, their approach reflects broader values. Experiential luxury is driving demand for hospitality-style, wellness-focused properties. Sustainability is no longer optional—green-certified buildings with solar integration and high-efficiency systems are commanding premiums. There’s growing interest in flexible models like fractional ownership, branded residences and private club real estate.
Technology is also a defining force. AI-powered analytics, blockchain-backed transactions and advanced smart-home automation are now standard expectations. Some family offices are not only adopting these technologies but are investing in the companies building them.
Looking ahead
Luxury real estate in 2025 isn’t just about owning high-profile properties. It’s about integrating them into a larger wealth strategy that’s built for the future.
The most effective family offices are engaging heirs early in investment decisions, balancing traditional luxury holdings with innovation and liquidity, and using technology and private deal flow to stay ahead of the curve.
The key question I ask my families — and that you should ask yourself — is: Are you actively shaping your next phase of real estate holdings, or watching while others seize the opportunities ahead?