PURE Competition

Despite the continued growth and stability in the high net worth insurance market, few insurers specialize in the unique risks of the very wealthy.

One new insurer is making headway with a new approach.

The Privilege Underwriters Reciprocal Exchange, better known as PURE Insurance, launched in 2006 to serve as an exclusive market for the insurance needs of high net worth clientele.

Ross Buchmueller, president and CEO of PURE and one of its founders, is no stranger to the affluent market. He spent the last 25 years of his career in leadership positions at Chubb Insurance and AIG, where he set up AIG’s Private Client Group to target the affluent.

Buchmueller says while the market for high net worth business is large, it isn’t extremely competitive.

“It had been and continues to be a growing market, even with what’s gone on in the economy, but you see relatively modest competition,” Buchmueller says. “And so we set out to build a new, fresh, alternative view.”

What Buchmueller helped build is a policyholder-owned and managed company.

The lack of insurers specializing in high net worth property/casualty insurance created a problem for insureds, according to Buchmueller.

“We saw the fundamental problem was the alignment of interests between shareholders and policyholders … in the insurance industry, the interests of policyholders and the interests of shareholders are not in sync unless there is robust competition. But if there’s not a lot of competition (as in the high net worth market), you’re going to see these circumstances where people pay well above the odds.”

PURE founders examined the benefits of building a policyholder-owned company for the affluent market and saw a perfect fit.

“We realized that if we could pool together the most responsible owners of the finest built homes, we could build a much more compelling alternative than a company whose stated goal is to maximize the wealth of shareholders. And that’s what we did.”

In just six years, PURE and the PURE Group of Insurance Cos. has grown to serve over 11,000 members. PURE currently writes in 20 states with plans for further expansion.

But Buchmueller adds the company is only looking for the very best risks. “We select very carefully. We only write business that we think meets the highest standards of everything from construction quality, elevation, etc.,” he says. That’s one of the benefits of a fresh start; no legacy issues or risks, he adds. “We select very carefully, we optimize the distribution, we maximize the membership in any one area, and I think it serves us very well.”