Newest Florida Carrier, Prepared Insurance, Targets ‘Older’ Homes

September 23, 2009

Florida has given the go-ahead to a new homeowners insurance company that plans to focus on what it says is the underserved market of homes built before 2002.

Prepared Insurance Co., headquartered in Tampa, intends to use its management’s knowledge of building codes, construction, loss mitigation and catastrophe exposure to underwrite homes that are shunned by other insurers simply because they are older, even though, according to Prepared, many are good risks that have been updated and fortified.

The newest insurer is promising to offer a broad policy with property coverage, including windstorm, as well as more than a dozen optional endorsements, such as home computer coverage, golf cart coverage and animal liability.

The firm is being headed by Doug Raucy as president and chief executive officer. Raucy served as the chief operating officer for the Institute for Business and Home Safety, a trade association that focuses on disaster-resistant structure research and education, from 2001 to 2008. Prior to IBHS, Raucy managed the catastrophe division at Allstate Insurance Co. from 1995 to 2000, during which time he established the Allstate National Catastrophe Team and National Catastrophe Center. He has also been a manager for Allstate in California and Florida in the auto, casualty and property divisions.

According to Raucy and his team, many carriers in Florida are using an “age of home” criterion as their primary underwriting tool, leaving homes that were built prior to 2002 with fewer coverage options in the private market. Prepared says more than 80 percent of Florida’s homes fall into this age category.

Instead of using age, Raucy wants to offer coverage based on “specific, verifiable construction characteristics that historically perform well.” Thus many homes regardless of when they were built could be underwritten.

According to Stephanie Siewert, vice president of sales and marketing, many Florida agents have few options for these older homes other than the state-backed insurer, Citizens Property Insurance Corp.

“We’re telling agents we will actually underwrite them,” Siewert told Insurance Journal.

She said the company will write coastal homes “but very selectively.”

The company’s initial underwriting will include satellite imaging. She estimated that about 40 percent of risks will be physically inspected before an underwriting decision is made.

Siewert says Prepared also wants to write newer homes but prefers to wait until the current mitigation credit program for these houses is cleaned up before writing too many. The state is reviewing that program which evidence suggests is encouraging vendor, agent and property owner fraud and awarding overly-generous discounts that result in inadequate premiums.

The Florida Office of Insurance Regulation issued Prepared a certificate of authority on Sept. 18. The new company has been started with $10 million in capital from private investors. It will begin selling in Florida during the fourth quarter of this year.

Prepared plans to market exclusively through independent insurance agents. It plans to appoint about 150 independent agents, with about 70 percent of them in central and northeastern counties, according to Siewert. About 15 percent will be in the three biggest coastal counties.

“Agency representation has been carefully designed with reinsurance costs in mind. Our geographically diverse footprint with higher agency concentration in lower risk areas of the state will help us avoid the pitfalls of some of our predecessors and maintain a more balanced portfolio,” said Siewert.

She promised competitive commissions along with profit sharing for Prepared’s agents.

In addition to Raucy, the management team includes:

Eric Gobble, Chief Risk Officer and Chief Operating Officer
Gobble has 21 years of experience in the insurance, reinsurance, risk management and catastrophe management fields. His industry experience has included working for John Deere Insurance Co. in Moline, Illinois, and RLI Insurance Co. in Peoria, Illinois. He most recently served as a senior director at Risk Management Solutions, Inc. (RMS) focusing on client development and the use of catastrophe risk management tools. At Prepared, Gobble will have responsibilities in rate/form filings, regulatory compliance, growth strategies, portfolio optimization, underwriting, investor and vendor relations, overall Probable Maximum Loss management, catastrophe modeling oversight, reinsurance protection, and other areas of strategic direction.

Wayne Burks, Chief Financial Officer
Burks served as chief operating officer and chief financial officer for Florida Lift Systems and its affiliates from 2007 to 2008. From 2005 to 2007 he was the COO and CFO of Movex, a nationwide self-service moving company. During the previous 10 years, Burks was a co-founder of a private investment group.

Mike Rubio, Vice President of Claims
Rubio joins Prepared with 35 years in claims at Allstate. Most recently, he served as property claim manager and Florida catastrophe claim coordinator from 2004 to 2008 for Allstate Insurance Co. and Allstate Floridian Insurance Co.

Stephanie Siewert, Vice President of Sales and Marketing
Siewert joins Prepared following 14 years in the insurance industry. Most recently she was vice president of sales and marketing for a medical savings accounts provider, overseeing a team of 50 sales professionals nationally and over $40 million in annual revenue. Her background began as a sales manager for AIG Europe based in Frankfurt, Germany. When she returned to the U.S. in 2000, she spent four years as marketing manager for a start-up homeowners’ carrier in Florida and also spent several years as an executive recruiter in the insurance industry.

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