Home Insurance Company Touts New Shore Approach
June 7, 2009
The Asbury Park Press - 07/08/09
By Michael L. Diamond
A New York company says it can provide less expensive homeowners' insurance to affluent residents at the Shore who have scrambled in recent years to find affordable coverage.
Privilege Underwriters Reciprocal Exchange says it is taking a new approach to underwriting. It looks at homes at the Shore for their individual risk instead of lumping them in one, high-risk category.
"Our view is, when we can identify risks where the traditional market has been charging too much . . . that's an opportunity," said Ross Buchmueller, chief executive officer for the White Plains, N.Y.-based company, called Pure for short.
The company's entry into the market comes as homeowners have found it increasingly difficult to buy reasonably priced insurance. Some insurers, nervous about the prospects of a hurricane hitting the Shore, have refused to renew policies or abandoned the market. Others have raised premiums and deductibles.
Casey Boynton, whose Toms River home is about seven miles from the Atlantic Ocean, switched to Pure recently after his premiums were set to increase 10 percent. Boynton said he will save about 20 percent.
"I look more and more at where I can save money, especially in these times," said Boynton, whose family owns Boynton & Boynton insurance agency in Fair Haven, but isn't involved with the insurance business.
Homeowners' insurance covers property damage caused by wind, fire, theft and even household pets. Homeowners can buy flood insurance separately through a program backed by the federal government.
Insurers revisited their underwriting practices in 2005 after Hurricane Katrina devastated the Gulf Coast, leaving behind $40 billion worth of damage. Using new technology to better pinpoint storms, they decided a section of New Jersey roughly east of the Garden State Parkway, from northern Monmouth County to Cape May, was high risk.
Marshall McKnight, a spokesman for the New Jersey Department of Banking and Insurance, said surplus carriers, such as Lloyd's of London, have filled the void, although their policies typically are more expensive and less comprehensive. And their rates aren't regulated by the state.
But the number of homes covered by a state-sponsored plan for homeowners unable to get insurance through the private market has fallen 43 percent since 2005, McKnight said.
"We still have availability," McKnight said. "It isn't an issue where people aren't able to get any coverage. Along the coast, it's more expensive."
Buchmueller, however, said that doesn't need to be the case. Pure has used technology to evaluate homes and determine how well they can withstand fierce storms, he said.
The insurance product isn't available to everyone. The company typically covers customers whose homes are valued at more than $750,000.
"The same science that led people to not want to write (insurance) gives us the confidence to write larger structures as a rule because we believe they're less likely to damage," Buchmueller said.