Cape Cod Times - 12/30/10
By Sarah Shemkus
Ross Buchmueller, president and CEO of insurance company PURE, has a strong opinion about the wisdom of writing homeowners policies in Massachusetts.
"It's not only a good place, we would argue it's the best place," he said. "There's no state that is more affluent, more profitable ... than Massachusetts."
And so, as of two weeks ago, PURE is open for business in the commonwealth.
The Florida-based insurer focuses its business on homes valued above $1 million and homeowners who have a history of taking precautions — alarm systems, caretakers, winterizing — to protect their properties. And Massachusetts, he said, is full of such homeowners.
On the Cape, PURE may also insure lower-value vacation properties owned by customers insuring a high-value off-Cape home with the company, he said.
The business is structured so that policyholders rather than shareholders own the company, a system often called "mutual ownership." Without stockholders clamoring for higher profits, PURE will be able to charge lower premiums, Buchmueller said.
Chuck Robinson, president and CEO of Rogers & Gray Insurance Agency in South Dennis, has checked PURE's prices against those of rival insurers, he said.
"It runs anywhere from 18 to 30 percent savings," said Robinson, whose agency will be selling PURE policies. "Some of those premiums on those high-value homes are significant, so it's quite a difference."
The company expects to write only a "few thousand" policies in the entire state as part of its plan to carefully manage its risk, Buchmueller said.
"We will carefully select our membership," he said.
PURE also operates in a handful of other states, including Connecticut, Maryland, New Jersey, New York, North Carolina and Rhode Island.
In Massachusetts, however, the new player may not have much impact on the broader problems in the Cape and Islands homeowners insurance market. Since 2004, the region's homeowners have been facing soaring premiums and shrinking availability, as insurance companies have been shying away from coastal regions.
With its narrow focus, PURE will be a viable option for only a fraction of the Cape and Islands' 140,000 insured homeowners.
And, Robinson said, the companies that insure high-value homes tend to focus on that segment of the market. If PURE takes away some of their customers, they won't go looking for new clients in the broader market, he said.
"They don't write under $1 million, so it doesn't create more capacity for those under $1 million," he said. "It's not going to have much of an effect for everyone else."
Nonetheless, state regulators are pleased by the introduction of a new coastal insurer to the state. "Anytime we have a new entrant that writes and has a particular interest in coastal areas, I think that's good news," state Insurance Commissioner Joseph Murphy said.
PURE is also considering a move into the Massachusetts auto insurance market.
The company has been approved by the state, but needs to learn more about the regulations that govern the market in this state, Buchmueller said. Massachusetts adopted a new system of managed competition in 2008, replacing the old approach in which the insurance commissioner set rates for the entire state.
"We're watching it closely," Buchmueller said. "As we understand it, we would gladly get into the market."