PURE Insures $1 Million-Homes

Wouldn't it be nice to have a home worth $1 million or more? And wouldn't it be nice that, if you couldn't find an insurance company willing to insure your house, you could form your own company?

That's essentially the concept behind PURE Risk Management. Since starting about a year ago in Florida, PURE has garnered nearly 2,000 "high net worth" individuals as policyholders, or "members," including about 20 in Brevard County.

Based near Fort Lauderdale, PURE is the idea of Ross Buchmueller -- an insurance-industry veteran and PURE's president and chief executive officer -- and his partners.

PURE -- short for Privilege Underwriters Reciprocal Exchange -- is a policyholder-owned company that provides homeowners insurance, including windstorm coverage, for well-built homes insured for more than $1 million.

"Large homes have proven to hold up well" in hurricanes, Buchmueller said.

The company is part of an influx of new insurers in Florida to fill the void of other companies that have left or reduced their policies here since the hurricanes of 2004 and 2005.

This year alone, about 19 companies have entered the Florida market, although PURE's approach is unusual, said Ed Domansky, a spokesman for the state Office of Insurance Regulation.

State regulators determined that PURE had the financial strength to do business in Florida, Domansky said.

Part of that is because of the $17 million in startup money that PURE received from the state's Insurance Capital Build-Up Program, an initiative to retain and attract insurance companies to Florida.

PURE's marketing mantra is that well-built homes with lesser risk of damage from a hurricane or other calamity shouldn't pay higher insurance premiums.

"Our members have committed their own hard-earned capital to form PURE," Buchmueller said.

One of those members is Michael Sapourn, who lives in the gated Brevard beachside community of Lansing Island.

Sapourn, who used to run an insurance brokerage firm in Washington, D.C., said he was shopping for insurance after his company, insurance giant State Farm, refused to renew his homeowners' policy, even though he didn't file a claim from the hurricanes of recent years.

Sapourn said he did some research and went with PURE after determining it would be less expensive than other insurance, especially the state-run Citizens Property Insurance Corp. -- known as the insurer of last resort.

With a startup firm like PURE, there is the possibility that it could fail, he said, but "State Farm left me with no choice," he said.

But Sapourn is confident that, if there is a big storm, the company will come through.

"That's the bet I'm making," he said.

Contact Blake at 242-3644 or [email protected].

Typical premium

PURE Risk Management's average policyholder pays a premium of about $10,000 a year for a $1.8 million home. In addition, policyholders pay "surplus contributions" equal to about 10 percent of their annual premium for their first five years of membership. The contributions go into a surplus fund, which now has about $53 million, to help ensure the company's ability to pay out claims in the event of a disaster.