BestWire - 08/18/10
By Diana Rosenberg
White Plains, NY - Privilege Underwriters Reciprocal Exchange, launched three years ago by three former American International Group Inc. executives, continues its expansion into new markets, with a launch in Massachusetts in the coming months and plans to offer insurance products in Arizona and other states.
"Massachusetts is an important product launch," PURE Chief Operating Officer Martin Hartley said. In addition to Massachusetts, the company previously announced plans to expand in North Carolina and Alabama later this year. Eventually, PURE will seek to offer insurance products in 50 states, with Arizona, Colorado, Washington and California, as well as Illinois and Michigan, being priorities, Hartley said.
The companies with the largest market share in the Massachusetts homeowners multiperil market include MAPFRE USA Group, with a 10.74% share; Liberty Mutual Insurance Cos. with an 8.19% share; Travelers Group with 7.6%; Chubb Group of Insurance Cos. with 7.21% and Andover Cos. Pool with 6.8%, according to BestLink, which provides online access to A.M. Best Co.'s Global Insurance & Banking Database.
Hartley said despite the bad economy, the time is right to expand nationally. Homeowners are looking to their household budgets, seeing where they can save money, and PURE's target -- owners of high-value homes -- are an underserved market.
Domiciled in Fort Lauderdale, Fla., PURE provides homeowners, automobile, jewelry, art, personal liability and watercraft insurance products. In PURE's business model, policyholders agree to exchange contracts of insurance to achieve the desired risk pooling. Members' contributions pay for each others' claims. Policyholders' contributions to surplus are made during the first five years of membership in addition to premiums. The underwriting criteria provides that the homes must be worth at least $1 million and be well-protected against weather-related events. (BestWire, March 2, 2010).
An important strategy of the company's growth has been expanding into new markets and diversifying from its concentration in Florida, where the company was founded in 2006. The company, started by AIG Private Client Group colleagues Ross Buchmueller, Jeffrey Paraschac and Hartley, expanded into Rhode Island, Maryland, Texas, Georgia and Washington, D.C. earlier this year after launching in New York, New Jersey and Connecticut last year (Best Review, November 2009). After Massachusetts,North Carolina and Alabama, the company will focus on Arizona, Hartley said. Florida regulators approved the company's national expansion in May. As required by its consent order for licensure, PURE needed to receive approval from Florida insurance regulators before applying to expand into other states.
"Serving successful families, often times, we see second homes in states," Hartley said. "Colorado is a good example. There are lots of California and New York residents with ski homes in Colorado. Part of having a national reach is serving all the needs of members, whether primary or secondary homes."
Privilege Underwriters Reciprocal Exchange currently has a Best's Financial Strength Rating of A- (Excellent).