NU Online News Service, July 10, 2:15 p.m.EDT

A small Florida-based reciprocal insurance company thatspecializes in coverage of expensive, storm-resistant shore homesis expanding into New Jersey, the firm said yesterday.

The announcement by Fort Lauderdale-headquartered PURE RiskManagement LLC brings the number of states the company operates into four. It also insures property in New York and South Carolinaand is licensed for Connecticut and Washington, D.C.

A reciprocal insurer is a risk-pooling entity whose participantsare known as "subscribers," who agree to exchange insurancecontracts among themselves to achieve risk pooling. PURE memberspay a surplus contribution of 10 percent of their high-valuehomeowners' premium and 4 percent of their premium for all otherpolicies, for each of the first five years of membership.

Martin Hartley, executive vice president and chief operatingofficer for the company, said the company has been successfulbecause in targeting hurricane-exposed areas it doesn't have theaggregation of risks in a location that many insurers have builtover time.

He said the company's sophisticated underwriting uses the mostup-to-date "views of how homes are damaged in windstorms and weemploy those in our pricing."

One of the key things learned from recent hurricanes, said Mr.Hartley, is that "strong winds will damage big homes less thansmall homes. We factor in characteristics that maybe others [in theinsurance industry] don't."

PURE, he explained, takes into account such factors the shape ofthe building's roof and how new it is as well as how recently thehome went up and if it employed the newest building codes.

He said the company targets some homeowners that it views aspaying too much in premium, and avoids others "not payingenough."

A lot of carriers, he said, if they looked at their business"would see older homes, poorly elevated in flood zones. We'resaying, 'If you're elevated and have a good roof, allow us to sayyou're a better than average risk.'"

Mr. Hartley said the company distinguishes "hugely" betweenthose homes set right on the water and those with a good amount ofsetback from the beach whereas in New York, for example, "somecompanies have one rating territory for the whole of SuffolkCounty" on eastern Long Island.

PURE noted that in New Jersey many other insurers in the statecurrently offer limited coverage or have stopped writing policies,particularly along the coast.

The company said it plans to provide "New Jersey members(policyholders) with significant savings on their homeownersinsurance, much like it has done in the other states itserves."

In addition to homeowners insurance, PURE provides automobile,jewelry, art, personal liability and watercraft insurance towealthy individuals and families.

Ross Buchmueller, PURE president and chief executive officer,previously founded AIG Private Client Group and served as itspresident until 2006 when he and his partners established PURE.

"PURE believes that the owners of large, well-built, high-valuehomes in New Jersey deserve access to high-quality insurance andshouldn't necessarily have to pay higher premiums."

He said, "We recognize that many prospective members areattracted to PURE because of the savings we offer; however, we areable to retain a solid membership base and grow our reputationbecause of our dedication to exceed claims service expectations andour commitment to help our members develop sound practices toprotect their homes."

PURE said its coverage goes beyond repair costs or replacingdamaged property. The firm said it will contribute up to $2,500 tohelp prevent large losses from recurring and to control thelong-term cost of risk.

As an example, it mentioned that if lightning causes anelectrical surge and damages electrical appliances valued at$10,000 or more, PURE may cover the replacement of the appliancesand contribute to the installation of a lightning-suppressionsystem to help prevent similar incidents.

PURE, Privilege Underwriters Reciprocal Exchange, reports it hasmore than 3,700 members and about $100 million of surpluscapital.