While personal lines property insurers are leaving the state in droves, one new Florida mutual carrier thinks it can buck the trend with some sharp underwriting.
Earlier this year, the Privilege Underwriters Reciprocal Exchange (PURE) started insuring homes valued at over $1 million.
Executive Vice President Martin Hartley said the key to the company's underwriting was looking for well-built homes with the kind of retrofitting to withstand today's hurricanes and meet the state's 2001 building codes.
And this does not exclude the grand palaces built in Palm Beach during the 1920s and 1930s.
"Actually, a lot of homes built in those days are a lot more structurally sound than those built today," he said.
PURE will rely on reinsurance to cover up to 75 percent of its risk with Berkshire Hathaway, American International Group and ACE among the top companies it will look to.
The recent reforms signed into law by Republican Gov. Charlie Crist that expanded the capacity of the Florida Hurricane Catastrophe Fund came at just the right time, Mr. Hartley said, providing the reinsurance capacity needed for his operation.
The reciprocal exchange form of ownership, used primarily by doctors for malpractice insurance, offers many of the advantages of standard mutual ownership and then some, Mr. Hartley explained.
Among them is the ability to put revenues aside to fund future catastrophe losses on a tax-free basis–something the insurance industry has been fighting for in Congress for years now.
"And since capital is provided by our members, they are not looking for a 20 percent profit," he said.
Customers are required to make an additional one-time payment equal to half their first-year premium. That money is put into a fund once claims and expenses for the year have been deducted. If a customer drops the policy, they can withdraw those monies.
While the rates PURE charges may be similar to those charged by other high-end insurers such as Chubb, Mr. Hartley said, such coverage is often not available in this post-Katrina environment.
The company started selling policies Jan. 29 through the independent brokerage channel and so far Mr. Hartley has been pleased with the reception.
"We have had a phenomenal response," he said.
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