The idea for Pure, according to Buchmueller, grew out of a belief by all three that these market leaders underserved the high-net-worth sector. They felt that by starting a company that was devoted exclusively to this market, unencumbered by corporate red tape and legacy risk exposures, they could beat their competitors both in terms of price and service.
"One of the key things for us is that this is the only business that we're in, and I think that provides an advantage," Paraschac says.
Such specialization allows the firm to take a more refined approach to services and the type of risk that it insures, the founders say.
At its launch, for example, the firm signed policies only in Florida that were limited to relatively new homes built to the highest building code standards, with features such as concrete reinforcement and roof tiles tied with hurricane-proof straps, Hartley says. Indeed, about a third of the homes covered by Pure in 2007 were completed that same year.
"We started with a pool of members who were definitely going to outperform the average in that state," he says. "Our view is, if you think of insurance as a pool of risk, we are going to reserve our capacity to offer coverage to the best of the best."
The high-quality base of policyholders allows Pure to provide coverage that wouldn't be viable for its larger competitors, Buchmueller says.
He notes that Pure, on average, saves its policyholders about $3,200 per year in premiums over the like offerings of its competitors.
While homeowners insurance typically caps jewelry coverage at $5,000, Pure offers up to $50,000 in coverage in recognition of the fact that this could be a significant feature for high-net-worth families, Buchmueller says. The firm's standard home insurance also includes features designed to prevent damages, such as up to $2,500 for the installation of burglar or fire alarms, backup generators or other devices after incidents of $10,000 or more in damage.
Another key differentiator arose as the trio was trying to formulate Pure's service model. They started to notice, in survey after survey, that the insurance companies most respected by high-net-worth customers were those owned by policyholders.
Hence, the decision was made to use that ownership model for Pure. Under this structure, policyholders are considered members, or "subscribers," of the company, and as such are entitled to a full accounting of the company's financials in annual reports. For each of the first five years of a member's policy, 10% of home and watercraft policy premiums and 4% of auto, collectibles and umbrella liability premiums go into the surplus account.