Insuring Safety: PURE Group of Insurance Companies’ Ross Buchmueller
PURE’s president and CEO protects the high-value assets of affluent clients, especially in extreme weather events like Hurricane Sandy and other unpredictable conditions.
After a headline-grabbing career at AIG, Ross Buchmueller went out on his own to found the PURE Group of Insurance Companies.
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Last fall, as Superstorm Sandy was bearing down on Westchester County and the rest of Northeast, the PURE Group of Insurance Companies was a whirlwind of activity. Employees assembled in the glass-walled “war room” of PURE’s White Plains offices, tracking the storm on monitors and identifying clients in its path. The Communications Team then sent out emails to policyholders with advice on protecting their homes. The seven-person Member Advocate Team worked the phones, offering last-minute coaching to deal with the oncoming maelstrom and lining up temporary living situations, if needed. The Risk Management Team was marshaling resources for the cleanup—particularly arborists—and the Technology Team was getting its connectivity ducks in a row. Finally, the all-important Claims Team was bolstering the number of adjusters in advance of landfall, lining up contractors to help with the cleanup, and preparing itself for the onslaught of claims to come.
“We’re the calm before the storm,” says Ross Buchmueller, president and CEO of the six-year-old insurance company, which covers affluent homeowners and their valuables: jewelry, cars, watercraft, Picassos. Sandy was the second costliest storm in US history, accounting for 125 deaths, $62 billion in damages (mostly to New York and New Jersey), and costing $25 billion in claims for insurers. For its clients, PURE was the calm after the storm, too, as its claims adjusters fanned out across 10 states and Washington, DC, investigating the approximately 1,300 claims that came in, restoring order, making things right.
Buchmueller, 47, can see the “war room” from his corner office on the sixth floor of the Westchester One building. Casual in a sweater and khakis, he resembles Mark Ruffalo’s white-collar cousin. Photographs of his wife, Pamela, and two children abound; they live in Larchmont, where his son and daughter attend public schools. A plaque from 2004, when Crain’s New York Business named him one of its “40 Under Forty,” has pride of place on a wall by his desk.
At that time, he was 38, best known for launching AIG Private Client Group and growing it into a half-billion-dollar division. Now, he is the captain of his own ship, employing 175 people, half in White Plains, the rest in offices in Atlanta, Chicago, Scottsdale, Charleston, and Fort Lauderdale.
Since Sandy, PURE has weathered Winter Storm Nemo and a tornado in Hattiesburg, Mississippi, along with the assorted mishaps that befall people and their possessions: theft and fire, accidents and injury. Down on the street, police sirens sound, a reminder that mayhem—to steal another insurance carrier’s tagline—happens, and, when it does, it’s nice to have backup.
While PURE sounds like a brand of bottled water, it actually stands for Privilege Underwriters Reciprocal Exchange. Unlike publicly traded companies, PURE is based on the mutual insurance model, where policyholders are members and risk management is rewarded with lower premiums—up to 20 percent lower.
Members make a surplus contribution of up to 10 percent of their annual premium for five years into a capital pool, to boost capital assets. At the end of the year, if PURE shows profits or grows its surplus capital, the company allocates those gains into notional accounts for each member, called Subscriber Savings Accounts, or SSAs. If a member elects to cancel all of his or her PURE policies, any monies in their SSA are returned to them. “In 2012, despite the impact of Superstorm Sandy, PURE will make an allocation of $1,500,000 to member SSAs,” says Buchmueller.
While starting an insurance company in a 21st-century climate that seems defined by ever-more-destructive natural disasters might appear, well, risky, when it comes to his members, Buchmueller leaves little to chance. “In our model, we want to be careful. We aim to select those homes and owners that we believe will perform best in a storm. Our view is, we should only let in those people who we think share our values. That’s the best thing we can do to hedge risk.”
Anyone hoping to buy PURE’s High Value Homeowners Insurance must have a home that’s relatively new construction and that would cost at least $1 million to rebuild. They must be “responsible”: Their houses are solid as fortresses; they don’t file frivolous claims; they bring in the lawn furniture if a “wind event” is coming; they don’t see an impending storm as a chance to “lose” the boat they can no longer afford. “They’re very actively engaged in thinking ahead, trying to prevent loss,” says Buchmueller. “They have an ownership in PURE. It’s an ‘ounce of prevention, pound of cure’ issue. They would rather prevent a loss than respond to a loss.”