REPORT TO MEMBERS - PURE Insurance · 2019-04-05 · THE 2013 REPORT TO MEMBERS levels, as more than 75% of respondents to a recent member survey indicated that they have already

R E P O R T T O M E M B E R S

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TABLE OF CONTENTS

Review of Operations

The Voice of Membership

Love your insurance®

PURE Responsiveness

Knowledge Sharing

Exceptional Employees & Brokers

Exceptional Service

Policies & Premiums

Claims & Expenses

Capital Management, Reinsurance & Investments

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T H E 2 0 1 3 R E P O R T T O M E M B E R S

Dear PURE Members,2013 was a wonderful year for PURE. We exceeded expectations

in every area, especially in the service and satisfaction of our

membership. We look back at 2013 as the best year yet in our

history.

Bigger, Stronger, More Diversified. As we have in every year since

our formation, PURE grew by more than 40% in 2013 (44%). Direct

Premiums Written exceeded $250,000,000 and, as of the close

of the year, we serve more than 26,000 members in 46 states.

In January of 2014, we earned a license to welcome members

in California and expect to begin doing so in the second quarter.

Florida residents now represent fewer than 20% of our membership

and with continued Western expansion, we are moving closer and

closer to our optimal diversification.

More Financial Strength, More Financial Flexibility. With relatively benign weather, we produced an excellent net underwriting

result, with a combined ratio of less than 100%. We saw significant growth in surplus capital with the power of our model on full

display. The growing impact of surplus contributions from PURE members is critical for our strength and competitive advantage

(lowering our cost of capital). We continue to accelerate the repayment of one surplus note, but also demonstrated the flexibility

of our structure with an influx of new capital from the holding company of the PURE Group of Insurance Companies (Privilege

Underwriters, Inc.) into the pooled insurer, PURE Insurance Company. The

capital infusion was enabled by continued support of our existing investors

and the ability to access affordable debt serviced by the for-profit Attorney-

in-Fact. The net impact of all of these changes to the PURE Group is asset

growth of greater than 50% (to over $300,000,000) and statutory surplus

growth of nearly 70% (to more than $155,000,000).

Love your insurance®. Over the past two years, we have more than doubled the number of claims professionals, risk managers

and Member Advocates to serve the PURE membership. We have introduced a “Situation Room” as a place where PURE

members can get important information about risk. We are in the process of introducing a Member Portal, including a Claims

Tracker that will extend our commitment to keeping the membership connected during the claims process. Based on the

tremendous feedback on the service experience to date, we launched a new expression of our brand, “Love your insurance.”

Our employees embraced the challenge to delight the membership at every turn, and the results show. The preliminary Net

Promoter Score for 2013 is an extraordinary 65% (up from an excellent 58% last year).

Engagement and Alignment. We created PURE with the idea that we could build a profitable and valuable enterprise by

focusing on the needs of our policyholders. Our independent Attorney-in-Fact would attract talented and motivated people who

would feel liberated by the opportunity to manage an insurance company with policyholders in the center of their focus. Our

commitment to this model has never been stronger. We see evidence of member engagement and referrals at unprecedented

Our employees embraced the challenge to delight the membership at every turn, and the results show.

R E V I E W O F O P E R A T I O N S

2

Ross Buchmueller, President & CEO


levels, as more than 75% of respondents to a recent member survey indicated that

they have already referred a friend or colleague to PURE. As tangible evidence of

our alignment of interests, we have allocated $5,000,000 to Subscriber Savings

Accounts in recognition of the excellent operating results from 2013.

The future is lined with opportunities and challenges.

The Weather. The horrific winter weather was a strong reminder of the risks of this business (and our lives). We are responding

to burst pipe claims, and doing everything we can to proactively encourage and assist our membership to find ways to prevent

loss. We continue to be conservative in our approach to catastrophic losses — limiting the amount of members we accept

in any one area and protecting our business with comprehensive reinsurance. Nonetheless, we must be prepared to view

dramatic and destructive weather patterns as the new normal.

The Interest Rate Dilemma. Low interest rates have placed an enormous burden on insurers who are accustomed to a certain

level of return from their fixed income portfolio. In turn, the burden has been placed on policyholders as premiums have been

increasing in order for underwriting results to make up for lost investment income. PURE feels the impact of those headwinds,

as our fixed income yields are at historic lows. But there is a silver lining for PURE and its membership. Low interest rates have

contributed to a surge in capital flowing to reinsurance markets as “insurance-linked securities” are now viewed as an attractive

asset class. The result for us is a highly competitive reinsurance market that allows us to grow responsibly and hedge our bets

with increasingly affordable reinsurance coverage.

California. We cannot help but be intrigued by the potential that lies in California. On one hand, it is the largest and wealthiest

state in the nation. On the other hand, the extended drought conditions increase the risks for wildfires, and it’s been 20 years

since the last major earthquake (Northridge). Because these potential hazards are all but completely non-correlated to our

predominantly East Coast business, the opportunities outweigh the potential risks. We have begun to hire an excellent local

team, based in San Francisco, and we aim to enter the market carefully and thoughtfully in the second quarter of 2014.

Thousands of PURE members have already fully satisfied their obligation to make surplus contributions to strengthen this great

company. In many cases, the cost of insurance has started to go down for these members; I thank them for their commitment

and loyalty to PURE. And to the more than 20,000 PURE members who have joined us within the past five years, I am

committed to proving that the absolute best is yet to come.

Sincerely,

Ross Buchmueller, President & CEO

R E V I E W O F O P E R A T I O N S

We look back at 2013 as the best year yet in our history.

3

T H E 2 0 1 3 R E P O R T T O M E M B E R S4

Dear PURE Members,The PURE Subscribers’ Advisory Committee had a busy and productive year.

We continued to balance our dual roles of providing advice to PURE’s Attorney-in-Fact (AIF) and representing the membership in the governance process. One of our primary governance roles is to select an independent auditor to review the financial condition of both the insurance exchange (PURE) and the AIF. Since inception more than seven years ago, EisnerAmper have affirmed our confidence in PURE.

The Committee also played an important role alongside the AIF and our regulators to improve the simplicity and effectiveness of the PURE Subscriber’s Agreement and Limited Power of Attorney by clarifying some conditions for the benefit of the membership and introducing a plain English summary and signature page. We expect that these changes will make it easier for new members to understand the workings of PURE. We also strengthened and clarified our own governance rules, including a new procedure for electing Committee members which will begin later this year.

Our quarterly meetings with the management of the AIF include a broad financial and operational review as well as the opportunity to provide feedback on potential product and service enhancements. We pride ourselves on being able to empathize with the larger membership and offer constructive advice to improve the relevance and effectiveness of new and existing offerings. As you experience the new and improved services offered by PURE, we can only hope that our advice positively influenced the development of those services.

T H E V O I C E O F M E M B E R S H I P

T H E 2 0 1 3 R E P O R T T O M E M B E R S 5

Lastly, in 2013, we made great strides to act as model PURE members. As ambassadors for the company, Committee members opened doors and referred friends and colleagues like never before. We have enjoyed the engagement with other members across the country and hope to be able to do even more in future years. It is in all of our interests for PURE to become larger, stronger and more diversified. I encourage you to act as a “promoter” in your community.

I have served on this Committee for the past seven years and have enjoyed watching the company become even better every year. I join my fellow Committee members in applauding the work done by the PURE team and look forward to being a satisfied member for many years to come.

Sincerely,

William W. Wilson III, Chairman, Subscribers’ Advisory Committee

To view the new Subscriber’s Agreement, visit pureinsurance.com/agreements.

T H E V O I C E O F M E M B E R S H I P

The Subscribers’ Advisory Committee advises on the company’s direction and ensures that the voice of the membership is heard on important matters. From left: William W. Wilson III, Ross Buchmueller, Doug Fields, Joey Cummings, James McLaughlin, and Richard Jacobs. For additional information and bios, visit pureinsurance.com/sac.

Privilege Underwriters Reciprocal Exchange

Subscriber’s Agreement Summary and Signature Page

As a reciprocal insurance exchange, Privilege Underwriter’s Reciprocal Exchange (PURE) is an unincorporated association of subscribers operating as an insurer through a Subscriber’s Agreement & Power of Attorney (Agreement) which all subscribers are required to sign. Please review the attached Agreement and sign below to acknowledge your intention to be legally bound by its terms and conditions.

A summary of the key business provisions of the Agreement is as follows:

Non-Assessable Policies: PURE only issues non-assessable policies consistent with all applicable state statutes. Your liability as a Subscriber of PURE is limited to the costs of your insurance including premiums and surplus contributions (described below) for your policies.

Management of Insurer: You are designating PURE Risk Management, LLC (PRM), a for profit entity, to be the attorney-in-fact for PURE. As attorney-in-fact, PRM will manage all insurance operations for you and other PURE subscribers.

Management Compensation: PRM will be compensated by fees of 17% of Gross Written Premium for Marketing and Underwriting Services plus 5% of Gross Earned Premium for Claims Service and Management. PURE retains certain expenses outlined in the attached Agreement and the Attorney-In-Fact Agreement available at pureinsurance.com/misc/agreements.

Subscribers' Advisory Committee: PURE has established a Subscribers’ Advisory Committee (SAC) to give you a voice in the operations of PURE, to exercise Subscribers’ rights and supervise PURE’s finances and its operations to the extent of assuring conformity with this Agreement and the Attorney-in-Fact Agreement. PURE indemnifies SAC members and you agree not to sue SAC members for their service. To learn more about the SAC and its members, visit pureinsurance.com/sac.

Surplus Contributions: Each Subscriber makes surplus contributions during the first five (5) full years of continuous PURE membership and those contributions reduce the cost of PURE’s capital. Surplus contributions are set at 10% of total annual Homeowners and Watercraft premiums, and 4% of total annual premiums for all other policies. Surplus contributions are billed and collected with your premium. Subscribers should not expect a return of surplus contributions other than on a pro-rata basis for policies cancelled mid-term. Any return of surplus contributions is subject to the approval of PRM and the Florida Office of Insurance Regulation (OIR).

Subscriber Savings Accounts (SSAs): SSAs are notional accounts held for each active PURE subscriber. PURE is committed to return its underwriting profit back to subscribers by allocating it to SSAs and will look to return at least a portion of any surplus growth in years without underwriting profit. Funds allocated to SSAs remain on PURE’s balance sheet and are available as part of its overall claims paying ability. Funds may be allocated to SSAs subject to the prior written approval of the Florida Office of Insurance Regulation (OIR). Unlike surplus contributions, PURE subscribers should expect a return of their ending SSA balance upon their full withdrawal from PURE membership. For more information, visit pureinsurance.com/ssa.

Amendments: The Agreement may only be amended jointly by the SAC and PRM and amendments shall be subject to the prior written approval of the OIR and shall be effective as to all subscribers immediately. Amendments will be disclosed in a subscriber communication and continuation of any of your policies after disclosure of the amendment will constitute your agreement to be legally bound by the amendment.

This is a summary of the Agreement, please read the entire three pages of the Agreement for the precise terms you are agreeing to when you sign below.

I acknowledge and agree and intend to be legally bound by all terms and conditions contained in the Agreement.

Receipt Acknowledged:Privilege Underwriters Reciprocal Exchange, a Florida domiciled Reciprocal InsurerBy: PURE Risk Management, LLC, Attorney-in-FactDocument version dated 2014

Signature and Date

Name (please print)

1 of 3

I encourage you to act as a ‘promoter’ in your community.


Dear PURE,I just wanted a moment of your time. I had a little

fender bender the other day and it really upset my world. I

want to tell you that you have chosen amazing employees. I

cannot convey to you how wonderful, articulate and helpful

April Esterhuizen was to me. Taking care of this problem has

been a breeze so far and I wanted you to know that even when

you are not around your employees would be a reason I would

encourage my husband to always stay with the insurance we

have. Thank you for your time.

Dear PURE,

No, thank you. And particularly you! You can tell your bosses

for me that the service and hand holding you provided was

excellent.

Dear PURE,

I had the misfortune of my car being hit prior to Christmas.

I was not even in the car at the time and thought it would

be an easy fix. I found myself fighting with the Insurance

Company of the insured who hit me and the body shop.

It was Christmas and I was distraught. It was at this time

that Eric from PURE helped me get through a very difficult

ordeal. He was professional, kind and very helpful. I can not

express enough how helpful he was to me at a time I felt very

overwhelmed and between a rock and a hard place. Eric has

excellent customer service skills and people skills that are

not always easy to teach people. As a person in the field

of individual and family counseling, I know of many educated

and licensed professionals who could not have handled the

situation as well as Eric.

Thank you again, a very satisfied client.

Dear PURE,

I am grateful to Chris Mannion, Member Advocate, for passing on your contact information.

In writing to you both, my goal is to share candid feedback regarding Edwin Reyes and Chris Mannion.

On December 18, 2013 my home was ruined by a fire, causing us huge losses and being displaced. You are never prepared for the total chaos, sense of loss and helplessness.The day of the fire, we heard from Edwin and from the first

moment; he took control and told me he was going to take care of us. Little did we know what that meant. He arrived on the scene the next day.

My only opportunity so far to repay the kindness is limited. I have asked a colleague to consider it a personal favor to me if they will please move their insurance coverage to PURE and they assure me they will.

We are indebted to Edwin and Chris. They are wonderful people.


moment; he took control and told me he was going to take care of us. Little did we know what that meant. He arrived on


Dear PURE,

I wanted to drop you a note on how much Marilyn and I appreciated your company’s excellent service during this past claim on our [car]. Although the accident (we hit a deer or perhaps more accurately the deer hit us!) occurred at 5 AM in the morning, your off-hours answering service was extremely helpful and complete. Your office made contact shortly after 9 AM and had very few additional questions and informed us that our personal agent, Jeremy Hamel, would be contacting us immediately, which he promptly did.

Despite the fact that we were traveling to the Northeast for three weeks and would not be available for an inspection of the vehicle, a time was arranged at our convenience upon our return. Communication was always timely, complete and professional not to mention compassionate. The first question was always expressing a concern for us. This was, of course, due in large part to Mr. Hamel’s excellent service.

Accidents happen. Your team helps to minimize the anguish. Marilyn and I both absolutely know we were fortunate to have PURE help us through this event. You have our heartfelt thanks.


express enough how helpful he was to me at a time I felt very

overwhelmed and between a rock and a hard place. Eric has

excellent customer service skills and people skills that are

not always easy to teach people. As a person in the field

of individual and family counseling, I know of many educated

and licensed professionals who could not have handled the

situation as well as Eric.


Jeremy Hamel, would be contacting us immediately, which he promptly did.

Despite the fact that we were traveling to the Northeast for three weeks and would not be available for an inspection of the vehicle, a time was arranged at our convenience upon our return. Communication was always timely, complete and professional not to mention compassionate. The first question

thanks.

Dear PURE,

I have no words to express the magnitude of my gratitude

to you (and also to Jason).

Yesterday the city of Chicago came and fixed our piping.

It took them 4 hours from start to finish. I don’t know what

you wrote in that letter, but whatever it was, it worked like

magic. Frankly, I didn’t think that these guys were going

to respond, but I was clearly wrong. They were out here

in a day!

My family and I are back at our house, and we are so

thankful for that.

Please feel free to forward this email to your superiors,

and let them know that PURE insurance has gained some

pretty loyal customers out of this ordeal. I would be more

than happy to write to them personally and describe how

well you guys handled the whole situation.

PURE insurance has gained some pretty loyal customers out of this ordeal. - Stavros, Illinois

I want to tell you that you have chosen amazing employees. I cannot convey to you how wonderful, articulate and helpful April was to me. - Debra, Florida



My only opportunity so far to repay the kindness is limited. I have asked a colleague to consider it a personal favor to me if they will please move their insurance coverage to PURE and

We are indebted to Edwin and Chris. They are wonderful



My only opportunity so far to repay the kindness is limited. I have asked a colleague to consider it a personal favor to me if they will please move their insurance coverage to PURE and

Dear PURE,

No, thank you. And particularly you! You can tell your bosses

for me that the service and hand holding you provided was

excellent.

Dear PURE,

I had the misfortune of my car being hit prior to Christmas.







Dear PURE,

I wanted to drop you a note on how much Marilyn and I appreciated your company’s excellent service during this past claim on our [car]. Although the accident (we hit a deer or perhaps more accurately the deer hit us!) occurred at 5 AM in the morning, your off-hours answering service was extremely helpful and complete. Your office made contact shortly after 9 AM and had very few additional questions and informed us that our personal agent, Dear PURE,






Jeremy Hamel, would be contacting us immediately, which he promptly did.

Despite the fact that we were traveling to the Northeast for three weeks and would not be available for an inspection of the vehicle, a time was arranged at our convenience upon our return. Communication was always timely, complete and professional not to mention compassionate. The first question

Dear PURE,

I have no words to express the magnitude of my gratitude

to you (and also to Jason).

Dear PURE,I had the misfortune of my car being hit prior to Christmas.




It was Christmas and I was distraught. It was at this

time that Eric from PURE helped me get through a very

difficult ordeal. He was professional, kind and very helpful.

I can not express enough how helpful he was to me at a

time I felt very overwhelmed and between a rock and a

hard place. Eric has excellent customer service skills and

people skills that are not always easy to teach people. As

a person in the field of individual and family counseling, I

know of many educated and licensed professionals who

could not have handled the situation as well as Eric.


What has transpired on a daily basis is quite extraordinary. [Edwin and Chris have] taken calls 24/7. Neither of them abandoned us during the holidays. When they tell you they will take control of the situation and make sure you are taken care of they mean it and they deliver. When I called Edwin on Saturday, he was playing ball with his son – but he took the call and didn’t rush me off the telephone at all. - Sean, Missouri

LETTERS FROM OUR MEMBERSThe feedback that we receive from our members not only

inspired a new expression of our brand — Love your

insurance® — but also inspires us to continue delivering

an exceptional member experience every day. These pages

represent just a few of the unsolicited letters our members

have shared with us in response to our claim service

and the services of the PURE Member Advocate®.

If you have a story you would like to share, email us at [email protected].

...it was at this time that Eric from PURE helped me get through a very difficult ordeal. He was professional, kind and very helpful. I cannot express enough how helpful he was to me at a time I felt very overwhelmed and between a rock and a hard place. - Rebecca, Rhode Island

I am grateful to Chris Mannion, Member Advocate, for passing

In writing to you both, my goal is to share candid feedback





Dear PURE,

I would like to say that both you and PURE have handled my two claims with an exceptionally high level of service that seems to be rare these days. These incidents are disruptive and annoying, but the way PURE steps up, takes control, and makes the experience virtually hassle free for the customer, reaffirms to me that I have made the right choice in insurance carrier. Please share this with your supervisor(s) as may be appropriate.

Communication was always timely, complete and professional, not to mention compassionate. The first question was always expressing a concern for us. This was, of course, due in large part to Jeremy’s excellent service. Accidents happen. Your team helps to minimize the anguish. [We] absolutely know we were fortunate to have PURE help us through this event. You have our heartfelt thanks.

- Bob, South Carolina

L O V E Y O U R I N S U R A N C E ®


Dear PURE,

I left Chubb after what I bet was an almost 30 year relationship

as I saved over $2,000 by going with PURE. Well, we all know

the real measure of a company is not necessarily how much

they charge but rather how they pay their claims. Let me tell

you my recent claims experience with PURE and to tell you

that I have never been treated better by anyone.On a Sunday evening my daughter, away at college in Denver,

was in a fender bender accident, no one hurt but her car was

not drivable. I called the 800 number for PURE and got their

service, the guy was very nice and told me that they would

open up a claim file and an adjuster would call me on Monday.

That was fine with me.Monday morning before 9:00 a PURE adjuster called and we

went into more detail of what happened. The adjuster sent

me three body shop names, I called and found one very

close to her location, they arranged a tow truck and started

communicating with me, my daughter and PURE on a regular

basis. PURE arranged for a rental car through Enterprise and

before the end of the day on Monday the car was at the body

shop and my daughter was driving a rental.This was as painless as possible.

service, the guy was very nice and told me that they would

open up a claim file and an adjuster would call me on Monday.

That was fine with me.Monday morning before 9:00 a PURE adjuster called and we

Dear PURE,I was stunned to receive flowers from PURE yesterday

after our conversation in which I mentioned my father

in law’s passing. It was incredibly thoughtful. The only

coverage we do not currently have with your firm is wind

(Citizens). I am asking our agent, Tina Brenes of Ludwig-

Walpole in Sarasota, if you are in that market for our kind

of property on Longboat Key. Thanks again.

Dear PURE,

Thanks for handling this claim in such a wonderful, professional

manner! I hope we do not have to work with you in the future,

but if we do..........I know that we will be working with the

best......of the best!!!!!!!!!!!

Monday morning before 9:00 a PURE adjuster called and we

went into more detail of what happened. The adjuster sent

me three body shop names, I called and found one very

close to her location, they arranged a tow truck and started

Dear PURE,

Dear PURE,

Dear PURE,I am writing to share my story of an excellent client experience

with Mike Kuziak and PURE Insurance. In November of

2013 I needed help. A few weeks prior, a window washer

scratched a majority of the windows in our brand new home.

On Monday, November 11th I received a call from the window

washer’s insurance company. Right away the adjuster began

giving reasons why they were not going to cover the claim and

insinuated that I damaged the windows myself. I knew I did

not have the skills or knowledge to navigate this process on

my own. On Tuesday, November 12th, I called my insurance

agent and she contacted PURE.

The entire process was complete in less than two weeks and I

only had to make one outbound phone call. Most of all, I was

relieved of the stress that came along with this event. I knew

I could not navigate the system myself. The good news was

that I didn’t have to, Mike did it for me.

I commend Mike Kuziak and PURE Insurance for providing an

excellent client experience.

Dear PURE,

I am grateful to Chris Mannion, Member Advocate, for passing on your contact information.

In writing to you both, my goal is to share candid feedback regarding Edwin Reyes and Chris Mannion.


moment; he took control and told me he was going to take care of us. Little did we know what that meant. He arrived on the scene the next day.


We are indebted to Edwin and Chris. They are wonderful people.

I was stunned to receive flowers from PURE yesterday


in law’s passing.

I was stunned to receive flowers from PURE yesterday


in law’s passing.coverage we do not currently have with your firm is wind

(Citizens).Walpole in Sarasota, if you are in that market for our kind

of property on Longboat Key.

scratched a majority of the windows in our brand new home.

On Monday, November 11th I received a call from the window

washer’s insurance company. Right away the adjuster began

giving reasons why they were not going to cover the claim and

insinuated that I damaged the windows myself. I knew I did

not have the skills or knowledge to navigate this process on

my own. On Tuesday, November 12th, I called my insurance

agent and she contacted PURE.

The entire process was complete in less than two weeks and I

only had to make one outbound phone call. Most of all, I was

relieved of the stress that came along with this event. I knew

I could not navigate the system myself. The good news was

that I didn’t have to, Mike did it for me.

I commend Mike Kuziak and PURE Insurance for providing an

excellent client experience.

Dear PURE,

I wanted to take a moment of your time and send an

appreciative email about my experience with PURE and Ms.

Karsten Richards. I have had an open claim that tra

nsferred

over to her and her level of professionalism has simply been

a breath of fresh air.

It is important for me to share that she was very positive, polite

and responsive. I am in the healthcare industry a

nd while our

industries are somewhat different, they are a bit similar as we

both are serving people in unfavorable circumstances…and

times are rare when we are sent a note of thanks or feedback

that extends a job well done. This is a note to say thank you

and I am so pleased.

Certainly, I was horrified when some very important (and

expensive!) items were stolen out of my car. B

ut the way in

which PURE handled it, left m

e so glad we are insured with

you. Collectively, y

our team was a delight to work with and

while I would never want to experience a loss of any kind

again, I feel fortunate of the experience with your team and

Karsten’s friendly and on-point nature.

Mike took the time to listen to my story and assured me PURE would help me navigate this process. The entire process was completed in less than two weeks and I only had to make one outbound phone call. Most of all, I was relieved of the stress that came along with this event. I knew I could not navigate the system myself. The good news was that I didn’t have to, Mike did it for me. - Peter, Minnesota

I hope we do not have to work with you in the future, but if we do I know that we will be working with the best of the best!!!!!!!!!!!

- Les, South Carolina

…the service and hand-holding you provided was excellent. - Leonard, New York

Dear PURE,

I wanted to take a moment of your time and send an

appreciative email about my experience with PURE and Ms.

Karsten Richards. I have had an open claim that transferred

over to her and her level of professionalism has simply been

It is important for me to share that she was very positive, polite

I am in the healthcare industry and while our

industries are somewhat different, they are a bit similar as we

Dear PURE,

I would like to say that both you and PURE have handled my two claims with an exceptionally high level of service that seems to be rare these days. These incidents are disruptive and annoying, but the way PURE steps up, takes control, and makes the experience virtually hassle free for the customer, reaffirms to me that I have made the right choice in insurance carrier. Please share this with your supervisor(s) as may be appropriate.

PURE handled my two claims with an exceptionally high level of service that seems to be rare these days. These incidents are disruptive and annoying, but the way PURE steps up, takes control, and makes the experience virtually hassle-free for the customer, reaffirms to me that I have made the right choice in an insurance carrier. - David, Florida

...the way in which PURE handled [my claim] left me so glad we are insured with you. Collectively, your team was a delight to work with and while I would never want to experience a loss of any kind again, I feel fortunate for the experience with your team and Karsten’s friendly and on-point nature. - Melanie, Maryland

I saved over $2,000 by going with PURE...I have never been treated better by anyone. Never a bump in the road, everyone was very nice to both me and my daughter and it was actually very well handled. - Michael, Missouri

L O V E Y O U R I N S U R A N C E ®

THE HOMEOWNER FLOOD INSURANCE AFFORDABILITY ACT

In March of 2014, President Obama signed the Homeowner Flood Insurance Affordability Act that intends to slow down or reverse changes to FEMA’s National Flood Insurance Program (NFIP).

The program was facing a $25 billion deficit when bipartisan legislation was passed in 2012 with designs to strengthen and stabilize the NFIP. The intent of this legislation was to create a platform for a fair and stable flood insurance program. Under the Biggert-Waters Flood Insurance Reform Act, rates would be increased for properties that suffered repetitive losses (also creating a disincentive to build new homes in high-risk areas). Flood mapping would be updated and older properties that had been “grandfathered” with preferred rates would gradually see an overall movement towards actuarially sound rates.

Under Biggert-Waters, there were some unintended consequences, including rate increases for some low-income residents that exceeded their ability to pay. Rather than address this directly with vouchers or other cost-effective and targeted subsidies, this new law will reverse the movement towards actuarially sound rates, reinstate “grandfathered” rules, and return most all of the subsidies in the NFIP.

For PURE members who were facing increases in their flood premiums, this new law can be seen as good news. For the long-term health of the program, there remain serious concerns. We are grateful to the National Association of Mutual Insurance Companies (NAMIC) for their advocacy of this and other important issues.


In the middle of the night on September 12th, Tucker Humphrey heard a strange sound coming from the lower level of her Boulder, CO home. When she went downstairs, nothing could have prepared her for what she found. Water and sewage were spewing from the toilet and tub. Tucker called for her husband, Brian, and the two worked feverishly to save whatever furniture and possessions they could. Within minutes, 18 inches of sewage filled the lower level of the Humphreys’ home.

At the time, Boulder had been experiencing significant rainfall. The storm, now referred to as the Thousand Year Rain, dropped over 17 inches of rain; it destroyed hundreds of homes and damaged thousands more.

Realizing there was nothing more they could do, the Humphreys began calling plumbers, cleaners, and restoration companies, but the severity of the situation in Boulder left no one available to respond for several days. At a loss for what to do, they called their insurance agent — and he called PURE.

“Whereas others told us it would take days or even longer, PURE was able to get a remediation crew

“Our neighbors could not believe help came to us so quickly...when asked how we did it, I told them it was our insurance company!”

- Tucker Humphrey

PURE Offers Primary Flood Insurance Through the NFIP

As the most common type of natural disaster, flooding poses a serious and costly threat to families nationwide. To help better protect our members, PURE offers primary flood insurance through the National Flood Insurance Program (NFIP). By purchasing flood insurance from PURE, members who suffer a loss involving multiple kinds of damage (e.g., a severe storm causes wind damage to your roof and surface water damage to your home and contents) benefit from a single point of contact who will be assigned to manage and accelerate all aspects of the claim process on your behalf.

How To Obtain Coverage

If you already have an NFIP policy through another carrier, ask your broker to move it to PURE. Doing so is easy.

• If you live in a low- or medium-risk flood zone, your broker should have all of the information necessary to make the switch.

• If you live in a high-risk flood zone, you will need to provide an Elevation Certificate, which your broker should have, and two photographs of the exterior of your home (front and back) dated within 90 days.

If you have not yet purchased primary flood, we encourage you to speak to your broker about this important coverage.

AN EXCEPTIONAL RESPONSE DURING EXTRAORDINARY CIRCUMSTANCES

P U R E R E S P O N S I V E N E S S

Brian and Tucker Humphrey, PURE members since 2013, with their agent (and Brian’s brother), David Humphrey of AHM Financial Group LLC.

For more information about PURE’s flood coverage, visit pureinsurance.com/flood.


to our home almost immediately,” says Tucker. “The crew arrived at 10 a.m. that day — just hours after our agent submitted the claim. Our neighbors could not believe help came to us so quickly; they were all told it would be several days or more. When asked how we did it, I told them it was our insurance company!”

“The crew worked for 12 hours that day, and just as they were wrapping up, the toilet and tub began running again. By this time, all of the sewer lines had been cleared so it was just dirty water that was flowing. There was nothing more the crew could do that day. They left behind a pump which helped to keep the water level below our electrical outlets, sparing us an even greater loss. In the end, it took the crew a full week to complete the cleanup.”

Despite nearly impossible travel conditions, Edwin, their adjuster, arrived at the Humphreys’ home the next day. Within just a couple of days, the Humphreys had a check to cover the costs of the cleanup and repairs. “The process was very easy and very friendly,” says Tucker.

“We had switched to PURE only six weeks before the claim. Our agent, David of AHM Financial Group, had been trying to convince us to switch to a high net worth specialist like PURE for years. I am so thankful that we finally did. Had we not, I know that our claim experience would have been very different,” says Tucker.

P U R E R E S P O N S I V E N E S S

Edwin Reyes, PURE Claims Adjuster

“PURE brings a personal touch to every claim that is truly genuine. They understand that no two claims are alike just as no two clients are alike and they bring this understanding to the claims process. It’s clear that in everything they do, the focus is always on the client.

PURE’s reaction to my clients’ needs during this claim has been beyond my expectation. I could not be more pleased.”

- Richard Harkwell, President & CEO, AHM Financial Group LLC


WILDFIRE DAMAGE CAN BE MITIGATEDEach year, wildfires devastate thousands of acres of wildland, destroying homes and other structures. Fires can erupt at any time from a variety of causes, including arson, lightning, debris burning and abandoned campfires. Adding to the fire hazard is the growing number of wildland areas being converted to residential communities.

However, these losses can be minimized by taking steps to protect your home. In studying many of the worst wildfires, PURE’s Risk Management team learned that the probability of a house surviving a wildfire is greatly influenced by the type of roofing materials; vents, eaves, and other openings; and by the amount of clearance around the perimeter of the home.

Minimize Your Risk From Wildfires

Make sure you have adequate defensible space.Maintaining a defensible space around your home’s perimeter is your first line of protection against wildfire. This area should be free of fuels, flammable vegetation, and any combustibles to help slow the spread of wildfire. Many experts, including the Insurance Institute for Business & Home Safety, suggest taking a zoned approach to defensible space. This approach breaks your property into three zones and outlines specific safety precautions for each.

Use noncombustible roofing materials. The roof has a significant impact on a home’s ignitability because of its extensive surface area. If a flying ember lands on a wood shake roof, the chances of the home withstanding a total fire loss are small. Roofs should be constructed of noncombustible or fire-resistant materials. If you prefer the look of wood shake over masonry types, metal, and slate, consider Polymer roof tiles. They look and feel like cedar shake but are fire-resistant and more durable.

Protect vents, eaves and other openings. Vents, eaves, and other openings can be entry points for embers and flames. Seal off these entry points to better protect your home.

•Ventsshouldbelouveredorcoveredwithaprotectivewirescreen.

•Eavesshouldbeboxedorcoveredwithasoffittohelpdeflectfire.

•Openingsinrooftileormetalroofsshouldbefittedwithbirdstops.

•Chimneysshouldbefittedwithsparkarrestors.

Become Firewise.The Firewise Communities/USA Recognition Program empowers neighbors to work together to reduce their wildfire risk. Communities develop a plan to guide their residential risk reduction activities, while engaging and encouraging neighbors to become active participants in building a safer place to live. To learn more about becoming Firewise, visit firewise.org.

Enroll in PURE’s Wildfire Mitigation Program. If you live in a wildfire prone region and have not yet enrolled in PURE’s Wildfire Mitigation Program, we encourage you to do so. Visit pureinsurance.com/wildfire-enrollment.

For more comprehensive tips to help protect your home from wildfire, visit pureinsurance.com/loss-prevention.

K N O W L E D G E S H A R I N G


In August, PURE helped Santa Fe members, Bud and Valerie Hamilton, make strides toward helping their neighborhood become a Firewise community. With the help of Nora Hughes, PURE Risk Manager and former volunteer firefighter, and Bobby Collins, PURE SVP of Member Engagement, the Hamiltons hosted an educational event at their home. Attendees included neighbors and members of the homeowners association. They were addressed by a panel of fire prevention and environmental experts, including Santa Fe County’s Fire Chief, as well as representatives from the county’s Wildland Division, and Firebreak Spray Systems — the industry leader in wildfire mitigation.

“Wildfire is always a threat when you live in the Southwest. It’s a topic my neighbors and I discuss often,” says Bud. “I thought it would be an incredible learning opportunity to have such seasoned experts educate us on ways to better protect our community against these natural disasters.”

To learn more about protecting your home from wildfire, contact a PURE Member Advocate® at (888) 813-PURE (7873) or [email protected].


“Most insurance companies can be counted on in the event of a loss, but it’s a great feeling to know we’re insured by a company that actually wants to help us prevent one from happening in the first place.”

Helping One Family Help Their Community

From left: Bud and Valerie Hamilton, PURE members since 2013; Mike Feulner, Santa Fe County Wildland Captain; Nora Hughes, PURE Risk Manager; Krys Nystrom, Santa Fe County Fire Prevention Specialist; David Sperling, Santa Fe County Chief; and Porfirio Chavarria, City of Santa Fe Wildland Urban Interface Specialist.

- Bud Hamilton


PURE insures thousands of vacation and secondary homes for our members, from Nantucket to Jackson Hole to Beaver Creek and everywhere in between. We know that these properties are cherished by the families who own them, representing summer vacations, ski trips, and weekends away.

While losses are less likely to occur in an unoccupied home, their severity is significantly amplified when they do happen. Fires can spread without response, and a leak or burst pipe can cause water to run unnoticed. This year, we responded to a number of devastating, disruptive losses for members who were away from home.

When Martin and Margaret Banks returned to their Houston home after visiting family in the U.K. for two weeks, they were devastated to find that a water line in their attic had rusted through and split. The rushing waters had collapsed their son’s bedroom ceiling and floor, and had destroyed their master bedroom below. Precious antique furniture, a rare Persian rug, and brand new hardwood floors were just a few of the damaged items the Banks family was devastated to lose.

“After nearly 24 hours of traveling, we walked through our back door to a disaster,” says Martin. “It was awful seeing such damage to our home. We called PURE and within an hour they had a remediation company here, removing ruined items, protecting our salvageable belongings, and preventing any more damage. Starting at 11:30 that evening, PURE worked tirelessly around the clock to fix our home.”

Construction on the Bankses’ home lasted for 10 weeks. Repairs were extensive, and included replacing the home’s galvanized pipes with PVC pipes that are impervious to rust. While initially able to remain in their home, ultimately Martin and Margaret looked to Reggie, their adjuster, for help finding a local apartment when repair of their floors began.

“Even when we had to evacuate, we were confident everything would be taken care of,” says Margaret. “From the beginning, Reggie was concerned about our well-being — confirming that my son had not been hurt when his room collapsed, ensuring that we had a comfortable place to stay during the repairs, reassuring us that we would be back in our home in time for Thanksgiving.”

Margaret now recommends that friends and family who are traveling make sure they enlist a caretaker or neighbor to check in on their home.

“If we had arranged for someone to look after our home during our trip abroad, had turned off our water, or invested in a leak detection system, the damage wouldn’t have been nearly as severe,” she says. “We will never make those mistakes again.”

Lessons Learned from a Water Loss


CLAIMS IN UNOCCUPIED HOMES CAN BE MORE SEVERE

Reggie Warren, PURE Claims Adjuster

Margaret and Martin Banks, PURE members since 2011, with their agent Leash Yu.


Avoid a Loss When You’re Away from Home Before going on vacation or leaving for any period of time, prepare your home for your departure.•To prevent frozen pipes and water damage in cold climates, set your thermostat to keep the inside temperature above 60˚F. Opening cabinets under sinks and in front of plumbing can help warm air to circulate.

•Topreventmoldandmildew inwarm,dampclimates,set temperatures to keep homes below 80˚F. A humidity indicator can also help maintain a reasonably dry interior.

•Setyouralarmandnotifyyouralarmcompanyofyourtravelplans. Provide names of house-sitters or caretakers, as well as your contact information while away. Assign alternate codes to caretakers or expected visitors that can be deactivated upon your return.

•Storeoutdoorfurnitureinagarage,shed,orstorageunit.

•Removeallfirehazards.Disposeoformoveflammableitemslikestacked papers and oily rags.

If you’re leaving your home for the season, consider these added precautions. •Enlisttheservicesofaprofessionalcaretakertomaintainyourhome. Meet with your caretaker to discuss their responsibilities and the frequency of their visits. Establish an emergency plan, inclusive of a list of preferred vendors. When hiring a caretaker, consider performing a background check on candidates — your PURE Member Advocate® can facilitate a complimentary screening for you.

•Winterizeyourhome(especiallyifit’srequiredbyyourPUREpolicy).Work with a licensed plumber to turn off your water supply, drain pipes and insulate your sprinkler system. Make sure caretakers and other visitors are aware that the home has been winterized.

•Alert local authorities to your absence. Many municipalities will send authorities to drive by unoccupied homes to check for intruders or signs of trouble. Be sure to let them know if a caretaker or house-sitter will be stopping by.

Make use of today’s technology.• Manyleadingalarmcompanieshavemobileappsorwebsitesthatenable homeowners to remotely change temperature, light, and security settings in their home. Many provide alerts if the temperature rises or falls, if a smoke detector is activated, even if a door is opened. Others allow families to view footage from security cameras within the home directly on their smartphones. Talk to your alarm company to find out what options are available to you.


“Our experience was as good as it could have been, and better than I would have ever expected. I will never stop being grateful to Leash, our broker, for telling us about PURE. And as a realtor, now I spread the message, telling all my clients to get a quote.”

- Margaret Banks

For help protecting your home even in your absence, contact a PURE Member Advocate® at (888) 813-PURE (7873) or [email protected].


STAFF GROWTHTo help deliver exceptional coverage and service, PURE, through its for-profit Attorney-in-Fact, works to hire remarkable people from a variety of backgrounds who take great pride in doing great work. In the eight years since inception, we’ve added staff to build and maintain an exceptional member experience, help expand our footprint, and become more efficient in the process.

STAFF BY OFFICE

BROKER RELATIONSHIPSPURE works with a select network of independent agents and brokers that are among the most qualified and respected in their field. They have a thorough understanding of the personal insurance needs of high net worth families, strong reputations within the communities they serve, and have dedicated professionals that act as trusted advisors.

By most estimates, there are roughly 30,000 independent insurance agencies throughout the U.S. Though many thousands have applied for appointment with PURE, our careful selection process has resulted in only a small fraction of those being appointed.

2007

2008

2009

2010

2011

2012

2013

131

213

247

309

384

459

79

Basking Ridge 1%

White Plains 43%

Remote 23%

Scottsdale 7%

Charleston 8%

Chicago 11%

San Francisco 1%

Ft. Lauderdale 6%

In addition to those employees who are based out of each of PURE’s eight offices, our robust field team includes Claims Adjusters, Risk Managers and Sales and Marketing Managers who are based in nearly 20 states.

In 2014, we will open new offices in Basking Ridge, NJ, and in San Francisco, CA to help support our growing membership and the brokers that serve it.

2006 25

2007 35

2008 50

2009 64

2010 90

2011 119

2012 163

2013 212

2014 (Projected)

290

EMPLOYEE COUNT

BROKER COUNT

= 20 EMPLOYEES

E X C E P T I O N A L E M P L O Y E E S A N D B R O K E R S


Selecting the right members starts with selecting the right brokers. Among PURE’s exceptional independent brokers is Celedinas Insurance Group.

Ray Celedinas, President & CEO, joined the agency in 1985. Over the next 29 years, he built a small family business into one of the nation’s largest personal insurance agencies, serving nearly 20,000 clients. Today the agency is licensed nationally and represents many of the country’s top insurance carriers, including all of the high net worth carriers. It has been recognized by the Insurance Journal as one of the “Top 10 Personal Lines Agencies” and “Top 100 Privately Held Property & Casualty Agencies” in the U.S. In 2012, Celedinas Group was selected as the exclusive Assurex Global partner representing South Florida. Ray attributes much of the agency’s growth and success to having a profound understanding of the challenging insurance market, with a particular knowledge of the unique needs of the high net worth customer, as well as a commitment to delivering more than just a policy to their clients.

Ray also serves as the Founder of the Assurex Global Private Client Practice Group. Assurex Global is an exclusive partnership of the most prominent independent insurance agents and brokers in the world. Partners are selected on the basis of their premier market position, history of growth, quality and breadth of services, integrity, and commitment to serving their clients. Every firm must go through an exhaustive review process, ensuring only the very best are selected to join. PURE is a proud sponsor of Assurex Global and honored to work with many of the organization’s partners, including Gillis, Ellis & Baker, Inc, Starkweather & Shepley Insurance Brokerage, Inc. and Thames Batré Insurance, to name a few. For a complete list of Assurex Global partners visit assurexglobal.com.

Ray also serves on the Board of Trustees of the Private Risk Management Association (PRMA), an independent, non-profit organization committed to lifting the specialist high net worth insurance category through enhanced education, practice management, awareness and advocacy. PURE is also proud to be a founding member of PRMA. To learn more about PRMA, visit privateriskmanagement.org.

BROKER SPOTLIGHT: CELEDINAS INSURANCE GROUP

PURE PARAGON

We align ourselves with brokers who are independent and act in the interests of their clients. We are proud to recognize those who combine client advocacy with insurance professionalism and who deliver exceptional results for PURE with our PURE Paragon designation.

E X C E P T I O N A L E M P L O Y E E S A N D B R O K E R S

Ray Celedinas, President & CEO of Celedinas Insurance Group

The 2014 PURE Paragon brokers


SATURDAY HOURS

SERVICE INNOVATIONS

SIMPLIFIED BILLING STATEMENT

Over the course of 2013, we made significant investments to provide our members and agents with enhanced service. Listening intently to the feedback of these key stakeholders, we implemented and prepared to introduce a number of new offerings.

IN-HOME RISK MANAGEMENT CONSULTATION

SELF-SERVE ACCOUNT MANAGEMENT

PURE Member Services representatives are now available on Saturdays from 8:30 AM - 5 PM EST, in addition to Monday - Friday from 8:30 AM - 8:00 PM EST. Billing and payment questions, requests for documentation, and new car purchases have long occurred on Saturdays. From now on, members can be confident that we’re there to help them if these or other issues arise. Rest assured, our team is also available to help you with broker-specific services like endorsements, premium indications, and more.

For more on how to get the most out of your PURE membership, visit the Member’s Guide to Working with PURE at pureinsurance.com/memberguide.

We began the process of redesigning our billing invoices to further improve transparency and ease of payment. Our new statement, which will be in circulation later this year, includes a simplified summary page, a breakdown of specific charges, a log of recent transactions and payments, and a projected payment schedule.

An online Member Portal will be rolled out this year to improve connectivity during the claims process and to offer members enhanced visibility into their policies. The Portal’s Claim Tracker, Billing Center and Policy Details pages ensure members have all important information at their fingertips.

We introduced the PURE360™, an innovative new approach to the home appraisal process. At its core is the Right Coverage Valuation – our commitment to helping members obtain both the right coverage and valuation of their home. The detailed risk management report includes an assessment of how resilient your home is to risk, followed by smart loss prevention advice that can help you better protect your home and family. The PURE Member Advocate® is available to assist in fulfilling any of these recommendations. We also provide a summary of all available premium credits and confirm what the member qualified for. Lastly, we share photos, diagrams and detailed notes to help streamline the claims process in the event of a loss.

To help make this process a success, we have and will continue to add additional Risk Management resources throughout the country. Our growing staff conducted more than twice as many home appraisals in 2013 as in 2012.

To learn more, visit pureinsurance.com/pure360.

360™

®

®

MEMBER ID: 12345678919

Your PURE Insurance Billing Statement:This statement reflects the remaining balance on your consolidated PURE insurance policies as of March 10, 2014. Any changes made to your account after this date will be reflected on a future billing statement. Some policies may be billed separately.

Chris Customer1 Oak StreetNew York, NY 10001

Chris Customer1 Oak StreetNew York, NY 10001

PO Box 95000-2655Philadelphia, PA 19195-2655

Your Agency: John Doe Insurance Agency Inc.1 Maple LaneNew York, NY 10001555-555-5555

Information as of: March 10, 2014

1234567890 1234567890 1234567890 1234567890 20131009

PURE Member ID: 12345678919Account Balance $2,850.00Minimum Due $1,150.00Due Date March 30, 2014

Visit www.pureinsurance.com/memberportal to access your account, review your payment history,

and find answers to billing FAQs.

Payment Options:

Detach bottom portion and enclose with check.

Amount Enclosed: $

For assistance, contact Member Services at 888-813-7873 or email [email protected].

Please refer to your Member ID.

Please make check payable to:

Policy Type Policy Number Remaining Balance Minimum DuePolicy

Effective Date

NY Fine Art & Jewelry Policy PA000000000102PA000000000102PA000000000102PA000000000102PA000000000102PA000000000102PA000000000102PA000000000102PA000000000102PA000000000102PA000000000102

8/5/20138/5/20138/5/20138/5/20138/5/20138/5/20138/5/20138/5/20138/5/20138/5/20138/5/2013

$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00

$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00$105,250.00

$105,250.00 $105,250.00

NY Fine Art & Jewelry PolicyNY Fine Art & Jewelry PolicyNY Fine Art & Jewelry PolicyNY Fine Art & Jewelry PolicyNY Fine Art & Jewelry PolicyNY Fine Art & Jewelry PolicyNY Fine Art & Jewelry PolicyNY Fine Art & Jewelry PolicyNY Fine Art & Jewelry Policy

Visit paymybill.pureinsurance.com to make a one-time payment or set up recurring payments.

Please return this portion with your payment.

Call Member Services at 888-813-7873 from 8:30 AM – 8:00 PM EST to remit payment.

16

E X C E P T I O N A L S E R V I C E

To reach a Member Services representative, call (888) 813-PURE (7873) or email [email protected].


NPS is derived by classifying customers into three categories — Promoters, Passives and Detractors — based on their answer to one simple question: How likely are you to recommend [company] to a friend or family member? Customers respond on a 0 - 10 scale, where 0 - 6 are Detractors, 7 - 8 are Passives and 9 - 10 are Promoters. NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters.

As our membership and agency distribution channel have grown, we strive to continue providing responsive and timely service.

As of this printing, the annual member survey has been issued to half of the membership, and PURE’s NPS stands at 65%. This is trending notably higher than our score of 58% for 2012 — which was excellent, and among the highest in any financial services segment.

In addition to our annual survey, we survey each PURE member at the close of their claim. The scores and reviews are used as learning tools to help us enhance our service and develop our people.

One adjuster in particular, Cathy Lugo, earned nothing but perfect scores and high praise from the members whom she assisted in 2013. This remarkable achievement is a testament to Cathy’s exceptional level of service.

Cathy joined PURE in 2010 with a decade of claims adjusting experience. Since then she has succeeded in delighting countless families, and truly exemplifies the qualities of professionalism, empathy and responsiveness that sets PURE’s Claims team apart. Following are just a sampling of the accolades members have provided after working with Cathy:

“Superb, fast, open, straight forward — totally professional — provided calm, considerate direction at a very difficult time.”

“Each element of the communication process surrounding our claim was prompt, professional and courteous.”

“Our agent is reviewing our other policies to see if we can transfer any to PURE.”

“I was very impressed with the way this claim was handled. I was amazed at the efficiency of it all.”

“Our claim was handled professionally and proficiently.”

“Great customer service.”

“I try to approach each new claim with empathy; with the mindset that this may be our member’s first accident or loss and it is likely very upsetting to him or her. During our first call I try to gauge how much assistance is needed and try to communicate in a way that can be easily understood.”

NET PROMOTER SCORE

EXCELLENCE PERSONIFIED

ABOUT NPS

SELF-SERVE ACCOUNT MANAGEMENT

MEMBER SERVICES

CALLS RECEIVED

AVERAGE WAIT TIME FOR CALLS

EMAILS RECEIVED

48,209

29,618

20122011

80,514

38,272

2013

130,166

54,330

12 sec 12 sec7 sec

E X C E P T I O N A L S E R V I C E

58%2012

65%2013

Cathy Lugo, PURE Claims Adjuster


As we move towards national expansion, we continue to diversify our book of business. As we enter California and other Western states, we move closer to our optimal diversification. Diversified growth will enable PURE to continue to improve the efficiency of its reinsurance spend and improve bottom-line results.

MEMBERSHIP DIVERSIFICATION

GROSS WRITTEN PREMIUM

PURE is proud to announce that we have made an allocation of $5 million to Subscriber Savings Accounts (SSAs) for 2013.

SSAs are notional accounts that remain on PURE’s balance sheet (supporting PURE’s overall claims-paying ability) in the name of each member, into which PURE may allocate surplus. They allow PURE greater financial strength while showing our commitment to serve the membership well.

This year, the membership grew by more than 7,400 families, and premiums grew by 44% to nearly $251.3M. This marks the seventh consecutive year since our launch that written premium has grown by more than 40%.

Dollars in Millions

(Allocations by Year)

Florida 19.7%

New York 16.2%

New England 13.0%

Mid-Atlantic 10.4%

Carolinas 10.4%

Other 14.1%

Texas & The Gulf 16.2%

18

P O L I C I E S A N D P R E M I U M S

We are pleased that so many members choose to renew their coverage year after year, as shown by our nearly 95% member retention rate.

MEMBERSHIP RETENTION

SUBSCRIBER SAVINGS ACCOUNTS

In 2013, members who joined PURE in 2008 reached their five year service date and as a result are no longer required to make surplus contributions. These members will see an annual cost savings of more than $700 on average. In 2014, members who joined in 2009 will experience this benefit.

FIFTH RENEWAL BENEFIT 8192012

1,8412013

2010 2011 2012 2013$1M $1.5M$0 $5M

$251.3$174.2$121.8$83.3$52.7$32.5$18.4

2013 -

2012 -

2011 -

2010 -

2009 -

2008 -

2007 -

93.7%2012

94.8%2013


1 2 3

1 2 3

1 2 3

MEMBERSHIP DIVERSIFICATION

NATIONAL EXPANSIONAt the time of publication, PURE is licensed in 48 states (and Washington, D.C.). As a larger company, PURE is able to better serve our membership. In early 2014, we earned a license to write business in California — the largest and most affluent state in the country. We anticipate a launch in the second quarter. We are now actively engaging regulators in the remaining two states, Idaho and Alaska, and have every intention of being a national carrier in 2014.

20071,690

20083,140

20095,542

20108,970

201112,988

201218,625

201326,117

LINES PER MEMBERMore members rely on PURE for all of their personal insurance needs as shown by the steady increase in the lines of coverage we provide to each member (home, auto, excess liability, watercraft and collections of art and jewelry).

2011 2.96

3.09

3.22

2012

2013

LAunChED PRIOR TO 2013

LAunChED In 2013

LAunChInG In 2014

19

P O L I C I E S A N D P R E M I U M S

MEMBERSHIP GROWTHThis year, the membership grew by more than 7,400 members.


An insurer’s combined ratio measures losses and expenses against premium to help evaluate underwriting results. A combined ratio below 100 typically indicates profitability. However, a growing insurance company may show statutory underwriting losses even with a combined ratio under 100 (see Deferred Acquisition Costs on page 23).

Management monitors three combined ratios to evaluate operating performance:

COMBINED RATIOS

GROSS COMBINED RATIO. This measure indicates whether or not an insurer is collecting enough premium to cover its claims obligations and operating expenses prior to the cost/benefit of reinsurance.

NET COMBINED RATIO. This measure indicates profitability net of the cost/benefit of reinsurance. It reflects items included in the statutory P&L.

ADJUSTED COMBINED RATIO. This measure adjusts the Net Combined ratio to reflect the benefit of member surplus contributions, which go directly to PURE’s balance sheet. We believe that this measure provides the most accurate picture of PURE’s claims-paying ability and overall economic performance in any given year.

For help with these and many more loss prevention measures, contact your Member Advocate at [email protected].

TOTAL CLAIM COSTS

TOTAL PREMIuM EARnED

TOTAL OPERATInG EXPEnSES

TOTAL PREMIuM WRITTEn

nET CLAIM COSTS

nETPREMIuM EARnED

nET OPERATInG EXPEnSES

nET PREMIuM WRITTEn

nET CLAIM COSTS

(nET PREMIuM EARnED + MEMBER SuRPLuS

COnTRIBuTIOnS)

nET OPERATInG EXPEnSES

(nET PREMIuM WRITTEn

+ MEMBER SuRPLuS

COnTRIBuTIOnS)

INVESTMENTS IN LOSS PREVENTION

20

C L A I M S A N D E X P E N S E S

In 2013, these were five of the most common loss prevention methods that the PURE Member Advocates® helped to fund.

PURE is dedicated to helping members prevent losses. Following a covered property loss resulting in damages of greater than $10,000, PURE will contribute up to $2,500 toward the cost of preventing future losses.

ARBORISTS to prune or remove trees likely to fall in future storms.

WATER ShuT-OFF VALVES to automatically stop the flow of water into a home, preventing significant water damage.

GEnERATORS to help keep sump pumps working and maintain quality of life when the power goes out.

hOME SECuRITY SYSTEMS to improve a home’s protection against theft, fire, and carbon monoxide.

WhOLE-hOuSE SuRGE PROTECTORS/LIGhTnInG SuPPRESSIOn SYSTEMS to shield a home from lightning strikes and electrical damage.

MOST COMMON INVESTMENTS

GROSS COMBINED RATIO

82.7%NET COMBINED RATIO

99.7%ADJUSTED COMBINED RATIO

78.6%

2013

2011 2012 2013

33

88

153


PURE insures high-value homes, automobiles, collections, and other assets whose losses are likely to be more costly than those experienced by standard carriers. Our staff is experienced and well-equipped to respond to nearly all loss types, from the large and complex to the more typical.

As we continue to grow, we are naturally experiencing an increasing number of claims. The table on the right shows the top ten costliest causes of loss across all policy lines for PURE members in 2013. The percent of total cost reflects what PURE has paid or expects to pay to help members repair or replace their assets. While auto collisions represent the greatest number of claims, the cost impact of water damage claims is greater.

CLAIMS COUNT BY YEAR

COSTLIEST CAUSES OF LOSS

2010

1,423

2011

3,153

2012

5,179

2013

5,954

88

600

1,463

244

CATASTROPhE CLAIMSnOn-CATASTROPhE CLAIMS

LESS ThAn $100KGREATER ThAn OR EquAL TO $100K

CAuSEPERCEnT OF TOTAL COST

PERCEnT OF TOTAL CLAIMS

LARGE LOSSES

nuMBER OF LOSSES COST

98.2%

40.6%

59.4%

1.8%

WATER DAMAGE

COLLISION WITH MOTOR VEHICLE

FIRE

MYSTERIOUS DISAPPEARANCE OF A VALUABLE

HAIL

LIGHTNING

COLLISION WITH FIXED OBJECT

WIND

BURGLARY

LOST OR MISPLACED ARTICLE

top 10 causes

28.2%

25.8%

10.9%

3.9%

3.4%

3.0%

2.8%

2.3%

2.0%

1.2%

83.5%

11.7%

32.2%

0.6%

3.4%

1.7%

1.2%

4.7%

2.7%

0.8%

1.6%

60.6%

21

C L A I M S A N D E X P E N S E S


Privilege Underwriters Reciprocal Exchange (PURE) is the member-owned insurer at the center of the PURE Group. PURE is fueled by surplus contributions from members and is the company that underwrites policies for our members.

Privilege Underwriters, Inc. (PUI), a for-profit entity, was founded in 2006 and provides the management resources and capital that enabled PURE’s creation and early success. PUI was initially capitalized through investments from management and Trident III, a private equity fund managed by Stone Point Capital, a preeminent investor in the insurance industry.

PURE Risk Management, LLC (PRM), a subsidiary of PUI, serves as the Attorney-in-Fact for PURE. PRM is paid a fee to provide marketing, underwriting and claims administration services for PURE.

PURE Insurance Company (PIC) is also a subsidiary of PUI, and plays a major role in the Group. PIC is a reinsurance company that is pooled with PURE and shares in its net results. PIC also holds surplus notes issued by PURE. It’s important to note that the pooling agreement does not apply to surplus contributions. PURE and PIC share all net premiums and net losses equally — but 100% of all surplus contributions exclusively benefit PURE and its membership.

PURE and the PURE Group (the combined assets of PURE and PIC), have experienced a steady growth in admitted assets each year since inception.

PURE INSURANCE COMPANY (PIC)

POOLED CAPITAL

PURE RISK MANAGEMENT (PRM), LLC

PRIVILEGE UNDERWRITERS, INC. (PUI)

THE PURE GROUP STRUCTURE

ASSETS

2007

$59.4 $59.4 $59.9

$111.9

$71.5

$125.3

$85.4

$143.0

$111.0

$169.2

$132.1

$198.8

$171.7

$308.9

2008 2009 2010 2011 2012 2013

PuREPuRE Group

Dollars in Millions

22

C A P I T A L M A N A G E M E N T , R E I N S U R A N C E , I N V E S T M E N T S

GROWING IMPACT OF SURPLUS CONTRIBUTIONS

DEFERRED ACQUISITION COSTS PURE GROUP

$21.3M2012

PURE GROUP

$35.2M2013

Dollars in Millions (net of SSA Returns)

Cumulative deferred acquisition cost as of year-end (il lustration only).

$1.7

$2.7

$4.4

$6.9

$9.8

$13.0

$17.8

2007 -

2008 -

2009 -

2010 -

2011 -

2012 -

2013 -

PURE members make su rp lus contributions for each of their first five full years of membership. These contributions provide a steady flow of capital to PURE, enabling PURE to sustain a much lower cost of capital than most stock insurers. A lower cost of capital contributes to highly competitive rates.

Statutory accounting requires an insurer to book expenses when a policy is written, but revenue is earned pro-rata over the term of the policy. This puts a strain on a growing company. If we were to illustrate the matching of PURE’s revenue and expenses (as in GAAP), the PURE Group’s surplus would have grown by an additional $14M in 2013.

STATUTORY SURPLUSPURE’s statutory surplus grew by 13% in 2013. PURE members are also protected by the additional capital (and capital flexibility) of the PURE Group of Insurance Companies.

PURE

$60.1M2013

PURE GROUP

$155.2M2013

SURPLUS NOTESPURE grew statutory surplus while repaying $1.5M in third-party surplus note principle for the second consecutive year.

PURE

$17.0M2008

PURE

$12.1M2013

T H E 2 0 1 3 P U R E A N N U A L R E P O R T 23


We are proud to partner with Swiss Re, a financially strong provider of traditional and nontraditional reinsurance solutions.

In each of the past four years, our partnership with Swiss Re has grown deeper. In 2013, 10 PURE employees participated in the Swiss Re Insurance Management Symposium, a program of the Swiss Re Academy. Alongside other Swiss Re clients, the PURE staff were challenged to run their own insurance company as executive managers while competing in a virtual marketplace. PURE participants left enthused.

PURE continues to purchase significant reinsurance protection from some of the largest, most highly rated and well-respected reinsurance companies in the industry. These reinsurance arrangements protect against large individual losses as well as the impact of catastrophic events on several members at once. As it pertains to catastrophe, our philosophy is to evaluate our potential exposures and expose no more than 20% of the prior year capital (surplus) to any event modeled with a 1-in-100 year probability. We also purchase coverage to ensure that we could respond to multiple events of this magnitude in the same year.

Below is a list of the companies that make up our reinsurance program.

REINSURANCE

REINSURER SPOTLIGHT: SWISS RE


“It was an incredibly powerful learning experience and very well orchestrated,” said PURE attendee, James Pozzi.

PartnerRe

Berkley Re America

Catlin Insurance Company LTD.

Everest Reinsurance Company

General RE (A Berkshire Hathaway Co.)

Hannover AG

Lloyd’s Syndicates

Odyssey Reinsurance Company

Swiss Re

Transatlantic Reinsurance Company

Munich Re

HomeA.M. Best Rating

A+

A+

A

A

A

A

A+

A+

A+

A+

A++

Catastrophe All Other

Top row from left: Rich Lanners, Vice President, Senior Treaty Underwriter at Swiss Re; Tim Lamothe, Senior Vice President, National Sales Leader – Direct at Swiss Re; Jeff Paraschac, Executive Vice President, CFO at PURE; Front row from left: Charles Connors, Vice President, Account Executive at Swiss Re; Martin Hartley, Executive Vice President, COO at PURE.

Over the last seven years, PURE has substantially increased its level of reinsurance protection, both on a catastrophe and per-risk basis. However, as PURE continues to grow, diversify, and spread its risk, this conservative reinsurance program is becoming more and more affordable. The following chart highlights these efficiency gains by displaying the PURE Group’s third-party actual reinsurance spend as a percentage of its total direct written premium.

REINSURANCE COSTS

(PURE GROUP)

2010 2011 2012 2013

PERCENT OF TOTAL WRITTEN PREMIUMS CEDED TO REINSURANCE SPEND

60.1%

52.3%47.9%

40.8%

T H E 2 0 1 3 P U R E A N N U A L R E P O R T 24

T H E 2 0 1 3 P U R E A N N U A L R E P O R T

BALANCE SHEET AND INVESTMENTS

PURE 2013 2012 CHANGE VARIANCE

Total Cash and Invested Assets

Net Accounts Receivable

Other Assets

Total Assets

Unpaid Losses & LAE

Accounts Payable & Accrued

Unearned Premiums

Reinsurance Payable

Other Current Liabilities

Total Liabilities

Surplus Notes

Member Surplus Contributions

Subscriber Savings Accounts

Unassigned Surplus & Other

Surplus as Regards to Policyholders

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

107,694,338

63,105,032

879,440

171,678,810

15,368,292

15,937,787

38,023,514

35,970,253

6,297,549

111,597,395

46,087,209

54,007,884

2,256,455

(42,270,134)

60,081,414

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

76,632,717

54,644,943

843,571

132,121,231

11,777,657

10,810,014

23,868,133

28,386,944

4,090,563

78,933,311

47,552,326

37,569,025

877,467

(32,810,898)

53,187,920

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

31,061,621

8,460,089

35,869

39,557,579

3,590,635

5,127,773

14,155,381

7,583,309

2,206,986

32,664,084

(1,465,117)

16,438,859

1,378,988

(9,459,236)

6,893,494

41%

15%

4%

30%

30%

47%

59%

27%

54%

41%

-3%

44%

157%

29%

13%

PURE GROUP 2013 2012 CHANGE VARIANCE

Total Cash and Invested Assets

Net Accounts Receivable

Other Assets

Total Assets

Unpaid Losses & LAE

Accounts Payable & Accrued

Unearned Premiums

Reinsurance Payable

Other Current Liabilities

Total Liabilities

Common Capital Stock

Contributed Capital

3rd Part Surplus Notes

Member Surplus Contributions

Subscriber Savings Accounts

Unassigned Surplus & Other

Surplus as Regards to Policyholders

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

243,042,914

64,613,777

1,236,236

308,892,927

30,736,583

16,111,858

76,047,028

24,534,643

6,297,549

153,727,661

920,000

144,122,400

12,087,209

54,007,884

2,256,455

(58,228,682)

155,165,266

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

146,374,147

51,256,032

1,145,484

198,775,663

23,555,315

10,903,885

47,736,266

19,147,394

4,793,368

106,136,228

920,000

91,080,000

13,552,326

37,569,025

877,467

(51,359,383)

92,639,435

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

96,668,767

13,357,745

90,752

110,117,264

7,181,268

5,207,973

28,310,762

5,387,249

1,504,181

47,591,433

0

53,042,400

(1,465,117)

16,438,859

1,378,988

(6,869,299)

62,525,831

66%

26%

8%

55%

30%

48%

59%

28%

31%

45%

0%

58%

-11%

44%

157%

13%

67%

INVESTMENTS AT A GLANCE

2013’s INVESTMENT MIX

TOTAL CASH AND INVESTED ASSETS

25


2011 2012 2013$76.6M$64.9M $107.7M

Convertibles 2%

Bonds not available for sale

2%

Equities 1%

Cash 31%

Corporate Bonds 23%

Mortgage Backed Securities

18%

Asset Backed Securities

10%

US Governments

9%

Taxable Municipal Securities

4%

PURE grew its cash and invested assets by over $31M in 2013 and maintained a highly conservative and liquid investment portfolio.

PRIVILEGE UNDERWRITERS RECIPROCAL EXCHANGESUBSCRIBERS’ ADVISORY COMMITTEE Ross J. Buchmueller President & CEO, Privilege Underwriters, Inc.

Joey Cummings CEO/Chief Strategic & Creative Officer, The Joey Company

Douglas G. Fields (Secretary) Senior Vice President, BB&T – Oswald Trippe And Co.

Richard A. Jacobs Managing Director, CGA Capital

James H. McLaughlin CEO, James H. McLaughlin & Co., LLC

William W. Wilson III (Chairman) CEO, Refocux Inc.

ATTORNEY-IN-FACT PURE Risk Management, LLC (wholly owned subsidiary of Privilege Underwriters, Inc.)

ACTUARIAL SERVICES Perr & Knight Boca Raton, FL

AUDITOR EisnerAmper LLP Edison, NJ

INVESTMENT MANAGEMENT Wellington Management Boston, MA

PURE INSURANCE COMPANYDIRECTORS

J. Stephen Baine General Partner, Starboard Specialty Funds, LLC

Ross J. Buchmueller President & CEO, Privilege Underwriters, Inc.

James D. Carey Senior Principal, Stone Point Capital

Peter M. Mundheim Principal, Stone Point Capital

Nicolas D. Zerbib Senior Principal, Stone Point Capital

ACTUARIAL SERVICES Perr & Knight Boca Raton, FL

AUDITOR EisnerAmper LLP Edison, NJ

INVESTMENT MANAGEMENT AAM-Asset Allocation and Management Chicago, IL

PRIVILEGE UNDERWRITERS INC. DIRECTORS

J. Stephen Baine Ross J. Buchmueller James D. Carey Peter M. Mundheim Nicolas D. Zerbib

LEADERSHIP TEAM

Ross J. Buchmueller President & Chief Executive Officer

Martin A. Hartley Executive Vice President & Chief Operating Officer

Jeffrey A. Paraschac Executive Vice President & Chief Financial Officer

W. Keith Self Executive Vice President, Eastern Zone Executive

Robert O. Collins Senior Vice President, Member Engagement

Phil M. Figueiredo Senior Vice President, Controller

Mark C. Galante Senior Vice President & Chief Marketing Officer

Vivian S. Gee Senior Vice President, Regional Executive - Florida

Dennis P. Kirwin Senior Vice President, Western Zone Executive

John R. Miner Senior Vice President, Central Zone Executive

Mark W. Musser Senior Vice President, General Counsel

Steven B. Oakley Senior Vice President, Chief Actuarial Officer

Gary D. Stephen Senior Vice President, Claims & Risk Management

Stuart G. Tainsky Senior Vice President & Chief Information Officer

John J. Willis Jr. Senior Vice President, Product Management

Timothy J. Arone Vice President, Risk Management

James V. Callahan Vice President, Regional Executive - Midwest

Christopher M. Cassady Vice President, Regional Executive - Texas

Randall C. Davis Vice President Claims - West

Frank M. DiGrande Vice President, Property Claims

William E. Doran Vice President, National Product Management

Robert P. Giurlando Vice President, Underwriting

Colin M. Haupt Vice President, Human Resources

Lindsay A. Holden Vice President, Regional Executive - New England

William J. Johnson Vice President, Underwriting Executive

Susan D. Kowalski Vice President, Underwriting

Jason M. Lichtenthal Vice President, Technology

Bryan R. Luker Vice President, Regional Executive - California

Marlot R. McMichael Vice President, Regional Executive - Southeast

Jason R. Metzger Vice President, Agency Distribution

Karen M. Riemer Vice President, Technology Implementations

Alex C. Strange Vice President, Regional Executive - West

Michael R. Trchala Vice President, Regional Executive - New York

T H E P U R E G R O U P O F I N S U R A N C E C O M P A N I E S

ARIZONA

6263 N Scottsdale Road

Suite 245

Scottsdale, AZ 85250

CALIFORNIA

1 Post Street

Suite 1025

San Francisco, CA 94104

FLORIDA

800 Corporate Drive

Suite 420

Fort Lauderdale, FL 33334

GEORGIA

One Lakeside Commons

990 Hammond Drive

Suite 980

Atlanta, GA 30328

ILLINOIS

233 South Wacker Drive

Suite 450

Chicago, IL 60606

NEW JERSEY 106 Allen Road

Suite 301

Basking Ridge, NJ 07920

NEW YORK

44 South Broadway

Suite 301

White Plains, NY 10601

SOUTH CAROLINA

2000 Sam Rittenberg Boulevard

Suite 2020

Charleston, SC 29407

OFFICE LOCATIONS

PURE® is the trade name of Privilege Underwriters Reciprocal Exchange, a Florida-domiciled reciprocal insurer & member of PURE Group of Insurance Companies. PURE Risk Management, LLC, a for profit entity, (PRM) serves as PURE’s Attorney-In-Fact for a fee. PURE membership requires Subscriber’s Agreement. Coverage is subject to insurance policies issued & may not be available in all jurisdictions. Visit pureinsurance.com for details. ©2014 PURE.

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REPORT TO MEMBERS - PURE Insurance · 2019-04-05 · THE 2013 REPORT TO MEMBERS levels, as more than 75% of respondents to a recent member survey indicated that they have already