PURE Insurance 2024 Report: Growth and Challenges in the High-Net-Worth Market As A Reciprocal Insurer

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PURE Insurance 2024 Report: Growth and Challenges in the High-Net-Worth Market As A Reciprocal Insurer

WHITE PLAINS, NY – Privilege Underwriters Reciprocal Exchange (PURE), the policyholder-owned insurer specializing in the high-net-worth property and casualty market, released its 2024 Report to Members, detailing a year of significant financial improvement alongside persistent industry challenges. The report underscores PURE’s unique structure as a reciprocal exchange, its commitment to member service and loss prevention, and its strategic navigation of a complex insurance landscape marked by severe weather events and rising liability costs. For insurance professionals in Massachusetts and the broader New England region, where PURE maintains a presence, the report offers insights into a key player serving affluent clientele.

A Member-Owned Approach in Focus

Unlike traditional stock insurance companies driven by shareholder profit, PURE operates as a reciprocal exchange, owned by its policyholders (referred to as members). This structure, as emphasized in the report, aligns the company’s interests with those of its members. PURE Risk Management, LLC (PRM), a subsidiary of Tokio Marine-owned Privilege Underwriters, Inc., acts as the attorney-in-fact, managing the exchange for a fee.

PURE CEO Martin Leitch highlighted this distinction in his letter to members, stating, “Unlike traditional stock insurance companies, maximizing underwriting profit is not a goal at PURE, given our reciprocal structure. Instead, our long-term goal is to charge the ‘right’ price—essentially, to break even over time (after calculating premiums collected minus claims costs, expenses and the cost of reinsurance)”. This philosophy aims to provide “exceptional coverage and service while rewarding the most responsible members with lower premiums over the long run”.

Members contribute to the reciprocal’s surplus during their first five years, building capital reserves intended to lower the long-term cost of insurance. In 2024, these contributions amounted to $77 million, and the report notes that over 60% of the membership has now surpassed the five-year mark and no longer makes these contributions.

Financial Performance: A Return to Stability?

PURE reported a significant improvement in its financial results for 2024 following several challenging years impacted by inflation and severe weather.

Premiums: Direct written premiums saw steady growth, rising 16% to over $2.41 billion in 2024, up from $2.08 billion in 2023.
Combined Ratio: The company reported a marked improvement in its direct combined ratio, which fell to 93.8% in 2024 from 102.2% in 2023 and 106.1% in 2022. PURE attributed this enhancement to stricter underwriting, pricing adjustments, loss prevention efforts, and reduced operating costs. After accounting for reinsurance and pooling agreements, PURE reported a net combined ratio of 100.4%, essentially achieving its break-even goal.
Surplus: Policyholder surplus strengthened by $79 million from improved results and surplus contributions, further bolstered by a $75 million surplus note purchase by Tokio Marine. Total policyholder surplus reached $814.6 million at year-end 2024, up from $661 million in 2023.
Investments: Despite a challenging bond market, PURE generated statutory investment income of $78.3 million in 2024. Total cash and invested assets grew significantly to $1.82 billion.

Jodi Lash, Chair of the Subscribers’ Advisory Committee (SAC)—the body representing member interests—affirmed the company’s financial health in her letter: “Having reviewed PURE’s financials quarterly and having procured and reviewed the annual independent audit with Price Waterhouse Coopers, the Committee is happy to report that, despite a year marked by several major catastrophes, PURE’s financial position remains strong”.

Strategy: Selectivity, Service, and Broker Partnerships

PURE’s strategy continues to center on careful member selection, proactive loss prevention, and strong relationships with independent insurance brokers.

Membership Growth & Retention: PURE welcomed nearly 9,500 new members in 2024, expanding its total membership to over 115,000. The insurer emphasizes selectivity, aiming for “the most responsible homeowners” to help manage claim costs. Member retention remained high at 95.7% for those offered renewal.
Broker Relationships: The report acknowledges the crucial role of independent brokers as “impartial advocates” who recommend PURE to clients. PURE positions itself as an agency company, relying on brokers for distribution and client relationships. The company’s expansion into Canada, starting with Ontario, also relies on partnerships with select brokers.
Loss Prevention Focus: A significant portion of the report details PURE’s efforts to prevent losses, particularly from water damage and electrical fires, the most frequent and often severe claim types. Initiatives include:
- Water Damage: Promoting leak detection technology (like LeakBot, Flume) and automatic water shut-off devices, offering complimentary sensors, and providing guidance on home maintenance. The report notes that interior water damage accounts for 39% of homeowner claims.
- Fire Prevention: Expanding the complimentary Ting electrical sensor program, which has alerted members to nearly 150 potential fire hazards. Electrical fires drove over 20% of homeowner loss costs in 2024, though frequency declined.
- PURE360° Consultations: Offering in-home risk management consultations to identify vulnerabilities and recommend improvements.
- Loss Prevention Benefit: Contributing up to $2,500 toward mitigation measures following a covered homeowners claim exceeding $10,000.
Claims Service: PURE highlights its claims service as a key differentiator, reporting a 91% claims satisfaction score for the over 33,000 claims handled in 2024. The report emphasizes empathy, speed, and proactive support, especially during catastrophes like the recent Los Angeles wildfires and Hurricanes Helene and Milton. The company utilizes a “PURE Corps” of employee volunteers to assist with member outreach during major events.

Product Portfolio and Massachusetts Relevance

PURE focuses exclusively on the personal lines needs of high-net-worth individuals. Its product diversification, according to the report, helps spread risk. Key offerings and member take-up rates include:

Homeowners: Nearly universal among members.
Excess Liability: Held by 84.8% of members. The report stresses the growing importance of adequate limits due to rising litigation severity and “social inflation”.
Collections (Art, Jewelry, etc.): Held by 74.0%.
Auto: Held by 67.5%. PURE is launching a Teen Driver safety program in 2025, offering resources and a complimentary subscription to the Life360 app.
Fraud & Cyber: Held by 46.3%, with increasing uptake noted.
Flood: Held by only 12.1%. PURE acknowledges this coverage gap and plans to roll out new proprietary flood endorsements and solutions starting in late 2025 to simplify and enhance protection, particularly for basement coverage.
Watercraft: Held by 7.2%.

For Massachusetts insurance professionals, PURE represents a significant market for affluent clients. While the report doesn’t break down state-specific data, New England constitutes 13.9% of PURE’s insured home locations, indicating a substantial presence. The company’s Boston office further cements its commitment to the region. PURE’s focus on high-value homes, coastal property considerations (including enhanced flood solutions), and comprehensive personal lines packages makes it a relevant carrier for agencies serving high-net-worth individuals in the Commonwealth.

Navigating Headwinds: Catastrophes and Market Challenges

Despite improved financials, the report is candid about ongoing challenges.

Catastrophes: Natural catastrophe losses remain a major factor. CEO Leitch noted the 2025 Los Angeles wildfires will rank among the costliest events for the industry and PURE. He highlighted that 2024 insured U.S. catastrophe losses ($117 billion) were significantly above recent averages. Severe Convective Storms (SCS), including hail, were particularly impactful, causing nearly half of U.S. catastrophe losses and significantly increasing loss costs over the past two decades.
Liability Environment: The report details concerns over rising liability claim severity, driven by higher medical costs, aggressive litigation tactics, litigation funding, and shifting juror sentiments (“social inflation”). PURE reported that the personal umbrella market faces significant pressure, citing industry data showing unsustainable combined ratios.
Market Conditions: Specific markets, like California, remain challenging due to wildfire risk and regulatory hurdles, impacting insurance availability and affordability. CEO Leitch expressed hope that recent events would spur necessary reforms.

Outlook for Massachusetts Agencies

PURE’s 2024 report paints a picture of an insurer successfully leveraging its unique reciprocal model to improve financial standing while doubling down on its core tenets of member service, loss prevention, and broker partnerships. PURE appears financially resilient and committed to the market for Massachusetts agents serving the high-net-worth segment. The focus on proactive risk management, upcoming enhanced flood products, and specialized coverages aligns well with the needs of clients owning high-value and potentially complex properties in the state as primary residences or in other states, as second (or third) homes.

Complete report available from PURE

For readers seeking more detailed information on PURE’s performance, strategies, and member stories, the complete, visually rich 45-page 2024 Report to Members provides comprehensive details. The full report is available for viewing and download at purein.com/annual-report.