PURE Programs, a managing general underwriter (MGU) offering specialized excess & surplus (E&S) insurance and risk management solutions for PURE members and the high net worth (HNW) community, has entered into a new partnership with specialty insurer Palomar Holdings to provide an insurance solution for owners of high value homes undergoing complex construction projects.
The program is designed for luxury construction projects requiring up to $20 million of coverage, inclusive of ground-up new builds, major renovations, and additions. Palomar Holding’s surplus lines subsidiary, Palomar Excess and Surplus Insurance Company, will act as the insurer for the program, while PURE Programs will be the MGU overseeing insurance operations, including underwriting, risk management, and claims.
“This is a profile that we have seen more and more of, and one that really relates to an important member need – the need to insure risks when they are under construction, whether that construction is for a major renovation, a ground-up new build, or anything in between,” said Mark Galante, president & CEO of PURE Programs. “It’s become especially timely in recent months, particularly in the last year, for a pretty simple reason. Much has been written about the surge in home sales stimulated by the COVID-19 pandemic […] and what that’s done to housing prices.”
PURE members were not isolated from the pandemic-driven home buying / renovation boom. Galante and his team conducted an investigation into the homes they were being asked to insure and found that the number of new homes for existing members from July 01, 2020 to June 30, 2021 increased by 50% year-over-year.
“What often happens when somebody buys a home, they intend to make it their own, and oftentimes that means they want to do renovations or add an addition,” Galante commented. “And in some cases, they purchase these homes for the lots, and they ultimately want to tear them down and build their own brand-new dream home. So, when we see this increased frequency of new purchases, we would anticipate that’s going to ultimately result in an increased need for solving those construction solutions.”
PURE Insurance, on the admitted insurance side of the house, has the ability to handle construction projects that are smaller in scope and not too complex. For example, within its standard forms and rating structure, PURE can accommodate a simple renovation with a limited project duration, which won’t require the owner to vacate the premises.
“But when you start to introduce complexity, where the policyholder is being asked to vacate the home, the length of the renovation or construction is going to be extensive, and the price tag is going to be extensive, PURE’s admitted forms and rates just don’t contemplate that complexity. So, we knew we needed to create a solution to do that,” said Galante.
PURE Programs is using this opportunity to “dial up the value proposition” for PURE members, Galante explained. The aim of the program is to help HNW clients to build more resilient homes for the long-run, and not just to protect their assets during construction. As well as providing coverage for hard-to-place risks – for example, in highly CAT-prone states, like Florida and California – the program is underpinned by differentiated risk management services.
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“There are a number of ways in which we provide proactive risk management and help people prevent losses from happening, whether it’s during construction or in the generations that follow,” Galante told Insurance Business. “First of all, every location we insure as part of this program will receive at least one, and sometimes multiple complimentary inspections from a PURE risk manager. That inspection is what we call a PURE360 consultation, and it’s really designed to take a very comprehensive view of the structure [and the construction] environment.
“Additionally, we provide a dedicated resilient home advisor who can work with the policyholder and their builder to recommend decisions they can make during the construction process that might prevent losses and save them hundreds of thousands of dollars in aggravation and out-of-pocket expense later on. For example, there are choices that people can make now to really strengthen the home and prevent things like water damage, or if the home is in California, strategies to reduce the risk of wildfire damage. We just want to make our policyholders aware of these things now because it’s so much easier for them to implement them while the project is just beginning, than it would be (in many cases) long after the fact.”
The new PURE program for homeowners undergoing complex construction projects is currently available in 12 states, which collectively reach over 60% of PURE’s membership. Since its launch in June, the program has already experienced a surge of interest.
“We’re getting requests from insurance brokers before the home is purchased, so they can get some indication from us of whether we would insure the construction or the renovation that’s being contemplated, and if so, what the ballpark cost might be so that they can help the insured in the buying process,” said Galante. “And we’re seeing significant demand for this new product already. It’s only been out for a month, and the level of submissions are really quite strong - exceeding our expectations in light of some of the trends we’re seeing. We’re 100% committed to making this program a success, and we’ve got lots of runway for growth in it with Palomar Holdings.”