Home insurance policy: U.S. property insurer enters Canada with coverage aimed at wealthy homeowners
U.S.-based property and casualty insurer PURE Insurance is expanding into Canada, offering coverage to affluent homeowners with properties worth more than $2-million.
PURE Insurance is set to announce its first move outside of the United States on Monday with the launch of a Toronto office that will begin offering home insurance policies to Ontario residents this month. The company will introduce auto-insurance products for the province in early 2025.
In addition to covering multimillion-dollar homes, specialty insurance companies that cater to high-net-worth clients offer expertise in protecting art collections, high-end automobiles, watercraft, vacation homes, vintage carpets, jewellery, as well as offering cyberfraud protection and personal liability coverage.
This coverage also includes specialized risk-management services, disaster planning, and a concierge-level claims process for replacing property as unique as antique carpets or rare stonemasonry.
Chris Sevdalis, head of PURE’s Canadian branch, said Canadians worth $20-million to $50-million would need a policy with about $25-million of excess personal liability, compared with only $2-million to $5-million in standard policies. This coverage provides legal costs and payouts if an insured person is found legally liable.
PURE – which is an acronym for Privilege Underwriters Reciprocal Exchange – operates in all 50 U.S. states, including wildfire and coastal jurisdictions that have seen several major U.S insurance companies pull out of renewing policies owing to severe natural-disaster-claims costs.
In Canada, there are about 60 insurers providing personal property coverage – up from 50 companies that were operating in 2018, based on financial data from MSA Research Inc.
In recent years, severe weather events have led to an increase in the number of insurance claims. That in turn has put pressure on how much insurers have to charge in premiums to sustain that risk.
The result has led to some homeowners being forced to shop around.
PURE’s entrance into Canada follows the exodus of two global specialty commercial insurers – Allianz Global Corporate and Specialty and Lloyd’s of London – from Canada during the COVID-19 pandemic, and gives insurance brokers and affluent homeowners another option, which could have particular appeal for snowbirds or those with second homes in the United States.
“Canadian members who own properties or assets in the U.S. will benefit from an established presence in the U.S. market,” Mr. Sevdalis said in an interview. “What’s really important is that we can offer them a seamless insurance experience across the borders. It’s the same claims-reporting process regardless of where risk is located.”
Unlike more traditional or publicly traded insurers, PURE is a “reciprocal” insurance company – meaning it is owned by it’s policyholders, also known as members. As an owner, members have a voice in the governance of the company and are eligible to receive annual contributions to a subscriber savings account.
Under the reciprocal model, PURE is managed by a third party called an attorney-in-fact, or AIF. For PURE, the AIF is done through PURE Risk Management, a subsidiary of global insurance giant Tokio Marine.
Pure Insurance‘s chief executive Martin Leitch – who is contracted by PURE Risk Management – said this type of member-owned model allows him to manage prices more easily as he doesn’t have to “balance the interest of shareholders” and can pay back members if there is a year where premiums were set higher than needed to cover liabilities.
“If underwriting profits are made, we return those profits to the membership through their subscriber savings account. They’re not just handed back to external shareholders,” Mr. Leitch added. “So you have this alignment that you want to charge the fair price but you don’t have to find that breaking point. So it’s just hugely powerful.”
The cost of home insurance is becoming a major sore point among Canadians – even for those who do not live in high-risk areas. Over the past 15 years, disaster claims in Canada have more than quadrupled, accounting for $3.1-billion of insured losses in 2023. That is up from just $400-million in 2008, according to the Insurance Bureau of Canada.
Part of that damage comes from major flooding. About 90 per cent of homeowners in Canada have access to flood insurance, but only 40 to 60 per cent purchase coverage that includes losses from flooding, according to Public Safety Canada. And those policies may have limitations such as a low coverage amounts or high deductibles.
PURE executives spent the past two years preparing its products for the Canadian entrance. PURE’s homeowner policies in Canada, like those in the United States, will automatically include overland water coverage, which typically covers property damage caused by local flooding. Policyholders will not have to purchase this coverage as an add-on to the policy, helping prevent any confusion after an event, Mr. Leitch said.
“Many insurers offer coverage for certain types of damage, such as basement flooding caused by heavy rain, as an optional add-on, which can lead to gaps in coverage and make the claims process difficult,” Mr. Leitch added. “We’re saying it’s very clear that no matter what water is in your home, you’re covered under the policy.”
This article was first reported by The Globe and Mail
