WEBVTT - Interview With Ross Buchmueller: Masters in Business (Audio) 0:00:00.440 --> 0:00:04.440 Look ahead, imagine more, gain insight for your industry with 0:00:04.480 --> 0:00:08.480 forward thinking advice from the professionals at Cone Resnick. Is 0:00:08.520 --> 0:00:11.559 your business ready to break through? Find out more at 0:00:11.640 --> 0:00:19.279 Cone resnick dot com slash Breakthrough. This is Masters in 0:00:19.360 --> 0:00:23.840 Business with Barry Ridholts on Bloomberg Radio. This week on 0:00:23.880 --> 0:00:27.400 the podcast, we have a special and unusual guest. His 0:00:27.560 --> 0:00:30.800 name is Ross buck Mueller. He's the founder and CEO 0:00:31.640 --> 0:00:36.000 of the Pure group of insurance companies. I don't usually 0:00:36.040 --> 0:00:40.440 think about insurance companies, and I certainly hadn't gone out 0:00:40.560 --> 0:00:43.240 and said, hey, let's find someone from the insurance industry. 0:00:43.840 --> 0:00:46.320 I don't get a lot of PR pitches that I'm 0:00:46.360 --> 0:00:51.440 remotely interested in. But when uhuh, someone had contacted me 0:00:51.479 --> 0:00:53.440 and said, hey, are you interested in speaking with the 0:00:53.479 --> 0:00:57.040 founder of Pure, I said, hey, that's my insurance company. 0:00:57.560 --> 0:01:01.400 Person was really no one ever really heard of us 0:01:01.400 --> 0:01:04.280 in the media. Well I did. I I heard of 0:01:04.319 --> 0:01:06.720 you because I was unhappy with one of your competitors, 0:01:06.720 --> 0:01:11.200 and my brother, who's an insurance agent, recommended I look 0:01:11.240 --> 0:01:14.240 at this company and and I thought they were really interesting, 0:01:14.400 --> 0:01:19.320 terrific and competitive. So I I had coffee with the 0:01:19.319 --> 0:01:22.760 the founder. His name is Ross talked to them about 0:01:23.000 --> 0:01:25.480 who they were, how they came about, and I thought 0:01:25.480 --> 0:01:31.640 it was really a surprisingly fascinating tale, certainly much more 0:01:31.720 --> 0:01:35.919 fascinating than we typically expect from the world of insurance. 0:01:35.920 --> 0:01:41.120 So we discussed how he uh came up with the concept, 0:01:42.040 --> 0:01:46.399 why he left A I G Financial in order to 0:01:46.400 --> 0:01:50.200 to launch this insurance company. And really they've been an 0:01:50.240 --> 0:01:54.520 extremely successful entity, much faster growth than the rest of 0:01:54.560 --> 0:01:58.120 the insurance industry. There over six hundred and fifty million 0:01:58.160 --> 0:02:01.280 dollars in premiums and they're growing forty percent a year. 0:02:01.360 --> 0:02:05.520 That that's a pretty astonishing number. So, with no further ado, 0:02:05.920 --> 0:02:11.440 here is my conversation with Ross Buck Mueller of Pure Insurance. 0:02:14.560 --> 0:02:18.880 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:02:19.480 --> 0:02:22.160 My guest today is a gentleman you may not be 0:02:22.240 --> 0:02:25.080 aware of, but you should be. His name is Ross 0:02:25.080 --> 0:02:28.200 Buck Mueller and he is the founder of the Pure 0:02:28.400 --> 0:02:32.360 Insurance Group of companies. UH. He has a storied background 0:02:32.360 --> 0:02:37.000 in the insurance industry. UH. He began his career at Chubb, 0:02:37.040 --> 0:02:40.320 where he spent more than a decade working the fields 0:02:40.360 --> 0:02:43.840 before he moved to A I G where he launched 0:02:44.000 --> 0:02:47.160 the A i G Private Client Group and built it 0:02:47.160 --> 0:02:50.360 it into a billion dollar business. He was president of 0:02:50.400 --> 0:02:53.080 the Private Client Group for more than six years. He 0:02:53.160 --> 0:02:56.359 has been recognized by Cranes New York in its annual 0:02:56.919 --> 0:03:00.880 forty under forty feature UH looking at Rising Stars of 0:03:00.919 --> 0:03:03.720 New York, as well as being the winner of the 0:03:05.480 --> 0:03:09.959 Ernstein Young Entrepreneur of the Year Award. Ross Buck Mueller, 0:03:10.040 --> 0:03:14.160 Welcome to Bloomberg. Thanks Berry. We don't really have a 0:03:14.160 --> 0:03:18.600 lot of people from the insurance industry in the studio, 0:03:18.840 --> 0:03:21.800 and I think a lot of people, uh don't really 0:03:21.800 --> 0:03:25.720 think about insurance until they need it. But you've been 0:03:26.160 --> 0:03:29.679 plowing those fields for a long time and you identified 0:03:29.720 --> 0:03:34.600 a number of interesting anomalies, not not only an underserved 0:03:34.680 --> 0:03:39.080 niche in the insurance industry, but an under utilized corporate 0:03:39.080 --> 0:03:42.720 structure that that made your company is more competitive. Let's 0:03:42.760 --> 0:03:45.960 let's start with that underserved niche. How did you first 0:03:46.000 --> 0:03:49.760 identify the niche either at a I G or at 0:03:49.800 --> 0:03:54.520 Pure Well for starters, the high net worth area, which 0:03:54.520 --> 0:03:57.400 is we focus on serving successful families, is the only 0:03:57.440 --> 0:04:00.680 business I've been in. Right out of college, got a 0:04:00.760 --> 0:04:03.600 job as an underwriter at chub in the personal insurance area. 0:04:04.160 --> 0:04:06.880 And uh. So on one level, discovering high net worth 0:04:07.040 --> 0:04:10.680 was well, it's where I fell into. UM. But as 0:04:10.720 --> 0:04:13.920 time went on, UM, you know what we began to see, 0:04:14.040 --> 0:04:16.160 or I certainly did along with some colleagues who joined 0:04:16.160 --> 0:04:20.040 me at Pure, were some some inefficiencies in the way 0:04:20.080 --> 0:04:23.240 that market had operated. Even as we brought more competition 0:04:23.279 --> 0:04:27.320 to it, there was more chance for inefficiency. But um, 0:04:27.560 --> 0:04:30.839 really it was this question of an alignment of interest. UM. 0:04:30.880 --> 0:04:32.920 You know, if you if you look back ten or 0:04:32.960 --> 0:04:37.640 fifteen years ago, there began a movement where both in 0:04:37.640 --> 0:04:40.719 the insurance world and and particularly in the wealth management world, 0:04:41.040 --> 0:04:45.440 were alignment of interest, the elimination of conflicts, UH, the 0:04:45.480 --> 0:04:50.400 improvement of transparency. They all became important, either forced by 0:04:50.480 --> 0:04:53.960 regulators who were saying you better behave better or demanded 0:04:53.960 --> 0:04:56.760 by consumers who said, I want to be treated with 0:04:56.760 --> 0:05:00.000 this sense of trust that I know you're gonna behave well. 0:05:00.720 --> 0:05:04.240 And we were able to look at the natural conflicts 0:05:04.279 --> 0:05:09.040 between policy holders and shareholders and design a business that 0:05:09.120 --> 0:05:13.200 would create this alignment. And uh, and that's what we've done. 0:05:13.400 --> 0:05:16.159 So so let's address that conflict. A lot of big 0:05:16.200 --> 0:05:20.560 insurance companies are publicly traded, which you are suggesting, and 0:05:20.600 --> 0:05:23.560 I think most of our listeners know UH have a 0:05:23.560 --> 0:05:28.799 fiduciary obligation to their shareholders. But as a mutual structure, 0:05:28.839 --> 0:05:32.560 where the policy holders are technically the owners of the company, 0:05:33.040 --> 0:05:35.520 there is no such conflict. Is that a fair way 0:05:35.560 --> 0:05:38.039 to describe it? Well, I think in the simplest terms, 0:05:38.080 --> 0:05:40.960 it is. But but you know it, and and our 0:05:41.080 --> 0:05:44.240 form takes a bit of a hybrid structure. UM. We 0:05:44.240 --> 0:05:48.320 think it takes the best aspects of mutuality, UM A 0:05:48.360 --> 0:05:51.880 low cost of capital because our policy holders contribute to 0:05:51.920 --> 0:05:56.159 build up the strength of the company. UM and UM 0:05:56.320 --> 0:05:59.920 looks at some of the challenges that that mutuals have had. 0:06:00.240 --> 0:06:04.160 Capital flexibility, the ability to compete with larger companies, and 0:06:04.160 --> 0:06:06.880 and an entrepreneurial environment. You know, maybe the best and 0:06:06.920 --> 0:06:08.960 most talented people want to work in a place where 0:06:08.960 --> 0:06:12.200 they feel like they can flourish. And sometimes the older 0:06:12.279 --> 0:06:15.360 mutual companies weren't seen as that we weren't the same 0:06:15.400 --> 0:06:19.680 stock option grants in the same exactly exactly, UM, and 0:06:19.760 --> 0:06:22.279 I think I and I think that that UM some 0:06:22.400 --> 0:06:26.640 of the great mutual companies were terrific stewards of the 0:06:26.839 --> 0:06:30.479 capital and the risks that their policy holders presented to 0:06:30.520 --> 0:06:34.680 them UM, but perhaps weren't weren't run with some of 0:06:34.680 --> 0:06:38.320 the modern ideas of corporate culture and environment, So beyond 0:06:38.320 --> 0:06:41.359 the rewards UM, you know, the environment might not have 0:06:41.400 --> 0:06:44.120 been as dynamic. So in any event, we looked at 0:06:44.200 --> 0:06:48.039 this and said, if we could create UM a business 0:06:48.080 --> 0:06:51.680 that really embraced mutuality, transparency, the alignment of interest, the 0:06:51.680 --> 0:06:55.280 elimination of conflicts, of lower cost of capital, of focus 0:06:55.400 --> 0:06:58.279 on the policy holders, do it in a way that 0:06:58.320 --> 0:07:02.000 it was entrepreneurial. Boy, we thought we'd have something terrific, 0:07:02.040 --> 0:07:04.680 and that's what we've done. But some of these conflicts 0:07:04.720 --> 0:07:07.680 are not sinister. They're simple, right, that that shareholders want 0:07:07.680 --> 0:07:10.080 premiums to be higher and policy holders want them to 0:07:10.120 --> 0:07:13.520 be lower. You know, so as a mutual, how much 0:07:13.600 --> 0:07:16.960 lower are your premiums relative to the to the big 0:07:17.000 --> 0:07:20.600 players in your space? Well, so I think the reciprocal 0:07:20.640 --> 0:07:24.120 structure probably gives us a ten to fifteen percent advantage 0:07:24.760 --> 0:07:27.520 in part because you know, insurance companies need to cover 0:07:28.240 --> 0:07:30.840 the cost of the claims and the cost of your expenses, 0:07:30.880 --> 0:07:33.640 but also the cost of capital UM and when your 0:07:33.680 --> 0:07:37.600 capitalists free contributed by policy holders year after year, that 0:07:37.720 --> 0:07:41.040 certainly reduces the burden to the need to return the 0:07:41.280 --> 0:07:43.760 The other part, though, that I think is just as important, 0:07:43.800 --> 0:07:46.520 is when you start a company from scratch and you 0:07:46.600 --> 0:07:50.000 have this idea of what you want to do. We 0:07:50.000 --> 0:07:53.160 were we have been able to select our our members, 0:07:53.160 --> 0:07:56.760 our policy holders carefully. So if you only ensure those 0:07:56.760 --> 0:07:59.600 people who are more responsible, who are less likely to 0:07:59.600 --> 0:08:03.520 make claim aimes, who appreciate what you're offering, UM, you 0:08:03.520 --> 0:08:05.880 can do it at a lower cost. So I'd say 0:08:05.880 --> 0:08:10.640 on average, our members report savings North. I'm Barry Rioults. 0:08:10.760 --> 0:08:13.880 You're listening to Masters in Business on Bloomberg Radio. My 0:08:13.960 --> 0:08:16.880 special guest today is Ross buck Mueller. He is the 0:08:16.960 --> 0:08:21.680 founder of Pure Group of insurance companies. Previously, he was 0:08:21.800 --> 0:08:25.640 the creator of the A I G Private Client Group. 0:08:25.760 --> 0:08:27.960 Let's let's talk a little bit about that. You're working 0:08:28.440 --> 0:08:31.040 as a youngster at chub, you're there for a dozen years. 0:08:32.360 --> 0:08:36.000 How did a I G come a knocking well? I 0:08:36.040 --> 0:08:39.560 was so I was in London, UM building out a 0:08:39.679 --> 0:08:42.640 UK high net worth practice and and and a few 0:08:42.640 --> 0:08:46.720 other things, and UM, you know the first thing that 0:08:46.800 --> 0:08:50.600 happened was is we were hosting our chairman at the time, 0:08:51.080 --> 0:08:54.880 UM and two companies in the United States, Continental and 0:08:54.960 --> 0:08:58.520 Sienna had merged and they both had a consumer business. 0:08:59.280 --> 0:09:01.959 And we're hosting our chairman for a dinner with some 0:09:02.320 --> 0:09:06.840 uh European executives and they uh, they said to him, 0:09:06.880 --> 0:09:09.240 so I see this merger, what is this going to mean? 0:09:09.280 --> 0:09:13.199 And and he reflected and said, We've never had competition 0:09:13.240 --> 0:09:15.480 and we never will. Boy, I was sitting at the 0:09:15.520 --> 0:09:17.439 dinner saying I'd like to compete against a company that 0:09:17.480 --> 0:09:21.360 doesn't think they'll ever have competition. Um. And about sixty 0:09:21.400 --> 0:09:22.760 days later I got a call from a I G 0:09:22.920 --> 0:09:24.839 saying they're exploring getting into the business and when I'd 0:09:24.840 --> 0:09:27.960 be willing to have a conversation and so, um, you know, 0:09:28.000 --> 0:09:30.800 I flew over from from London at the time and 0:09:30.800 --> 0:09:33.839 and uh, um you know, I had breakfast with Evan, 0:09:33.880 --> 0:09:36.040 at lunch with Hank and met everybody in between, and 0:09:36.080 --> 0:09:39.120 that would be Hank Greenberg and Evan Evan Greenberg as well. Yes, sorry, 0:09:39.120 --> 0:09:41.400 so at the time, who are running the company? And 0:09:41.400 --> 0:09:45.320 and um, uh you know I'll never forget. You know, 0:09:45.440 --> 0:09:47.920 at the time, I was thirty four years old. Um, 0:09:48.240 --> 0:09:53.439 Hank with seventy four chairman and uh. And he turned 0:09:53.440 --> 0:09:55.280 to me, and he said, you better take this job 0:09:55.320 --> 0:09:58.840 because you're getting too old at thirty four. Well, and 0:09:58.960 --> 0:10:00.600 his point was a good and you know, I had 0:10:00.600 --> 0:10:02.720 just been married for a couple of years. You know 0:10:02.800 --> 0:10:05.800 today we have two kids. We were expecting our first child. 0:10:06.280 --> 0:10:08.520 And his point of view was that that you know, 0:10:08.600 --> 0:10:10.520 you're not going to be able to take risks, or 0:10:10.559 --> 0:10:12.800 you may not be willing to take risks, you know, 0:10:12.920 --> 0:10:17.400 real soon when you're like exactly and and and so 0:10:17.559 --> 0:10:19.560 you know, for twelve years at CHUB, I'm being told, 0:10:19.600 --> 0:10:21.400 you know, calm down, young man, your day will come. 0:10:21.440 --> 0:10:24.280 And here's this guy telling me that I better take 0:10:24.320 --> 0:10:26.880 it now because I'm gonna start losing my my courage 0:10:26.920 --> 0:10:29.800 to to take risk. And so, um, it was the 0:10:30.000 --> 0:10:32.560 it was an absolute great decision and I and I 0:10:32.600 --> 0:10:36.240 loved every minute of how hands on was Hank Greenberg 0:10:36.240 --> 0:10:40.080 at seventy four at a I g oh, you know 0:10:40.200 --> 0:10:43.640 he he was. He was hands on in that he 0:10:43.760 --> 0:10:46.439 was there to help you at any at every turn. 0:10:46.679 --> 0:10:48.600 You know. Um. In my case, you know, he had 0:10:48.600 --> 0:10:51.280 a I think we still use rolodexes back then, but 0:10:51.360 --> 0:10:53.679 he had a great one. And and if you're getting 0:10:53.679 --> 0:10:55.480 into the high net worth business, and you have Hank, 0:10:56.320 --> 0:10:58.520 you know, behind you. That's a great tail wind to 0:10:58.520 --> 0:11:00.360 to meet a lot of people who could who could 0:11:00.360 --> 0:11:02.440 help your business. And so he was helpful in that. 0:11:02.840 --> 0:11:06.440 But most importantly he created a clear sense of accountability. 0:11:06.559 --> 0:11:09.600 It was your business, and so his help was there, 0:11:09.640 --> 0:11:11.560 his involvement was there. But let let there be no 0:11:11.640 --> 0:11:14.840 doubt that that good or bad, it was your business. 0:11:15.040 --> 0:11:16.839 And and uh, you know, we got to about a 0:11:16.840 --> 0:11:18.520 half a billion dollars in the first few years when 0:11:18.559 --> 0:11:21.320 I was there before I left, and and you know, 0:11:21.360 --> 0:11:24.000 the business continues to perform. Well, I take pride, you know, 0:11:24.080 --> 0:11:26.480 eleven years after having left, it's still a good business. 0:11:26.679 --> 0:11:30.720 You know. So this was the pre crisis days. This 0:11:30.840 --> 0:11:32.840 was in the early two thousand. When did you start 0:11:32.880 --> 0:11:36.120 at a all right? And you were there until oh 0:11:36.240 --> 0:11:38.560 January of o six we started pure alright, so you 0:11:38.640 --> 0:11:42.520 were almost seven years and that was all right before 0:11:42.520 --> 0:11:45.640 everything hit the fan. What was a I G like 0:11:46.360 --> 0:11:48.839 in that period? Those were really as big as a 0:11:48.920 --> 0:11:52.559 I G ever gotten that that that region was just 0:11:53.040 --> 0:11:56.520 they were tremendous then. So I just last week was 0:11:56.760 --> 0:11:59.000 was with a friend who now runs a big company 0:11:59.000 --> 0:12:02.480 and who was there the time and UM and we 0:12:02.480 --> 0:12:05.720 were having this reflection about the good old days as 0:12:05.720 --> 0:12:09.400 it were, and and I think the common theme was 0:12:09.400 --> 0:12:13.920 was winning. You just felt like you had such an 0:12:14.040 --> 0:12:18.280 edge and there was such momentum built around um winning. 0:12:18.320 --> 0:12:22.560 And I think everybody throughout the organization, UM, you know, 0:12:22.920 --> 0:12:26.000 embraced that idea that that that we were and could 0:12:26.080 --> 0:12:29.000 do great things and and and win and and people 0:12:29.040 --> 0:12:32.320 took great pride in in in winning. And so I 0:12:32.320 --> 0:12:34.640 think that was the first notable thing. I mean, I 0:12:34.640 --> 0:12:37.360 I was I was long gone by by the two 0:12:37.360 --> 0:12:41.040 thousand eight issues, but um, you know, that was a 0:12:41.040 --> 0:12:43.160 really important part of the culture. There was winning. When 0:12:43.200 --> 0:12:46.640 you say winning, where there our fps where the proposals 0:12:46.679 --> 0:12:50.520 that you were competing against some other companies, uh like? 0:12:50.840 --> 0:12:53.120 And what how often did it feel like a I 0:12:53.240 --> 0:12:55.880 G was if it's between you and who was the 0:12:55.920 --> 0:12:58.840 next closest competitor back then? Well again, I think that 0:12:58.920 --> 0:13:01.559 in the insurance industry my recollection and now we're going 0:13:01.600 --> 0:13:04.080 back a bit, but the market capitalization of a I 0:13:04.200 --> 0:13:07.840 G was bigger than the cumulative market capitalization of just 0:13:07.880 --> 0:13:11.480 about all other publicly traded insurers. So it was it 0:13:11.600 --> 0:13:13.440 was everybody, you know, I mean it was a two 0:13:13.840 --> 0:13:16.480 billion dollar market cap back I want to say sixty 0:13:17.240 --> 0:13:19.120 people something like that. Yeah, maybe even more than that. 0:13:19.200 --> 0:13:22.520 So so winning was the existing businesses were getting stronger 0:13:22.559 --> 0:13:25.120 all the time. New businesses like mine were entering and 0:13:25.160 --> 0:13:30.239 making an impact. They were acquiring Sun America, American General, um, 0:13:30.280 --> 0:13:32.800 you know. And there was a certain sense of confidence 0:13:32.920 --> 0:13:37.240 and purpose um, you know, and and pride um you know. 0:13:37.320 --> 0:13:38.800 And it was it was a great deal of fun. 0:13:38.880 --> 0:13:42.880 And boy did I learn a lot. So when when 0:13:42.920 --> 0:13:45.840 you left, oh so you left in oh six, I 0:13:45.880 --> 0:13:47.800 assume after that period of time you had a nice 0:13:48.040 --> 0:13:50.240 fat slug of stock and you got to liquidated at 0:13:50.240 --> 0:13:54.199 all before everything at the right. Wouldn't that be good 0:13:54.240 --> 0:13:56.000 if we could have done that? But you know, listen, 0:13:56.000 --> 0:13:58.440 I mean I guess I'll put that out as I 0:13:58.480 --> 0:14:00.520 was loyal to the company and I believed the company, 0:14:00.559 --> 0:14:02.600 even though you know, I set up a different business. 0:14:02.640 --> 0:14:05.640 But I I did hold probably a little more than 0:14:05.679 --> 0:14:08.839 I should, to say the least, although a I G 0:14:09.480 --> 0:14:15.120 has certainly recovered. At the time of the crisis, I 0:14:15.120 --> 0:14:17.880 would have bet a hundred million dollars that they would 0:14:17.960 --> 0:14:23.239 never repay sixty six billion dollars in aid, but apparently 0:14:23.840 --> 0:14:26.840 they just about have. There's some tax waivers that probably 0:14:27.400 --> 0:14:29.960 gives them a little wriggle room, but they more or 0:14:30.000 --> 0:14:32.800 less repaid the vast majority of that, which is an 0:14:32.800 --> 0:14:38.920 astonishing accomplishment considering how much money was involved. Absolutely so uh, 0:14:39.200 --> 0:14:42.200 looking looking at what you built at A I G. 0:14:42.560 --> 0:14:46.960 How similar or different is Pure relative to to that 0:14:47.240 --> 0:14:52.640 model of servicing the high net worth individual. Interestingly enough, 0:14:52.680 --> 0:14:55.360 it it's about as different as you could get. And 0:14:55.400 --> 0:14:58.000 so for to have the same guy build both companies 0:14:58.280 --> 0:15:00.400 and to look at it now, you know, But but but 0:15:00.560 --> 0:15:03.480 I think it reflects both a i G strength and 0:15:03.880 --> 0:15:07.440 what Pure's purposes At the time. You know, we had 0:15:07.440 --> 0:15:09.600 the biggest balance sheet in the industry at a i G. 0:15:09.840 --> 0:15:12.720 And so for us to take on extraordinary risks for 0:15:12.760 --> 0:15:15.920 people who had art collections in the billions of dollars, 0:15:15.960 --> 0:15:19.640 and to to extend limits to help people ensure what 0:15:19.760 --> 0:15:22.440 might have seen uninsurable at the time, you know that 0:15:22.520 --> 0:15:26.400 made sense. You start a business from scratch, and you're 0:15:26.440 --> 0:15:29.640 now trying to operate a company where you're carefully selecting 0:15:29.640 --> 0:15:32.840 the most responsible people and pulling them together in the 0:15:32.880 --> 0:15:37.080 most efficient way. Um, very different things, very very different things, 0:15:37.120 --> 0:15:40.200 and so the common the expertise was common, but other 0:15:40.280 --> 0:15:42.800 than that, it was very different business. I'm Barry Ridhults. 0:15:42.960 --> 0:15:46.320 You're listening to Masters in Business on Bloomberg Radio. My 0:15:46.400 --> 0:15:49.560 special guest this week is Ross buck Mueller. He is 0:15:49.600 --> 0:15:54.400 the founder and CEO of Pure Group of insurance companies, 0:15:55.200 --> 0:15:59.280 a specialty companies servicing high net worth individuals. And and 0:15:59.400 --> 0:16:02.920 let's talk a little bit about the rest of the 0:16:02.960 --> 0:16:06.680 industry and what what they get wrong. What does the 0:16:06.720 --> 0:16:11.960 insurance industry sort of missed the ball with. Yeah, well, again, 0:16:12.000 --> 0:16:14.360 I've been in the business for almost thirty years and 0:16:14.400 --> 0:16:16.720 so I'm I'm a bit of a fan of the industry, 0:16:16.760 --> 0:16:19.240 and I like to think that as a group we 0:16:19.320 --> 0:16:21.400 do more good than bad. But I don't mean what 0:16:21.480 --> 0:16:25.120 they do that's bad. Yeah, so you obviously spotted a 0:16:25.360 --> 0:16:28.360 niche because because Pure has has really blown up to 0:16:28.440 --> 0:16:33.000 be you're doing over half a billion absolutely. So what 0:16:33.040 --> 0:16:36.280 I was gonna say is is I think I think where, um, 0:16:36.320 --> 0:16:39.680 where we see as you have two big issues. One 0:16:39.800 --> 0:16:44.360 is there still remains inefficiencies in this market. Um. You know, 0:16:44.720 --> 0:16:48.160 in in nineteen seven, I joined a job out of 0:16:48.200 --> 0:16:51.680 out of college. I went through an underwriting training program 0:16:52.320 --> 0:16:55.520 and UM. I came back to the New York branch 0:16:55.600 --> 0:16:58.480 where I was set to be an underwriting trainee UM 0:16:58.520 --> 0:17:03.600 and they introduced a product called Masterpiece UM and at 0:17:03.640 --> 0:17:05.679 that time, master Piece was coming to New York. This 0:17:05.760 --> 0:17:08.080 was within a couple of months of me joining the 0:17:08.119 --> 0:17:13.800 company UM and we looked at the first release of 0:17:13.840 --> 0:17:17.040 the product and it had a flaw that if you 0:17:17.080 --> 0:17:19.760 were to insure a New York City apartment where you 0:17:19.800 --> 0:17:22.800 wanted to insure the fixtures and fittings or the marble 0:17:22.840 --> 0:17:26.120 floors of the mahogany walls, UM that they would sell 0:17:26.160 --> 0:17:28.119 it deductible from a hundred dollars all the way up 0:17:28.160 --> 0:17:30.640 to the highest deductibles of tens of thousands of dollars. 0:17:31.080 --> 0:17:33.960 And no matter what deductible you picked, the price was 0:17:34.000 --> 0:17:37.919 the same because they put the deductible credit in the 0:17:37.920 --> 0:17:40.600 wrong place in the algorithm, I mean, a silly little mistake. 0:17:41.000 --> 0:17:43.119 So here I was a two year old trainee and 0:17:43.119 --> 0:17:45.720 I wrote a memo saying, you know this is this 0:17:45.840 --> 0:17:49.320 is wrong And anyway, two thousand and sixteen, it's still 0:17:49.359 --> 0:17:52.800 the same. So if you're a Chubb insurance policy holder, 0:17:52.920 --> 0:17:55.280 call up and say I want the lowest possible deductible 0:17:55.680 --> 0:17:59.199 and your policy won't you for for this additions and 0:17:59.200 --> 0:18:02.440 alterations cover virgin in apartments. But but I guess my 0:18:02.520 --> 0:18:04.679 point is it's such a it's a very inefficient market. 0:18:04.920 --> 0:18:07.879 It there there are lots of little quirks, all of 0:18:07.920 --> 0:18:12.760 them can be rationalized. UM, but it's inefficient. And uh 0:18:12.760 --> 0:18:14.800 so I think that the inefficiencies and there are many, 0:18:14.920 --> 0:18:18.679 and part of the charm of our businesses. This is 0:18:18.720 --> 0:18:21.760 all we do, and we have looked at these inefficiencies 0:18:22.000 --> 0:18:24.359 and found ways to make things work. Whether that is 0:18:24.400 --> 0:18:27.400 the way jewelry insurance is over priced. So let's let's 0:18:27.400 --> 0:18:29.320 talk about that, because I would I know there's a 0:18:29.320 --> 0:18:33.560 tremendous amount of information asymmetry. It feels like as a customer, 0:18:34.440 --> 0:18:37.320 people don't necessarily know what's going on with things like that. 0:18:37.840 --> 0:18:41.520 Talk to us about the jewelry writers and how it's 0:18:41.560 --> 0:18:44.840 typically done and how you approach it. Well. For for 0:18:44.840 --> 0:18:49.280 for starters, the coverage is typically restrained on their homeowners policy. 0:18:49.440 --> 0:18:52.440 You can't make a claim for much jewelry to buy 0:18:53.480 --> 0:18:57.480 a writer or scheduled personal property policy UM. That is 0:18:57.520 --> 0:19:02.040 priced to make massive offense for the insurer. UM. And 0:19:02.080 --> 0:19:04.199 in our case, we provide more cover in case you 0:19:04.240 --> 0:19:06.960 forgot to ensure something, and the stuff that you intentionally 0:19:06.960 --> 0:19:09.359 want to ensure, your more higher valued items are a 0:19:09.440 --> 0:19:12.119 much lower price. But but so part of this is 0:19:12.640 --> 0:19:16.120 an inefficiency, but part of it also is designed for this, 0:19:16.119 --> 0:19:20.280 this rewarding shareholders. You know, the things that people do 0:19:20.440 --> 0:19:23.280 that everybody, even if you're not insurance expert, just no 0:19:24.000 --> 0:19:27.480 are are are wrong? Um. You know, I think we've 0:19:27.480 --> 0:19:29.359 been able to identify in fixed years ago there was 0:19:29.400 --> 0:19:32.200 a mortgage company that said sort of you know, even 0:19:32.280 --> 0:19:35.159 kids know it's not right to treat your new friends 0:19:35.160 --> 0:19:38.320 better than your old friends. Um. But insurance companies will 0:19:38.359 --> 0:19:41.280 still have new business writing companies where the premiums are 0:19:41.280 --> 0:19:43.880 lower if they've never met you, and higher if you've 0:19:43.920 --> 0:19:46.520 been there for ten years, um. And so we just 0:19:46.640 --> 0:19:49.479 dealt with a lot of these issues where products are 0:19:49.520 --> 0:19:52.720 built to be more generous, priced to be more efficient, 0:19:53.200 --> 0:19:56.080 and and principles put in place like treat your loyal 0:19:56.119 --> 0:19:58.040 customers better than you treat somebody you've never met. In 0:19:58.040 --> 0:20:00.720 other words, if you're an existing cost stomer, no one 0:20:00.800 --> 0:20:02.600 is going to come in as a brand new customer 0:20:02.800 --> 0:20:07.119 and get charged a lower exactly lower premium, So I 0:20:07.200 --> 0:20:10.000 was kind of surprised. We bought a house about eighteen 0:20:10.000 --> 0:20:13.800 months ago. I got an appraisal um for the mortgage, 0:20:13.800 --> 0:20:17.719 and then we got the insurance and uh lo and behold. 0:20:17.720 --> 0:20:20.600 Two months after we closed, the insurance company sends us 0:20:20.600 --> 0:20:23.920 a note, Hey, we've reappraised your home and it appraised 0:20:23.960 --> 0:20:27.200 for half a million dollars more than the original appraisal. 0:20:27.280 --> 0:20:29.720 And by the way, here's a bill for another four 0:20:29.800 --> 0:20:34.160 grand I was astonished by it. Um is that standard 0:20:34.160 --> 0:20:37.679 operating a procedure or is that uh was that a 0:20:37.720 --> 0:20:40.720 one off for me? Now you saw the experience the 0:20:40.760 --> 0:20:43.600 way it's probably designed to be seen, which is unfortunate. Right. 0:20:44.000 --> 0:20:46.040 So here's one of the great challenges. If you're with 0:20:46.080 --> 0:20:50.280 a standard company, they will they may overlook real issues 0:20:50.320 --> 0:20:53.000 that would cost more to rebuild, and so when you 0:20:53.040 --> 0:20:55.720 eventually had a claim, they might not have noticed some 0:20:55.760 --> 0:21:00.240 of those features. So the challenges as trying to you know, 0:21:00.720 --> 0:21:03.800 underwrite properly. We want to get these values correct, but 0:21:03.880 --> 0:21:06.800 we can't make it feel like a bait and switch, right, 0:21:07.040 --> 0:21:09.040 and so you know, and simply what one of the 0:21:09.119 --> 0:21:11.440 things we've done is it said if the value goes 0:21:11.480 --> 0:21:14.639 up by more than ten percent, the appraiser cannot make up, 0:21:14.840 --> 0:21:17.080 cannot issue the report. They have to make a phone 0:21:17.080 --> 0:21:19.120 call and go through line by line to make sure 0:21:19.160 --> 0:21:21.560 you agree with what we said, so you don't have 0:21:21.640 --> 0:21:26.159 that shock. UM. And there's lots of of of UH 0:21:26.400 --> 0:21:29.280 practices where the industry has done it the way they've 0:21:29.320 --> 0:21:32.239 done it. They believe they are right. There is some 0:21:32.280 --> 0:21:35.480 goodness in it, but it doesn't sit well with consumers. 0:21:35.680 --> 0:21:38.879 I'm Barry Ridholts. You're listening to Master's in Business on 0:21:38.960 --> 0:21:42.600 Bloomberg Radio. My special guest today is Ross buck Mueller. 0:21:42.720 --> 0:21:47.040 He is the founder, president, chief executive officer at the 0:21:47.200 --> 0:21:51.639 Pure Group of Insurance Companies. You know, I was telling 0:21:51.680 --> 0:21:56.199 someone about today's show and I described Pure because the 0:21:56.240 --> 0:21:59.800 answer is Pure. I'm not familiar with them. The My 0:22:00.000 --> 0:22:02.080 response to that was, well, think of them as the 0:22:02.160 --> 0:22:07.040 Vanguard Group of insurance. How accurate is that? Well? I 0:22:07.040 --> 0:22:10.760 I think that for us, it's a flattering comparison. You know, 0:22:10.760 --> 0:22:12.640 when you look at Vanguard, one of the first things 0:22:12.680 --> 0:22:15.760 they say is is that they're uniquely driven to do 0:22:15.840 --> 0:22:20.080 what's best for investors, and I think we share that value. Now, UH, 0:22:20.320 --> 0:22:22.680 we use independent brokers. They're much more of a direct 0:22:22.680 --> 0:22:25.399 to consumer. You know. We think we are very high touch. 0:22:25.840 --> 0:22:30.960 They're definitely low cost. So operating wise, there's probably some differences, 0:22:31.000 --> 0:22:34.080 but UM, I think we share the value that that 0:22:34.520 --> 0:22:37.879