Business Model

No agents and brokers

As the only direct writer of medical malpractice insurance in New Jersey, NJ PURE eliminates the traditional use of agents and brokers to sell its policies.  The average commission is 10% of your annual premium. This commission is paid each and every year and costs insurance companies millions of dollars annually. Since NJ PURE eliminates the middleman, this savings helps us save you money while providing a direct relationship between you and us. Although this has caused many agents and brokers to refrain from recommending NJ PURE to their physicians, we believe the long-term advantage to our physician policyholders outweighs this disadvantage.  This is one of our unique decisions that helps NJ PURE control its business directly, while saving millions for claims defense.  In summary, we strongly believe that commission costs are better spent defending our physicians.

No Profit Motive

NJ PURE is a not-for-profit reciprocal exchange and can therefore only use profits to build the surplus level or to pay back dividends to NJ PURE policyholders, not to pay large dividends to its stockholders or executives. In contrast to traditional insurance company business models, where short-term profitability goals can directly increase the compensation to insurance executives and therefore compromise their long-term visions, in a reciprocal exchange, the management team is paid a flat fee regardless of profitability.  However, in order for the management team to become more profitable, the exchange must grow.  This growth typically only occurs from offering lower rates or better service – which is inline with the benefits each policyholder wishes to receive.  Many believe this lack of profit motive inherently provides a business model more advantageous to policyholders.

Our Attorney-in-Fact Management Fees Are the Lowest

Of each dollar paid for premiums by NJ PURE physicians, 12.5% goes toward paying Reciprocal Attorney-in-Fact, (RAF).  The remaining 87.5% of premiums paid goes only to operational expenses and claims.  This fee is the lowest Attorney-in-Fact fee in New Jersey.  In contrast, Conventus policyholder physicians pay their management team, NIP Management, 19.5% of every premium dollar in addition to that, part of their premium dollars are used to pay commissions.  In general, the lower the management fees, the more capital paid by a policyholder is available to pay claim costs and operational expenses. NJ PURE consistently makes strides to ensure that our costs remain significantly lower than those of our competition, so more of our policyholders’ premiums are used to pay claims and expenses.

When NJ PURE is profitable and financially secure, each and every year, our goal is the same: to pay back dividends to all our subscribers.  NJ PURE is proud to have already accomplished this goal within five years.

Stable Rates

We also pride ourselves on being the most ethical and forthright medical malpractice insurer in the industry, while maintaining stable rates for our policyholders.  In fact, we haven’t had to increase rates as often, or as high, as our competition.

Competitive Reinsurance

NJ PURE is reinsured with the most comprehensive reinsurance contract in the state of New Jersey.  NJ PURE is reinsured by various A-rated reinsurers (link to list page) for $750,000 in excess of any claim loss of $250,000 or more. Although purchasing this comprehensive reinsurance is costly, we believe in the need to protect our Exchange from catastrophic claims to ensure long-term viability.

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