FM, a major commercial property insurer with a focus on complex industrial risks, is entering the ultra-wealthy US homeowner market. The company has partnered with Pure, an insurer for high-net-worth clients, to offer coverage to owners of large, expensive homes, often dubbed "McMansions." This move capitalizes on soaring insurance prices and tighter terms from traditional providers like Progressive and State Farm, which have restricted payouts and increased deductibles, particularly in areas prone to extreme weather.

FM's approach differs from typical insurers by employing hundreds of engineers rather than actuaries to assess physical risks. They evaluate specific property features, from advanced HVAC systems to hydraulic car lifts, treating some mansions as complex as industrial sites. This engineering-led risk assessment aims to offer lower premiums for well-protected properties, leveraging FM's experience with similar risks in sectors like plastics manufacturing.

While FM believes its engineering expertise can mitigate risks and potentially lower costs, one analyst suggests rate reductions may be modest given the high overall value at risk. The move comes as high house price-to-income ratios, analyzed by JPMorgan, contribute to elevated insurance costs. Some wealthy homeowners have already turned to less regulated "non-admitted" insurance for properties in high-risk states like California and Florida.