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Friday, May 25, 2018
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Insurance rates falling, state report shows

TALLAHASSEE — Good news for homeowners, says Florida’s chief insurance regulator: Rates are going down and “the market as a whole is more robust and competitive.”

That comes less than a month after a national report found Floridians paying the highest homeowner insurance rates in the country.

Insurance Commissioner Kevin McCarty on Wednesday released a copy of his report to Chief Financial Officer Jeff Atwater, who had complained about Florida’s high insurance rates.

Atwater asked McCarty for a detailed review of why insurers weren’t lowering rates since the cost of reinsurance — a kind of insurance for insurers — has been going down.

McCarty’s review focused on the top 30 homeowners insurers in Florida, finding that half were paying less for reinsurance and, of those, six so far have filed to lower rates, with decreases ranging from 2 percent to 9 percent. Those 15 insurers account for nearly half of Florida homeowner policies in force. The other half isn’t yet required to turn in annual rate filings.

Only two of the 15 companies paying less for reinsurance filed to increase rates, he added. Insurance is strictly regulated, and companies must get permission from McCarty’s Office of Insurance Regulation before changing rates.

Those increases, which McCarty said were justified by company data, “were lower than they would have been (because of) lower reinsurance costs.”

But “increases … other than reinsurance costs (other expenses, non-catastrophe losses, sinkhole losses, projected catastrophe losses) may cause an increase in rates even when reinsurance costs are decreasing,” he said.

And lower reinsurance costs may not always trickle down in savings to policyholders because companies could decide to buy additional reinsurance at lower prices, resulting in a wash.

The state encourages companies to buy more reinsurance, when possible, to help ensure their financial well-being. In fact, some did buy extra reinsurance, McCarty said.

Still, “there is reason to be optimistic that the Florida homeowners market is steadily improving,” he wrote.

“Not only are rates trending downward, (but) new companies are coming to Florida.”

He said he expects that the “positive trends will continue” and “reductions in the cost of reinsurance are appropriately reflected in homeowners rates.”

At the same time, Florida’s insurance rates have been steadily going up for the last several years even though the state has not seen a hurricane since 2005.

A report by the National Association of Insurance Commissioners found that the average premium for most Florida homeowners is $1,933 a year, or nearly twice the national average of $978.

In an email to the Tribune, Atwater said he appreciated McCarty’s analysis.

“The commissioner made it clear, barring any catastrophic event, he has every expectation that these lower reinsurance costs will be reflected in lower rates for consumers in future rate filings,” Atwater said.

“I share (his) expectations. Floridians deserve rate relief.”

Five of the six states with the highest rates are along the Gulf of Mexico. Louisiana had the second-highest rates, followed by Texas, Mississippi, Oklahoma and Alabama.

The report is based on 2011 rates and for the first time includes premiums paid by customers of Citizens Property Insurance. State-created Citizens is Florida’s largest insurer, with more than 1 million policyholders.

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