Fla. Sees First Rate Cuts Since Cat Fund Expansion

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Florida regulators on Friday gave tentative approval to the first rate cuts by private home insurance companies following the passage last month of a new law giving the companies more access to the state’s backup insurance fund.

Insurance Commissioner Kevin McCarty said he was approving a request by American Strategic Insurance Co. of St. Petersburg to drop rates by 11.4 percent on average statewide. The rate reductions will start May 1 for renewing customers.

The rate may have to be changed later because under the new law rates must be based on figures calculated by the state on how much companies should save because of the provisions of the legislation.

The calculation of how much companies can be expected to save — and thus how much savings they should pass on to customers — won’t be made until March, however. If state officials say the company must lower rates more or less than what it is already doing, it would be expected to change its filing.

The company cited the expansion of the Florida Hurricane Catastrophe Fund in saying its costs for backup insurance will drop by about $30 million.

OIR also announced this week that two other companies have filed for lower rates without waiting for the state to determine the presumed amount.

Royal Palm Insurance Co., a new company that is in the process of taking over claims from Allstate Floridian, has filed for a statewide average rate reduction of 20.7 percent.

Security First Insurance Co., which has about 11,000 policies in the state, has filed for a 22.3 percent rate cut.