A three-year-old insurance company based in Hollywood is one of the few insurers in Florida to come up with a rate cut for its policyholders, meeting the mandate set by lawmakers in January.

Coral Insurance passed on savings achieved by buying lower-cost back-up insurance from the Florida Hurricane Catastrophe Fund; it recently filed for a 9.7 percent decrease. But the company already had cut homeowners rates on windstorm coverage as it saw reinsurance rates drop in the private market at the beginning of the year.

‘‘We had no idea that the state government would step in and cause this to happen, ’’ says Susan Straker, Coral’s president and CEO. In all, after factoring in mitigation credits, Coral’s windstorm rates have dropped about 50 percent this year, says Jay Carbine, vice president for underwriting and claims.

Right now, Coral operates in 12 counties, mostly in the southern half of the state. They include Miami-Dade, Broward and Palm Beach. Since its inception, the company has been writing new policies -- always with wind coverage. But it has strict underwriting criteria. It likes what Straker calls the ‘‘golden oldies, ’’ solidly built homes even more than 30 years old that have been completely upgraded to meet the new stricter building code. It will write homes of up to $2 million in value and up to 1 1/2 miles from the coast.

The company took advantage of some of the lower-cost back-up insurance from the CAT Fund, but on some of the coverage it could get a better deal in the private market than from the state.

‘‘The CAT Fund isn’t going to save anyone’s bacon. It’s a short-term fix for a long-term problem, ’’ says Carbine. Straker and Carbine discussed the Florida insurance market with The Miami Herald recently.

Q. How can Coral provide a rate cut when most other home insurers in the state are asking regulators for hefty rate increases?

A. Carbine: We had taken two rate increases in the last year. In the first quarter, because of Citizens’ [expansion], we began to lose a great deal of business to Citizens.

So we decided to give back some of the rate increases from last year. In February, we decided we would take a rate decrease and pulled the trigger in March for new and renewal business. Then we realized we had to provide another rate decrease. (Based on the insurance reform bill passed during the special session, insurers were required to pass on any savings achieved from buying lower-cost reinsurance from the CAT fund.)

At the end of the day, before mitigation credits are applied, we ended up with an overall rate decrease, depending on the territory, in the region of 30 to 35 percent [on windstorm coverage].

Q. In what areas of the state is Coral still writing new homeowners policies?

A. Carbine: We are still committed to offer [insurance] markets to Florida, but we won’t do it stupidly. We are having to modify where we are writing. In some areas, we’re not making enough [premium] to cover attritional losses, forget about catastrophic losses.

Wind rates in Martin, St. Lucie, Brevard, Indian River counties have come down so much. The pricing up there is so low after the mitigation credits that we aren’t offering much in the way of capacity.

So, the effect the state was trying to achieve, in our case, has had just the opposite effect. We have had to withdraw capacity. The same thing is happening over in Lee and Collier counties.

Join the discussion

Note: If this is your first time using our NEW commenting system, you will have to LOG OUT and then LOG BACK IN.

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. In order to post comments, you must be a registered user of MiamiHerald.com. Your username will show along with the comments you post. Thank you for taking the time to offer your thoughts.

     Showing: Oldest first Newest first Most-recommended first Least-recommended first

@Nyx.AuthorDisplayName@ wrote on @Nyx.PostedAtTime@:

@Nyx.CommentBody@

@Nyx.Recommender@ @Nyx.AbuseReporter@