State regulators approve rate drop for Citizens

State regulators have approved lowering rates for most homeowners covered by Citizens Property Insurance, the first widespread rate cut by the state-run insurer in years.

Homeowners in Miami-Dade, Broward and Palm Beach counties may see even lower rates.

The decision reflects a broader improvement in Florida’s long-suffering property insurance market after eight hurricane-free years and a big drop in sinkhole claims, thanks to a new state law.

The Florida Office of Insurance Regulation on Friday said the average Citizens’ homeowners rate will fall by 3.7 percent, slightly more than the 3.4 percent cut Citizens had originally sought in June. Rates will fall 4.6 percent, on average, for mobile home owners with multi-peril coverage.

Citizens has previously said nearly seven out of 10 policyholders statewide would see lower rates if its filing were approved.

The average multi-peril homeowners policy — the most common type — will have a rate of $2,383 for 2015, down from $2,538.

The new rates are effective in Februrary for both new personal lines policies and renewals.

Citizens, which insures those who cannot find coverage in the open market, is the largest property insurer in Florida with more than 933,000 policies as of July 31.

Since 2010, state legislators have allowed Citizens to raise its rates up to an average 10 percent a year. For most property owners, the insurer says, rates have caught up to become “actuarially sound.” In other words, the higher rates now reflect the risk of insuring those properties.

In making its filing, Citizens cited several triggers for lowering premiums:

For similar reasons, most private insurers statewide have filed for rate cuts over the past year.

“The bottom line is that today’s approval of our recommended rates, with some minor adjustments, reinforces the fact that the property insurance market continues to improve across the board in Florida,” Citizens president and CEO Barry Gilway said.

Since peaking at a near-term high of 1.5 million policies two years ago, Citizens has been actively trying to push homeowners into the private market. On Thursday, McCarty’s office approved letting a dozen private insurers assume more than 425,000 policies from the company, the single largest one-time policy removal.

A smaller Citizens is a plus for everyone in the state since, by law, every Floridian with an insurance policy is at risk of being assessed if Citizens is unable to pay all its claims after a major hurricane.

However, many homeowners have expressed concern that some of the small Florida-based private insurers picking up those policies have neither the financial capacity nor experience to deal with a major storm.

Eight Florida-based insurers that took out Citizens’ policies over the past 10 years have failed — half of them during this hurricane-free stretch — even though state regulators had assured they were fiscally sound. McCarty blamed the failures in part on high sinkhole payouts before the legislative changes took effect.