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Insurer to give break on auto rates

The state's biggest auto insurer is dropping its rates.

State Farm Mutual Automobile Insurance Co. plans to decrease its rates by 2.3 percent statewide, the company said Monday.

Policyholders in Pinellas County will see an 8 percent drop in rates. Only State Farm policyholders in Gainesville will see bigger decreases; their rates are scheduled to go down 8.4 percent.

The rate decrease is significant not just because State Farm is the state's biggest auto insurer _ it has about 2.13-million policyholders, or about 26 percent of the market _ but also because it is the first rate decline by a major auto insurer in Florida in some time.

"This is the first reduction in recent years that I can remember," said Dan McLaughlin, spokesman for the state Department of Insurance.

The rate declines are the result of fewer and less-expensive claims in Florida, said State Farm spokesman Steve Witner. He declined to give specifics on numbers and costs of claims.

Also factoring into State Farm's rate cut: As a mutual company, technically owned by its policyholders, it doesn't have to answer to stockholders looking for dividends. Other big insurance companies may not be as quick to cut their rates _ and profits.

State Farm's rate decreases will take effect May 1. Policyholders should start getting notices of the changes sometime next month, Witner said.

Rate changes will vary depending on location, among other factors. Policyholders in west Pasco County should see decreases of about 7 percent, according to the Insurance Department. In Tampa, rates should decline by 1.4 percent, while in Hernando and east Pasco counties, State Farm policyholders will see rates go up slightly.

Most State Farm policyholders should see decreases, however _ welcome ones. Last year, the Bloomington, Ill.-based insurer raised its Florida rates by 8.4 percent.

Partly, the decline in Florida claims could be the result of Insurance Department regulatory programs aimed at decreasing the number of uninsured motorists, McLaughlin said.

A program started in October 1995, for instance, allows law enforcement officials in the state's most populous counties to seize the license tags of vehicles without proper insurance. Following the program's first year, the number of insured vehicles on Florida's roads rose by about 2 percent.

"We've seen auto rates creeping up slowly in recent years for primarily two reasons," McLaughlin said. "One, uninsured motorist payouts, and two, comprehensive losses from fraud and theft.

"We're pleased because those are two areas where we've really tried to make an impact, and they've dropped significantly," he said.