New York Central Mutual Fire Insurance Co., the state's sixth-largest homeowners insurer, said Wednesday that it will cut rates on home policies by an average of 10 percent, as it returns some of its profits in a bid to be more competitive and gain market share.
The Edmeston-based company, which insures about 245,000 homes across the state, said it's trying to reward its policyholders for lower losses while also enticing new business. The company, which mostly underwrites in upstate New York, cited mild winters in the past two years for controlling expenses.
The company normally has been paying out about 54 cents of every premium dollar for incurred losses, but that rate has gone down in the past two years to 49 cents. With another 42 cents taken up by underwriting and operating expenses, that means the company's underwriting profit margin would rise to 9 percent from 4 percent, leaving room for rate cuts.
Not all policies will see a reduction, but the average comes out to 10 percent for those that will benefit, said Jeffrey R. Barrett, senior vice president of marketing. Some large-value policies will see reductions of as much as 27 percent, an acknowledgment by the insurer that those rates were too high, he said.
"We needed to take a rate reduction to position ourselves in the marketplace," he said.
The company also will cut rates across the board by 25 percent on the base premium of renters insurance in a bid to attract younger clients who may later want homeowners' policies.
All told, the company expects to reduce premiums by 3.2 percent from its current total of $150 million. With the average premium upstate being $600, that equates to an average savings of about $60 a year.