Florida’s state-backed property insurer’s proposed rate reduction is raising questions about whether it will make the insurer competitive with the private market.

Citizens Property Insurance Corp. recently proposed 2015 rates that include a statewide average 2.9 percent rate decrease on all residential policyholders.

If approved by regulators, seven in 10 Citizens personal lines policyholders will see a rate reduction next year. Th statewide average homeowners’ premium would drop from $2,538 to $2,379.

Not everyone, however, is greeting the proposed rate cut as good news.

Florida Property and Casualty Association Executive Director William Stander said he has heard rumblings through the industry over what the rate cut could mean for insurers’ expansion plans.

“I have heard some concerns among companies that Citizens’ rate trajectory potentially could interfere with their depopulation efforts,” said Stander.

Florida Association of Insurance Agents President Jeff Grady said that rate changes pitted what actuaries might calculate against public policy decisions. But just as a matter of perception, he said, any rate cut raises questions.

“It does seem to depart from the insurer of last resort having the highest rates,” Grady said.

As to the matter of competition, the state Office of Insurance Regulation approved 43 

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