Florida Insurance Commissioner Kevin McCarty yesterday orderedFlorida Peninsula Insurance Company to reduce the rates it has beencharging homeowners, to revise its business plan and to makerefunds.

Florida Peninsula's book of business contains wind-only propertyinsurance policies that it took out of Citizens Property InsuranceCorporation (Citizens), the state-created insurer of lastresort.

Mr. McCarty's office said Florida Peninsula policies areprimarily located in southeast Florida and in the Florida Keys.

Florida Peninsula filed a rate increase with the Office ofInsurance Regulation in April to increase its rates by a statewideaverage of 91 percent and began imposing the rates prior toobtaining Office approval under the use-and-file provisions ofFlorida statutes, according to OIR.

Florida Peninsula's action effectively doubled the rates thatmany of Florida Peninsula's policyholders were paying at the timethey were taken out of Citizens, OIR said.

Mr. McCarty said he is ordering Florida Peninsula to reduce itsrates "to no more than 25 percent above Citizens rates. Thedramatic price hikes in the global reinsurance markets have hitFloridians very hard, but to expect policyholders to shoulder thistype of an increase is unsustainable. This company needs torestructure and it needs to reduce these rates. "

In Monroe County, Florida Peninsula will charge rates equal toCitizens recently ordered rates. The impact from the decrease inMonroe County rates cannot be reallocated to other counties, OIRsaid.

The agency also said Florida Peninsula must pay policyholdersthe difference, if any, between the amount actually paid by eachpolicyholder since June 15, and the rate mandated by theCommissioner's order, along with interest, on the policy renewaldate.

The payments, OIR explained, can consist of a credit toward therenewal premium for any policyholder whose policy renews after Oct.11, but for policyholders who cancel or non-renew their policyafter that date the refund must be made by check.

Mr. McCarty issued an order Oct. 11 allowing all Floridians whowere being charged unapproved rates, which included FloridaPeninsula policyholders, to seek coverage from Citizens.

Any of the Florida Peninsula customers who pursued this optionbetween October 11th and 31st must have the opportunity toreinstate their coverage with Florida Peninsula under this neworder, OIR said.

Mr. McCarty also ordered Florida Peninsula to submit a revisedbusiness plan to the Office within 30 days. The plan must detailhow the company will transition from covering wind-only policies tooffering only multi-peril residential insurance policies.

In addition, Florida Peninsula must cease writing new wind-onlypolicies and reduce its exposure in southeast Florida and in theFlorida Keys. That exposure will have to be balanced over otherareas of the state.

"The plan of operation for Florida Peninsula must be reworked sothat its rate needs are more stable and, in fact, are reduced overtime," said Mr. McCarty. "We need to work to prevent policyholdersfrom being put into similar difficult situations in the future andto improve the financial strength of the company."