The Office of Insurance Regulation has issued an order that requires Citizens Property Insurance Corporation to offer coverage to homeowners whose policies had been removed by private insurers charging unapproved rates. The order centers on two take-out companies that have removed thousands of polices from Citizens. Florida Peninsula Ins. Co. has taken out more than 85,000 policies and Homewise Ins. Co. has taken out 31,000 policies. Most of the policies are located in South Florida.

By law, Citizens is required to charge rates that are higher than rates charged by private insurers so that the in-surer is not competitive with the private market. Specifically, the residual market must examine the rates charged by the 20 largest carriers offering homeowners' insurance in the state and set its rates above the average rates charged by those top 20 carriers in any given territory. Under Citizens' take-out plan, policyholders that are offered coverage by a private insurer are automatically declared ineligible for Citizens' coverage.

Insurance Commissioner Kevin McCarty noted that just because a private insurer charges a higher rate than Citizens, policyholders don't remain eligible for Citizens' coverage. But in this case, McCarty was addressing a loophole in the law that allowed the two take-out companies to charge higher rates.