Florida Insurance Commissioner Kevin McCarty on Wednesday ordered Citizens Property Insurance Corp., the state-backed insurer of last resort, to offer to take back policyholders who had been transferred by Citizens to two higher-priced insurers, Florida Peninsula Insurance Co. and Home Wise Insurance Co.

Combined, the two companies have 103,000 policies, about 5,000 of them in the Tampa Bay area.

The policyholders had been switched from Citizens during the past two years as part of a program to pare back the growing number of insurance policies that have made Citizens Florida's largest homeowner property insurer. Citizens has been placing thousands of its policyholders with insurers in the private market.

McCarty said he can allow policyholders to switch back to Citizens because Home Wise and Florida Peninsular are charging rates that have not been officially approved by the state.

Citizens is supposed to insure properties whose owners cannot find coverage elsewhere. Typically, once homeowners are switched from Citizens to other insurers, they cannot seek to return to Citizens for coverage.

Under state law, Citizens is supposed to charge higher rates than private insurers, but McCarty said some policyholders that were switched to Home Wise or Florida Peninsula found that they were paying dramatically higher rates.

"They were already being charged the highest insurance rates where they live, only to see their premiums skyrocket even higher," he said.

In some cases, the two insurers were charging thousands more in premiums than Citizens, said Bob Lotane, a spokesman for of the Office of Insurance Regulation.

Home Wise and Florida Peninsula offer hurricane policies to cover wind damage in coastal areas of Florida, including Pasco and Pinellas counties.

Officials of both insurance companies did not return phone calls seeking comment Wednesday.

McCarty's order may bring little financial relief for Florida Peninsula and Home Wise customers whose polices have renewed in the past few months. Such policyholders would lose 80 percent of the premiums they paid for the year if they cancel and switch back to Citizens, Lotane said.

The two companies include such a provision in their contracts to discourage people from buying wind coverage during the hurricane season and then drop coverage after the season ends, Lotane said.

Florida Peninsula and Home Wise's premiums began surpassing Citizens' during the past few months. Florida Peninsula imposed a 91.8 percent rate increase June 15 for new and renewal business, and Home Wise put in place a 75 percent premium jump July 1 for new business and on Aug. 15 for renewal business, Lotane said. Both companies put the rates into effect without state permission. They did so under a provision of state law that allows insurers to increase rates without getting regulators' initial approval. Regulators later can reject the rate increases and order insurers to give customers refunds.

On May 31, state regulators advised Florida Peninsula that they planned to reject the rate increase. The company is appealing that plan to McCarty's office.

Lotane said regulators are still in discussions with Home Wise about its rate increase.

Reporter Randy Diamond can be reached at rdiamond@tampatrib.com or (813) 259-8144.