The Florida Chamber of Commerce brought together regulators, lawmakers, insurance industry executives and other stakeholders last week for the chamber’s annual insurance summit. Through several panel discussions on pressing and emerging issues facing the state’s insurance market, the summit touched on everything from recent cases expected to raise workers’ compensation insurance costs to Hurricane Irma’s impact on the insurance and reinsurance markets to an overview of insurance-related bills considered by the Legislature earlier this year.
But the issue that drew the most attention was abuse of the “assignment of benefits” system, which has become the leading cost-driver in Florida’s property and casualty insurance market.
An AOB allows a policyholder, after a loss, to assign his or her policy benefits to a third party – generally to vendors like water-remediation companies, repairmen and contractors. This transfer not only allows the vendor to charge the insurer directly, but should they sue the insurer, they are able to take advantage of what was originally intended to be a consumer-protection provision called the “one-way attorney fee” law, allowing the assignee to collect legal fees from the insurer.
This system has encouraged unscrupulous vendors to overcharge for their services and file frivolous litigation, which can increase the cost of even the smallest claims by many thousands of dollars. Ultimately, the increased volume and cost of these claims are recovered through higher insurance rates.