Important Message from CFO Jimmy Patronis
Below is an important message from Florida Chief Financial Officer Jimmy Patronis regarding your home and auto insurance benefits.
Take Action Today
Share this message with your family, friends and coworkers, and help prevent other Floridians from becoming a victim of AOB abuse by sharing on Facebook and Twitter.
AOB Abuse Tops Agenda at Florida Chamber Insurance Summit
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.
Your Homeowners Insurance Rates…ON THE RISE AGAIN
Citizens Property Insurance Corp.’s Board of Governors has approved a proposal to raise homeowners’ insurance rates by an average 5.3 percent statewide next year, citing “out of control’’ water loss claims associated with assignment of benefits (AOB).
This increase is exactly what the Consumer Protection Coalition has warned against and underscores our position that state lawmakers must pass legislation to reform AOB abuse that is hurting Florida’s consumers and threatening the affordability of homeownership. A news article in today’s edition of the Orlando Sentinel, Citizens to ask Florida for insurance-rate hikes, blaming water claims, Citizens Chairman Chris Gardner said the proposed rate increases, which must be approved by state regulators, are “critical for Citizens’ effort to bring some relief to a market that is being made increasingly expensive by unnecessary litigation and out-of-control water loss claims. Unfortunately, we are making it more expensive for many of our customers to own a home.’’
Help Fight AOB Abuse
- Share this message with your friends, family and coworkers, and ask them to…
- Sign the petition to encourage lawmakers to stop AOB fraud and abuse, and protect consumers from increasing homeowners and auto insurance rates.
- Stay up to date on important AOB-related news updates by following the Consumer Protection Coalition on Twitter at @CPC_FL and “liking” the Coalition on Facebook at com/ConsumerProtectionCoalition
AOB Fraud and Abuse is Targeting Home and Auto Owners
The Florida Chamber of Commerce and its Consumer Protection Coalition have long-warned about a scam known as Assignment of Benefits (AOB) that is making it more expensive for Floridians to own a home and a car. Today there’s further evidence of just how bad the situation in Florida is…and it’s impacting your employees.
A story today by The Tampa Bay Times shows just how bad it is in Florida – a 1,300 percent increase in the number of lawsuits filed by third party contractors against insurance companies.
Here’s How It Works
In communities across Florida, car and truck owners are approached at a gas station or car wash by auto glass repair vendors claiming they can replace cracked or chipped windshields for free. The auto owner signs an AOB – giving away control of their insurance policy to a third party auto glass vendor. The vendor then submits an inflated claim to the auto insurance company, and then files a lawsuit if the insurer refuses to pay the outrageously ridiculous priced repair.
Making the situation worse are one-way attorney fees that require insurers to pay the other party’s legal fees.
Don’t Become a Victim; Here’s How You Can Help
The Florida Chamber and the Consumer Protection Coalition encourage you to beware of this scam, and help us educate your employees.
- Sign this petition asking lawmakers to put a stop to AOB abuse in home repairs and auto glass repairs.
- Help us spread this message to more Floridians by chipping in $100 toward our Public Service Campaign to alert consumers just like you.
Citizens’ Rate Increase Proposal Latest Evidence of Need for Assignment of Benefits Reform
Citizens Property Insurance Corp.’s recommendation to raise rates an average of 6.8 percent statewide underscores the immediate need for state lawmakers to stop Assignment of Benefits (AOB) abuse.
Citizens’ board of directors, in approving the 2017 rate package proposal today, said the increases are necessary because of skyrocketing non-weather-related water loss claims in South Florida, a trend that is spreading statewide. Many of the claims are fueled by abuse of AOB, which allows unscrupulous home repair vendors and trial attorneys to take control of a homeowner’s policy, inflate a claim and sue an insurance company that disputes the bill.
“Citizens’ decision to recommend rate increases for homeowners across Florida should sound the alarm that Assignment of Benefits scams have reached a critical level,’’ said Florida Chamber President Mark Wilson, President and CEO of the Florida Chamber of Commerce, which spearheads the coalition. “What started out as a South Florida problem has become a statewide crisis that no longer can be ignored and left to fester. We have to act now to put these bad actors out of business.’’
The Florida Chamber and its Consumer Protection Coalition has been a leader in pushing for AOB reform, warning that AOB abuse hurts homeowners, erodes Florida’s business-friendly environment and threatens the stability of the state’s insurance market. In fact, last week I personally testified at the Florida Insurance Consumer Advocate’s forum on Florida’s water loss crisis and advocated for solutions.
In recommending the higher rates, Citizens said the surge in non-weather-related water losses has increased its claims payments and litigation costs, reducing the financial progress the agency has gained from going a decade without a hurricane. Given the latest data, rates in Miami-Dade, Broward and Palm Beach counties would have nearly tripled because of all the water claims but, by law, can’t go up more than 10 percent.
Last year in South Florida, more than 55 percent of claims submitted involved an AOB or had legal representation before the claim was even reported to Citizens. Claims with an AOB cost more than twice the amount of a claim without an AOB.
The Florida Chamber and Consumer Protection Coalition support efforts by Citizens to curb AOB abuse, which include encouraging policyholders to call Citizens first after sustaining damage. In addition, the Florida Office of Insurance Regulation recently approved administrative changes allowing Citizens to inspect the property before repairs are done and capping the amount of non-approved emergency services.