How the Florida Insurance Industry Hopes to Rein in AOB Crisis

Originally Published by the Insurance Journal
July 19, 2018


“I think the number one thing the insurance industry can do is link AOB (assignment of benefits) to the impact that it’s having on the individual consumer and the huge impact it’s having on the premiums that the consumer’s paying,” Barry Gilway, president, CEO and executive director of Citizens Property Insurance Corp. told attendees in a recent Insurance Journal webinar on Florida AOB abuse.

Education, education, education, Gilway said, will be critical to slowing the Florida AOB epidemic that is leading to higher insurance rates, reduced coverage and a potential insurance market crisis in the state.

Gilway was one of a panel of four experts participating in the “Florida AOB Crisis: Where Does the Industry Go from Here?” webinar conducted by Insurance Journal on June 26.

Logan McFaddin, regional representative for the Property Casualty Insurers Association (PCI), Paul Huszar, CEO of remediation contracting company VetCor, and Patrick Wraight, director of the Insurance Journal Academy of Insurance, joined Gilway in discussing the AOB situation in Florida and ways to rein in what they all agreed is runaway abuse.

The AOB problem in Florida stems from unlicensed water remediation and roofing contractors who have homeowners sign over their insurance policy rights in exchange for needed repairs to their homes. The contractors, typically working with an attorney, file inflated or fake claims, and then pursue lawsuits against insurers when those claims are disputed or denied. Because of Florida’s one-way attorney fee statute, insurers are left footing the bill for the inflated claims and the attorney fees if the insurer is found to have underpaid the claim by any amount.

Carriers across the state have seen an increase in litigation because of these inflated claims. According to the Florida Department of Financial Services, there were 405 AOB lawsuits across all 67 Florida counties in 2006, and by 2016 that number had risen to 28,200.

Click here to read the complete article in the Insurance Journal.

Florida Chamber-Backed Assignment of Benefits Bill Heads to House Floor

The Florida Chamber of Commerce today applauded the House Commerce Committee for moving forward House Bill 1421, which takes positive steps toward stopping Assignment of Benefits (AOB) abuse.

The bill, sponsored by Rep. James “J.W.’’ Grant (R-Tampa), contains commonsense consumer protections that would curb abusive AOB practices that are driving up insurance premiums and threatening the affordability of home ownership for many Floridians.

This bill is a strong starting point for addressing AOB abuse and the resulting rising insurance rates caused by unscrupulous repair vendors and trial attorneys. We are encouraged by the House Commerce Committee’s action to keep AOB reform efforts alive this session and are calling on lawmakers in the Senate to follow the House’s lead.

The Florida Chamber continues to affirm that any legislation to reform AOB should eliminate one-way attorney fees, which create incentives for third parties to sue insurers over inflated claims without financial risk.

Both Insurance Commissioner David Altmaier and Citizens Property Insurance Corp. CEO Barry Gilway have testified that one-way attorney fees are the single-biggest factor fueling the explosion of water damage claims and AOB lawsuits that are driving up insurance costs for consumers. While HB 1421 does not provide an outright ban on one-way attorney fees, it does provide some restrictions on their use, which is an improvement over the current situation.

While we continue to believe strongly that AOB reform efforts must eliminate one-way attorney fees, we are pleased that the House bill acknowledges that one-way attorney fees are a serious problem and must be addressed. The attorney fee provisions in Rep. Grant’s bill are a clear step forward.

The Florida Chamber noted that legislators have heard testimony for five consecutive years about the growth of AOB abuse. Legislators have also received clear data and evidence from the state’s insurance regulator and from Citizens that homeowners – especially those living in the tri-county area of South Florida – will see their annual homeowners’ premiums rise by thousands of dollars over the next five years if the Legislature fails to enact reforms.

Failing to take action this session to protect consumers will only worsen the AOB problem, leading to more lawsuits and higher insurance rates for consumers, not just in South Florida, but in many other areas of the state.

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Support Assignment of Benefit reform by signing this petition.

Calling on Lawmakers to Protect Florida Consumers from AOB Abuse in Florida


WATCH video from the press conference.

Consumer Protection Coalition: “Time to Act on AOB Fraud & Abuse is Today”

TALLAHASSEE, Fla. (April 6, 2017) – In front of the Florida House Chamber, the Consumer Protection Coalition, a  broad-based group of business leaders, consumer advocates, real estate agents, construction contractors, insurance agents and insurance trade groups, today called on Florida lawmakers to protect Florida consumers and pass meaningful reforms to end Assignment of Benefits (AOB) abuse in the Sunshine State.


“We are halfway through the 2017 Legislative Session, and it appears another year may pass without meaningful reforms to end AOB abuse in Florida,” said DULCE SUAREZ-RESNICK, independent insurance agent in Miami and member of the Latin American Association of Insurance Agents.  “Make no mistake: If the Legislature fails to address the growing cancer of AOB for a fifth straight year, Florida’s hardworking families are the ones that will lose.  Our leaders have crystal clear evidence that AOB fraud and abuse is threatening the affordability of homeownership for average Floridians.  For lower-income families and those on fixed incomes, it could literally put the dream of homeownership out of reach.”


In Miami-Dade County, Citizens Property Insurance Corporation (Citizens) projects that without AOB reforms, the average premium for homeowners will skyrocket from $9,847 this year to $15,859 by 2022.  An increase of more than $6,000 in five years.


“At the beginning of the year, Citizens announced reining in out-of-control lawsuits over water damage claims and AOB abuse were a top legislative priority,” said BARRY GILWAY, president and CEO of Citizens.  “And, just a week ago, Citizens reported a net loss of more than $27 million for 2016 – our first annual loss in 11 years.  The reason is the unjustifiable explosion of water loss claims we are facing, AOB abuse and lawsuits that are seriously eroding our bottom line.”


Ninety-six percent of all litigation Citizens faces is coming from the tri-county area of Dade, Broward and Palm Beach.  In just the past three and a half years, Citizens has seen the average severity, or payout, from each litigated water claim rise from $10,000 to $20,000.  In 2011, just 12 percent of the claims Citizens received went into litigation.  By 2015, 45 percent have been litigated.


“A cottage industry of trial attorney firms, often partnering with a relatively small group of home repair vendors, are driving the vast majority of lawsuits against Citizens,” said GILWAY.  “A year ago, we were able to provide rate decreases to most of our customers across the state.  This year, 84 percent of our policyholders will see rate increases, because of this water damage claims and AOB litigation phenomenon.  Without significant statutory reforms, Citizens will be forced to pass these costs on to our customers in the form of higher rates for the foreseeable future.”


“I’ve seen first-hand the AOB abuse that’s happening in our neighborhoods and reform is urgently needed,” said RALPH DAVIS, local contractor and president of Streamline Roofing & Construction.  “AOB fraud and abuse is driving up the costs of home repairs and is hurting homeowners who are often unaware of the risks they face when they sign an AOB.  It’s hurting the reputation of our industry and all of the good roofing firms and other good contractors who don’t use AOBS and who want to stop the bad behavior.”


“Our legislators have heard testimony of plumbers getting paid kick-backs of as much as $2,500 to get a water remediation firm in the door to convince a homeowner to sign an AOB,” said DAVIS.  “That’s just plain wrong.  Florida homeowners don’t need to sign an AOB with a contractor to get repairs done, and roofers and other contractors don’t need AOBs to get paid.  The system that has been in place for years – having homeowners direct their insurers to pay us under their policies – has worked.  As a roofer who prides himself in making an honest dollar for an honest day’s work, I am calling on members of the House and Senate to step up and protect Florida consumers from AOB fraud and abuse.”


“As a member of the Florida Realtors, I know well that for most Floridians, their home is their largest investment,” said MARILYN PEARSON-ADAMS, vice chair of public policy for the Florida Realtors.  “Home ownership is still the key to the American dream and is vital to building strong communities. Floridians on fixed incomes are particularly vulnerable to increases in the ancillary costs of owning a home, such as property taxes, insurance and maintenance.  That’s why Florida Realtors is so concerned about AOB fraud and abuse, and is standing with the Consumer Protection Coalition in calling for legislative reform now.”


As an example relating to the impact of AOB abuse on middle-class families, state estimates show that in Palm Beach, coverage for a home valued at $155,000 will rise from $2,210 this year to $3,559 in 2022 without reform. In Broward, that premium would jump from $2,390 to $3,850.


“It is heartbreaking to see hardworking families scrimp and save to be able to qualify for a mortgage only to learn that these overhead costs end up busting-the-budget,” said PEARSON-ADAMS.  “These premium increases, mostly due to AOB scams, are already putting homeownership further out of reach for many families in South Florida and will start to impact families in other areas of the state without prompt legislative action.  Florida’s realtors, who help people achieve dreams and help fuel our state’s economy, are urging the Legislature to act.”


The Florida Chamber of Commerce has warned the Florida Legislature for five years about AOB fraud and abuse.  The time to act is clear:

  • Citizens has posted its first net loss in a decade, largely because of this problem;
  • The Florida Justice Reform Institute has reported that from 2010 to 2016 alone, the number of AOB lawsuits has skyrocketed from about 25,000 to over 100,000 – an increase of 300 percent; and
  • Worst of all, AOB fraud and abuse is threatening the affordability of home ownership for consumers insured by both Citizens and private insurers.


“Today, the Consumer Protection Coalition is delivering nearly 2,000 petitions signed by people across the state to our Senate and House leaders,” said CAROLYN JOHNSON, director of business, economic development and innovation policy with the Florida Chamber of Commerce. “These are real Floridians who want real reform on AOB fraud and abuse, and they want it now.  Our coalition is calling on Senate and House leaders to allow hearings on bills that we strongly believe will offer the best protection to homeowners and get at the heart of the AOB problem.”


“There is no question one-way attorney fees are key to what’s fueling this explosion of AOB litigation,” said JOHNSON.  “Plain and simple, we believe the right to one-way attorney fees should remain with the homeowner – and not be transferred to the water remediation firm, roofer or plumber who solicited an AOB from an unknowing homeowner.  The bottom line is this: If Senate and House members do not come together to pass meaningful AOB reforms this session, the AOB cottage industry will fleece homeowners even more and laugh all the way to the bank.  Expect even more water damage claims. Expect even more lawsuits.  And expect even more pain for the constituents or lawmakers, who will hand over their hard-earned dollars because of inaction. The time to act on AOB fraud and abuse is today.”


Also attending the press conference today were Representative Rene Plasencia and Office of Insurance Regulation Commissioner David Altmaier.

In addition to the press conference held today, the Consumer Protection Coalition recently hit the airwaves with a video and radio spot.

For more information on the Consumer Protection Coalition, please visit, follow @CPC_FL and like @ConsumerProtectionCoalition.


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