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.
AOB Fraud and Abuse Worsening – ACT NOW
A report released today shows further increases in property insurance fraud and abuse, and warns of possible property insurance premium increases if steps aren’t taken quickly.
The Citizens Property Insurance Corporation report, which identifies an explosion of water damage claims and Assignment of Benefits (AOB) lawsuits, should serve as a wake-up call for consumers, job creators and elected leaders. The report clearly demonstrates that this suspicious activity is a pocketbook problem for Florida families.
Reforming Florida’s property insurance market, particularly as it relates to AOB, is a top priority of the Florida Chamber. We believe that property insurance reform will create a stable market that helps consumers find the best options at the best rates, and it will help make Florida more competitive.
The Florida Chamber, along with our Consumer Protection Coalition, is urging state lawmakers to head the warning of the Citizens report and pass meaningful reforms that end AOB fraud and abuse.
Sign the Petition
Visit www.FightFraud.Today and sign the petition urging lawmakers to take action.