How Florida Saved Taxpayers

Reforms Helped a State-Backed Insurer Weather the Storm

These columns are often critical of government, especially when public officials put taxpayers on the hook for future risks. Think Fannie Mae, or federal flood insurance. So it’s worth pointing out when a government acts to reduce taxpayer liabilities ahead of a fiscal storm, as Florida did before Hurricane Irma.

The example is taxpayer-backed Citizens Property Insurance Corp., the state-owned insurer that not long ago was a fiscal disaster awaiting the next hurricane.


Click here to read the complete editorial in The Wall Street 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.

Take Action Now

Support Assignment of Benefit reform by signing this petition.

Consumer Alert: Beware of Insurance Scams

SHARE this important CONSUMER ALERT with your friends and loved ones.

> JOIN the Florida Chamber’s Consumer Protection Coalition and sign the petition seeking a legislative solution to this scam.

The Florida Chamber of Commerce and its Consumer Protection Coalition urge you to be on the lookout for unscrupulous home repair vendors and trial attorneys that try to profit off the disaster by asking you to sign an Assignment of Benefits (AOB). Remember, consumers do not need to sign an AOB to get storm-related repairs.


Post-Hurricane Hermine Consumer Alert


Why This Matters

Property insurance premiums are increasing across Florida and AOB is to blame. The government-run Citizens Property Insurance Corp. has recommended an average rate increase of 6.8 percent statewide for residential policies next year to offset an explosion in non-weather-related water loss claims. Here’s what the Palm Beach Post said last week: Florida water scam is soaking consumers, must be plugged.

Editorial: Florida Water Scam is Soaking Consumers, Must be Plugged

Published in the Palm Beach Post
August 30, 2016

State-backed Citizens Property Insurance Corp. is looking for a 9 percent increase from Palm Beach County homeowners – and an average 6.8 percent statewide – even though there hasn’t been a hurricane in more than 10 years.

The reason has nothing to do with the ravages of nature. Look instead to the greed of some lawyers and unscrupulous building contractors.

As both the insurance industry and consumers’ advocates tell it, the South Florida region has been inundated with inflated claims and frivolous lawsuits involving simple water damage – the kind you get when your washing machine overflows — and the abuse of a legal right called “assignment of benefits,” or AOB.

AOB lawsuits work like this: You have a leaky pipe and you call a water mitigation company for emergency dry-out services. The company sends a technician and, while drying out the house, presents you with documents to sign, including an AOB, by which you forfeit your insurance rights and benefits. This allows the contractor to bill the insurance company directly, and get the proceeds directly. You see it as a convenience. The contractor and lawyer see it as a gravy train.

The lawsuits arise when the insurer denies a claim because some of the losses aren’t covered by the policy. The water mitigation company now has an unpaid bill, so it sues the insurer. A lawyer is happy to file suit because it can charge big, “one-way” fees: if the claimant wins, the insurance company pays. But if the insurer wins, it can’t collect its legal fees from policyholders. In other words, claimants have nothing to lose by filing suit.

Those legal fees often add thousands of dollars to claims, which are themselves based on inflated invoices.

The insurers usually decide to settle the cases because it’s cheaper than fighting the lawsuits.

The cases are running rampant, particularly in South Florida. “In Miami-Dade County, Citizens Insurance says that one in six homeowners had water damage last year – one in six! And we didn’t have a hurricane,” Mark Wilson, president of the Florida Chamber of Commerce, told the Palm Beach Post Editorial Board.

AOB lawsuits involving homeowner property claims skyrocketed 2,700 percent from 2005 to 2014, says the Personal Insurance Federation of Florida. This March alone, Citizens was sued 1,000 times. And the pace isn’t letting up.

Michael Carlson, executive director of the Personal Insurance Federation, saidthis is happening in no other state that his member companies operate in.

Inevitably, the cost gets passed on to policyholders. By law, Citizens can raise rates no higher than 10 percent a year. But in Palm Beach, Broward and Miami-Dade counties, Citizens says “actuarially sound” rates ought to rise up to 189 percent. So the requests for rate increases will keep coming.

And it’s not just Citizens. “The overall Florida market will also suffer, especially if the state is hit by a serious catastrophe,” writes Insurance Journal. Private insurers, seeing a significant rise in AOB claims, “say hikes of as much as $1 billion will be needed.”

The Florida Legislature had a chance to fight this problem by putting in some safeguards. But three bills to reform the abuses died in committees in the last legislative session. The same thing happened the three previous years, with the insurers out-lobbied by water remediation companies, contractors and lawyers.

So yes, as regulators mull the Citizens request — a public hearing period ends Thursday — we avidly hope they keep the increases as slight as possible.

But in the long run, consumers will be far better served when lawmakers finally get serious about cracking down on a budding scam that is quickly showing the potential to raise prices for everybody.

Citizens’ Rate Increase Further Proof AOB Reform Needed

Citizens Property Insurance Corp.’s proposed statewide rate increases is further proof that Assignment of Benefits (AOB) abuse is hurting homeowners and must be addressed during the 2017 legislative session, the Consumer Protection Coalition said today.

During a rate hearing before the Florida Office of Insurance Regulation today, Citizens said its recommended 6.8 percent rate increase for personal lines policies was necessary to offset an explosion in non-weather-related water loss claims. In many of the claims, a homeowner signed an AOB enabling an unscrupulous home repair vendor to take over the policy, inflate the cost of the claim and file a lawsuit against the insurance company if it disputed the bill.

“It’s unfortunate that Citizens is here today requesting a rate increase because of a legalized scam that allows the bad behavior of a few to punish everyone,’’ said MARK WILSON, President and CEO of the Florida Chamber of Commerce, which spearheads the Consumer Protection Coalition. “The coalition has been warning that AOB abuse would directly hit consumers’ wallets, and, regrettably, our fears are coming to fruition.’’

The broad-based coalition of business leaders, consumer advocates, real estate agents, insurance groups and others formed in January to raise awareness about the dangers of AOB abuse and need for reform. The coalition believes that abusive AOB practices and scams are harmful to consumers and jeopardize Florida’s business-friendly environment. The rapidly growing AOB problem also impacts the availability and affordability of insurance, hindering efforts by Citizens, the state-run insurer, to reduce its number of policies and shift homeowners to the private market.

Learn more about today’s hearing by clicking here.


The Florida Chamber and its Consumer Protection Coalition is sharing your call for AOB reform to stop the fraud and abuse. We’re gaining traction, but need your help to drive the message home. The Florida Chamber and Consumer Protection Coalition is sharing your call for AOB reform to stop the fraud and abuse. Thanks to your support, we’re gaining traction. Help us grow the Coalition by encouraging others to signing this petition.

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.

AOB Fraud Forces Policy Changes at Citizens Property

In Florida, there’s a rapidly growing scam in which shady home repair vendors pressure homeowners to sign away the rights and benefits of their insurance policies as a condition of performing work. This practice has led to grossly inflated claims and an explosion of Assignment of Benefit lawsuits against insurers, which is driving up the cost of homeowners’ coverage for consumers.

As a result, Citizens Property Insurance, the state’s largest government insurer, recently announced policy changes that will impact the handling of claims – especially claims for emergency repairs. These changes, which will take effect on or after July 1, 2016 for new or renewed policies, are designed to help curb AOB fraud and abuse.

Policy Changes Include:

  • The policyholder must take emergency measures to prevent further damage, and the policy includes only what is reasonable and necessary up to $3,000 or 1 percent of their coverage limit, unless Citizens approves additional measures.
  • Citizens can inspect and adjust the claim. Permanent repairs cannot take place until 72 hours after
  • Citizens has been notified, or the loss is inspected by Citizens, or verbal or written approval is given by Citizens property insurance.
  • These policy changes have only been approved for Citizens Property Insurance by the Office of Insurance Regulation. However, we anticipate other insurers soon might follow suit.

The Florida Chamber of Commerce and its Consumer Protection Coalition continue to fight for solutions to AOB fraud and abuse – particularly addressing one-way attorney fee provisions.

Join our efforts by signing this petition, and stay tuned for additional updates as we continue pushing back against billboard trial lawyers.

Failure to Enact Meaningful AOB Reforms Hurts Florida’s Consumers, Coalition Says

TALLAHASSEE, Fla. (March 11, 2016) – Florida’s property insurance policyholders face paying higher rates due to the Legislature’s failure this legislative session to pass meaningful reforms to rein in fraud and abuse involving Assignment of Benefits (AOB).

For the fourth straight year, legislators heard testimony about a rapidly growing scam in which shady home repair vendors pressure homeowners to sign away the rights and benefits of their insurance policies as a condition of performing work. This practice has led to grossly inflated claims and an explosion of AOB lawsuits against insurers, which is driving up the cost of homeowners’ coverage for consumers.

Last week, Citizens Property Insurance Corp. warned that its policyholders in Miami-Dade, Broward and Palm Beach counties face rate increases of 10 percent annually for years to come, and that rate decreases for its other policyholders across the state are now jeopardized, due to a huge increase in water damage claims and AOB lawsuits. Citizens said it is now receiving an average 650 new lawsuits a month. The mounting losses are threatening the state insurer’s financial strength and jeopardizing its efforts to move policies to the private market.

Earlier in the session, the Florida Office of Insurance Regulation issued an analysis showing that AOB abuse and lawsuits are also a growing problem for private insurers. State insurance regulators said if the trend wasn’t stopped, private insurers also could be forced to raise rates by 10 percent or more annually just to break even.

The Consumer Protection Coalition, led by the Florida Chamber of Commerce, praised state Senator Dorothy Hukill (R-Port Orange) and state Rep. Matt Caldwell (R-Lehigh Acres) for introducing bills at the start of the 2016 session that contained strong consumer protections. However, their bills died in committee. Among the common-sense consumer protections that failed to win acceptance with legislators were provisions allowing the consumer to rescind an AOB within three days, a requirement that the home repair vendor provide written disclosure to the policyholder that they might be signing away important legal and policy rights and a prohibition against vendors interfering with the right of the insurer to communicate directly with their own policyholder.

Hukill’s bill also sought to reform the use of one-way attorney fees in AOB lawsuits, which are fueling the dramatic surge in AOB lawsuits. One-way attorney fees that exist in state law today were intended to ensure a level playing field for policyholders forced to sue their own insurance company. Instead, shady home repair vendors are obtaining the right to these one-way fees, incentivizing them to file lawsuits – because they don’t have to pay attorney fees to insurers, even if they lose.

“Unless the Legislature takes real steps to address one-way attorney fees and stop the lawsuit free-for-all, consumers will continue to pay the price of inaction in the form of higher insurance rates,” said David Hart, Executive Vice President of the Florida Chamber of Commerce, which is spearheading the coalition. “The fraud and abuse involving AOBs is real, it is getting worse and it is spreading statewide. While we are disappointed that the Legislature did not agree to a cure this session, we are 100 percent committed to ending the abuse and protecting consumers in 2017.”

The Florida Chamber and Consumer Protection Coalition, which includes a wide array of consumer advocates, construction firms, realtors, bankers, business associations, insurance agents and insurance companies, said it will continue to work to educate consumers, legislators and other stakeholders and press for real reforms over the next year.

Did You Know Floridians Paid $1.5 Billion in Hidden “Hurricane Taxes”

Did You Know?

Florida Hurricane Catastrophe Fund (CAT Fund) hurricane taxes assessed on Floridians to pay for the six named storms of 2004-2005 will end this coming January – a year earlier than expected? However, Citizens Property Insurance Corporation (Citizens) hurricane taxes, also assessed for the back-to-back record-breaking 2004-2005 seasons, will continue to be assessed until 2017. To date, Citizens has received more than $1.5 billion in hurricane taxes from all Florida property and casualty insurance policyholders – auto, homeowners, businesses, charities, churches, renters and more.

Why does this matter to Florida’s business community?

Florida’s geographic location makes our state one of the most exposed places in the world to tropical windstorms and hurricanes. Of the 180 hurricanes that have made landfall in the continental United States since 1900, 65 have landed in Florida – the most of any state in the nation.

While it’s been nine years since the last major hurricane landfall, Florida’s experience during 2004 and 2005 shows our state is just one bad season away from tens of billions in damages. Between 2004 and 2005, Hurricanes Charley, Dennis, Frances, Ivan, Jeanne and Wilma hit Florida and caused more than $70 billion in damages. In addition, Hurricane Andrew in 1992 caused $25 billion in damages to Florida – equating to more than double that in today’s dollars.

The past nine years has allowed Florida’s insurance and reinsurance industry to build up reserves, but there still exists a major gap in how Florida addresses property and casualty insurance. If Citizens, the largest insurer in the state with more than 933,000 policies and $292.6 billion in total exposure, has a shortfall due to a series of storms, taxpayers are on the hook to pay these claims. These assessments could be borne by the business community.

Citizens currently has the authority to levy assessments on all property and casualty insurance in Florida including auto, business, home and renters insurance policies. This “emergency” assessment was put into place to help spread the risk among all policyholders in Florida in the event of a catastrophic storm. Currently, non-Citizens policyholders pay $136 million, or about 84 percent, yearly of the total assessments on all Florida property and causality insurance policies. These assessments are slated to be eliminated in early 2017.

Additionally, Citizens policyholders could be hit with a one-time 45 percent surcharge if Citizens depletes its savings and is unable to pay claims. This could impact businesses that rely on Citizens for property insurance coverage as well.

According to Stephen Weinstein, Senior Vice President with RenaissanceRe Holdings Ltd., Florida has taken significant steps in the last several years to strengthen the state’s property insurance market. Weinstein credits leadership at Florida’s Citizens Property Insurance Corporation and Florida Hurricane Catastrophe Fund for bolstering the financial position and reducing the risk of assessments on Floridians statewide.

“This has been complemented by the efforts of the executive leadership and professional management teams at Florida’s Citizens Property Insurance Corporation and Hurricane Catastrophe Fund to bolster their financial position and reduce the risk of assessments on Floridians statewide,” Weinstein said. “Collectively, these efforts have stabilized our property insurance system and attracted record levels of global capital to compete for Florida’s business. At the same time, Florida has also gotten lucky, by dodging a major storm for the past nine years.”

But this is Florida, after all, and our hurricane free streak could end at any time.

“In light of current conditions in the global private markets, Florida has an extraordinary opportunity right now to build on the success of recent years,” Weinstein explained. “This can be achieved by adopting a renewed business plan toward stability, in which insured risks are willingly borne by those who create them, and supported by a fairly priced, competitive private market, with our unique hurricane risk shared with and financed by private investors worldwide. We appreciate the significant and valuable reforms to date and hope to keep contributing to an ever more stable market for Florida’s consumers, homeowners and businesses.”

The stability referenced by Weinstein is a major step for Florida’s coastal communities, which accounts for approximately 80 percent of the state’s economic activity. Currently, the value of coastal property in Florida is roughly $2.0 trillion. This accounts for 80 percent of the state’s total residential and commercial property. More than 75 percent of Floridians live in a coastal county – meaning three out of four residents are in the direct landfall zone of a major hurricane. In addition, 12 of the 20 fastest growing coastal counties in the United States are located right here in the Sunshine State. Properties, both residential and commercial, within these counties have the most significant risk for hurricane damage due to high winds and storm surge. Ensuring stability for these communities throughout our state is a step in the right direction for our state’s slowly recovering property insurance systems.

And Citizens isn’t the only state-run liability that is in need of stability. The only state-sponsored reinsurance entity of its type, Florida’s CAT fund, may only be able to cover losses for one major storm or series of smaller storms. The CAT Fund is on the hook for $17 billion in claims, and while bonding capacity estimates show the CAT Fund may have the capability to pay these claims, Florida’s policyholders would have to foot the bill.

The end result? A system in which Florida’s financial stability could be decimated with one bad storm season, relying on post-storm assessments from Florida’s taxpayers for years to come.

Three Ways You Can Help Secure Florida’s Future:

  1. Join us at the 2014 Future of Florida Forum, September 29 – October 1. Join state business leaders, industry experts and elected officials as they discuss and explore how to secure Florida’s future, together. This year’s program features top level executives from several state agencies and identifies connection points and partnerships that will make Florida a state with vibrant communities, high-wage jobs and endless opportunities for global competitiveness. Register today and be part of the conversations that will help Florida stand out as the premier place to live, learn work and raise a family.
  2. Save the date for the Florida Chamber’s Annual Insurance Summit, January 21-23 at the Grand Floridian in Orlando. Plan to engage with the state’s top policymakers, industry leaders and business community experts as they tackle the challenges facing Florida’s insurance industry.
  3. Become a Florida Chamber Foundation Trustee and help provide a strategic direction for Florida’s future, to 2030 and beyond. For more information, contact Sal Nuzzo at 850-521-1283 or

Tell Us Your Story:

How has your business been affected by these assessments? Share your Florida story with us and stay tuned for more updates from The Florida Scorecard on Florida’s insurance industry.


About the Florida Scorecard Did You Know:

The Florida Scorecard, located at, presents metrics across Florida’s economy. Each week, the Florida Chamber Foundation produces a Scorecard Did You Know that takes an in-depth look at one specific statistic. If you would like additional information on the Weekly Scorecard Did You Know or on the Florida Scorecard, please contact Sal Nuzzo with the Florida Chamber Foundation at 850.521.1283 or You can also follow Sal on Twitter at @SalNuzzo and the Florida Chamber Foundation at @FLChamberFDN.