Senate Takes Steps Toward AOB Reform 

 

Consumer Protection Coalition

 

On January 22, the Senate Committee on Banking & Insurance met to discuss an Assignment of Benefits (AOB) reform bill that will help reign in AOB abuse — Senate Bill 122.

The Florida Chamber applauds Senator Doug Broxson for proposing SB 122 and the committee for engaging in bold dialogue and seeking meaningful insights from industry experts, including Florida Chief Financial Officer Jimmy Patronis, the Office of Insurance Regulation and Citizens Property Insurance. 

Meaningful reforms have failed to cross the finish line in past years and as a result, we have seen hardworking individuals continue to fall victim to shady contractors who have convinced them to sign away their rights— ultimately leaving them high and dry without recourse.

Consider that, in 2006, there were only 405 AOB-related lawsuits. Last year, the number skyrocketed to more than 34,000.

We cannot afford another year without AOB reform. 

Engage With Us

  1. Visit the Consumer Protection Coalition to see how you can fight fraud today.
  2. Connect with Florida’s new Governor, members of the Cabinet and the Florida Legislature during the Florida Chamber’s 2019 Legislative Fly-In and Global Florida Dinner.

Florida Chamber President Provides Hurricane Irma Economic Outlook During Testimony Before Senate Commerce Committee

 

Read Testimony   Fight AOB Fraud    Local Chamber Relief Fund

 

In a testimony before the Florida Senate Commerce Committee, Florida Chamber of Commerce President and CEO Mark Wilson told lawmakers that Florida will rebound from Irma.

During his remarks to the committee, which is chaired by Senator Bill Montford (D-Tallahassee), Wilson encouraged lawmakers to focus on continuous improvement and to join forces with the private sector to help secure Florida’s future.  Click here to read Wilson’s testimony.

Irma yielded the largest evacuation in U.S. history, and as Wilson explained, there’s no question we’ll learn lessons from this storm. From an economic outlook perspective, Wilson testified that:

  • Tax revenue likely won’t keep up with storm expenses,
  • Job growth will continue to slow,
  • A gap in skilled labor – particularly for home repairs and rebuilding – will hurt in the short-term, and
  • Lawsuit chasers, as highlighted in the Wall Street Journal, “are trying to milk the public’s pain for their own gain.” Wilson encouraged lawmakers to side with consumers in frivolous class action claims.

Looking forward, he applauded state leaders for making smart public policy decisions to reduce exposure and spread risk in Citizens Property Insurance and Florida’s CAT Fund. However, he warned that the tsunami of assignment of benefit-related claims that have flooded the market – unrelated to Hurricane Irma – are causing property insurance rates to skyrocket. He encouraged lawmakers to make meaningful reforms this session.

Wilson was joined on the panel by partners in Florida’s business community, including:

  • Cissy Proctor, Executive Director, Florida Department of Economic Opportunity
  • Ken Lawson, President & CEO, VISIT FLORIDA
  • Michelle Dennard, President and CEO, CareerSource Florida
  • Cheryl Kirby, Associate State Director, Florida SBDC
  • Lance Lozano, Chief Operating Officer, Florida United Business Association

 

Call on the Legislature to Fight AOB Fraud

Fight back against the growing storm of assignment of benefits fraud. Sign the petition and call on the Legislature to stop this “Category 5 hurricane.”

 

Support Local Chambers in Need

Support local chambers in need of relief following Hurricane Irma by contributing to the Florida Chamber Local Chamber Relief Fund.

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

  1. Share this message with your friends, family and coworkers, and ask them to…
  2. Sign the petition to encourage lawmakers to stop AOB fraud and abuse, and protect consumers from increasing homeowners and auto insurance rates.
  3. 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

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 FightFraud.today, follow @CPC_FL and like @ConsumerProtectionCoalition.

 

# # #

Property Insurance Reform

 

Creating Competitive and Stable Insurance Markets

 

Why It Matters to Florida

Creating a competitive and stable insurance market will lower costs for Florida’s policy holders. We must continue initiatives like limiting the size and exposure of Citizens Insurance, reforming Florida’s Catastrophe Fund, spreading risks, reducing fraudulent claims and allowing for creative solutions for the issues homeowners and businesses face. Reforming Florida’s property insurance system will help reduce taxpayer risk in the event of a catastrophic storm and further improve Florida’s business climate.

Florida’s Competitiveness Agenda

  • Citizens Property Insurance
    Florida’s unique geography leads to a marketplace for property insurance that is far more complex than other states. We must continue to fight for legislation that spreads risk and empowers Floridians to invest in their safety. The Florida Chamber has long advocated that homeowners should be provided with creative, market-based solutions to our natural disaster risks, and the state should do what is necessary to limit growth in the government-run citizen Citizens Property Insurance.
  • Florida’s Catastrophe Fund
    Instead of relying on good luck to protect Floridians, the Florida Chamber believes that improving the claims paying ability of the Florida Hurricane Catastrophe Fund will reduce the need for hurricane taxes on businesses, families, charities, churches and automobile policyholders. This can be achieved by taking advantage of favorable market conditions in the private reinsurance markets.
  • Assignment of Benefits
    The “assignment of benefits” issue is one the Florida Chamber has been actively fighting to reform in an effort to reduce fraud and abuse in our state’s insurance system. Inflated claims through assignment of benefits are the result of an increase in the number of claims in which the policy has been signed over to a third-party repairing the damage, where the third-party is also working with a trial lawyer. In these instances, the damages are repaired before the insurer can even come out to adjust the claim, and then the trial lawyer sues for additional damages beyond what was necessary.

The Fight for Free Enterprise Continues

We must fight to keep consistent tax and regulatory systems, continue to reign in our state’s government run property insurance company and champion a fair legal climate to improve job growth.

Act Now

Instead of short-term solutions from well-funded plaintiff trial lawyers with special interest agendas, the Florida Chamber is focused on creating long-term sustainable solutions so Florida can continue to attract, add and grow the top businesses in the nation. Tell us how insurance issues affect your ability to do business in Florida by contacting Carolyn Johnson.

Creating Competitive and Stable Insurance Markets

DOWNLOAD Our Property Insurance Reform One Pager

Creating a competitive and stable insurance market will lower costs for Florida’s policy holders. We must continue initiatives like reducing the size and exposure of Citizens Insurance, reforming Florida’s Catastrophe Fund, spreading risks, reducing fraudulent claims and allowing for creative solutions for the issues homeowners and businesses face. Reforming Florida’s broken property insurance system will help reduce taxpayer risk in the event of a catastrophic storm and further improve Florida’s business climate.

  • Citizens Property Insurance
    Since 1900, 180 hurricanes made landfall in the United States. More than 65 of those landed in Florida. This one element of Florida’s geography leads to a marketplace for property insurance that is far more complex than other states. We must continue to fight for legislation that spreads risk and empowers Floridians to invest in their safety. The Florida Chamber has long advocated that homeowners should be provided with creative, market-based solutions to our natural disaster risks, instead of the ill-conceived and anticompetitive government programs to which we have too often turned.
  • Florida’s Catastrophe Fund
    Instead of relying on good luck to protect Floridians, the Florida Chamber believes that improving the claims paying ability of the Florida Hurricane Catastrophe Fund will reduce the need for hurricane taxes on businesses, families, charities, churches and automobile policyholders. This can be achieved by taking advantage of favorable market conditions in the private reinsurance markets.
  • Flood Insurance
    We must continue to push for legislation that will create an actuarially sound flood insurance market.
  • Assignment of Benefits
    The “assignment of benefits” issue is one the Florida Chamber has been actively fighting to reform in an effort to reduce fraud and abuse in our state’s insurance system. Inflated claims through assignment of benefits are the result of an increase in the number of claims in which the policy has been signed over to a third-party repairing the damage, where the third-party is also working with a trial lawyer. In these instances, the damages are repaired before the insurer can even come out to adjust the claim, and then the trial lawyer sues for additional damages beyond what was necessary.

We must fight to keep consistent tax and regulatory systems, continue to reign in our state’s government run property insurance company and champion a fair legal climate to improve job growth.

Instead of short-term solutions from well-funded plaintiff trial lawyers with special interest agendas, the Florida Chamber is focused on creating long-term sustainable solutions so Florida can continue to attract, add and grow the top businesses in the nation. Tell us how insurance issues affect your ability to do business in Florida by contacting Carolyn Johnson.

Citizens’ Rate Increase Request Further Proof of Need for Assignment of Benefits Reform

TALLAHASSEE, Fla. (Aug. 18, 2016) – Citizens Property Insurance Corp.’s proposed statewide rate increases demonstrate beyond a doubt that Assignment of Benefits 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, 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 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.

“Citizens is taking the right steps to protect their policyholders should a large hurricane make landfall in the coming months,” said PCI Regional Manager LOGAN McFADDIN, a coalition member. “The last thing Floridians need is another unnecessary cost-driver increasing their insurance expenses as a result of abuse in our current system. We are hopeful this request from Citizens will prompt lawmakers to take a harder look at the problem and stop this type of abuse before it gets worse.’’

During the last legislative session, the coalition pushed for bills that would have added protections to keep homeowners in control of their policies when seeking emergency repairs for a broken kitchen pipe, roof leak or other kind of damage. The group also gathered testimony from actual customers who have been taken advantage of by vendors using AOB to pad their profits.

“This isn’t just a Citizens issue,’’ said MICHAEL CARLSON, president of the Personal Insurance Federation of Florida, and a member of the coalition. “All insurers are feeling the impact, resulting in higher costs for everyone. It’s time to put the bad guys out of business and put consumers back in control of their policies.’’

The coalition has been a vocal supporter of Citizens’ efforts to stop AOB abuse, including its campaign encouraging policyholders to call Citizens first after sustaining damage. Amid rising rates and mounting evidence of AOB abuse, the coalition plans to aggressively seek legislative reform again in 2017.

Smart Property Insurance Reforms Equal Consumer Savings

The Florida Chamber’s Bottom Line Featuring Michael Carlson

“We are in the best positon as a marketplace that we have been in for about 10 years now,” said Michael Carlson, Executive Director of Personal Insurance Federation of Florida (PIFF). “Our companies are more solvent, they are better able to make claims, and more importantly our backstop- the Hurricane Catastrophe Fund, our Citizens Property Insurance Corporation, which you know is a government supported entity- are both in the best fiscal shape they’ve been in.”

This is due in part to the smart reforms that have been enacted throughout the past several years such as creating more sustainable Citizen’s Property Insurance rates- allowing private companies to competitively take policies, creating a Citizens Clearinghouse program to help move policies into the private market, and reducing fraud in sinkhole claims.

But while our insurance markets are moving in the right direction, special interests groups continue to fight to make Florida’s insurance markets more expensive for families and businesses alike. For workers’ comp, this is a dangerous problem that could cost businesses increased rates.

“Trial lawyers today are challenging the very smart reforms that have been enacted in Florida since 2003 and if they are successful, you will see cost increases in the workers’ comp systems that will affect Florida’s businesses and Florida’s consumers.”

For property insurance, it could equal direct increased costs to homeowners.

“There is a worrisome trend developing in Florida where the cost driver that’s particularly related to roofing and water claims in the homeowner prop insurance market,” shared Carlson. “There is a legal tool called an ‘Assignment of Benefits’ which we believe is being abused by a cottage industry of unscrupulous vendors and trial lawyers that is causing rates to increase. We need to do something about that.”

One solution, Carlson says, is attending the Florida Chamber’s Insurance Summit January 26-28 in Orlando.

“It’s an important gathering. In fact, I would say that the importance cannot be understated,” said Carlson. “The prominent thought leaders, prominent stake holder groups, company executives and representatives, legislators, elected officials, academics all gather under the auspices of the [Florida] Chamber at this event to talk about the problems that we face in property insurance and other insurance markets and more importantly talk about solutions, smart solutions, to address these problems.”

Join Us:

Register today for the Florida Chamber Insurance Summit January 26-28 in Orlando.