Florida Property Insurance Fraud, Don’t Sign Your Rights Away

In Florida, there’s a rapidly growing scam in which a few 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.

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LEARN MORE about the Florida Chamber’s efforts to create a competitive and stable insurance market

Florida Times-Union Editorial Board Reacts to Florida Chamber Competitiveness Agenda

Last week, The Florida Times-Union published an editorial after meeting with leaders from the Florida Chamber. Click the image below to find out why the editorial board wrote: “…the Florida Chamber of Commerce should be applauded.”

Floridians Pay Twice the National Average in Homeowners Insurance

Hurricane season will start tomorrow and while it’s been 11 years since Florida’s last major hurricane season, the tides could turn at any time. With Floridians already paying twice the national average in homeowners insurance, how would a destructive hurricane season affect your property insurance premiums? Does your household or business have a disaster preparedness in place? How will the coming hurricane season impact you?

Get Involved

To learn more about property insurance and its impact on Florida’s business community, make plans to attend the Florida Chamber of Commerce’s Insurance Summit on February 1-3, 2017, in Miami.

Property Insurance Rates Likely to Rise

Two of Florida’s largest property insurers are seeking rate increases to help offset the ever-increasing cost of fraud and abuse associated with Assignment of Benefits (AOB). Heritage Property & Casualty, Florida’s fourth largest insurer, is seeking to increase rates by nearly 15 percent, while Citizens Property Insurance, the state’s largest insurer, is also significantly increasing rates for their policyholders.

AOB is threatening Florida’s families and businesses. That’s because some unscrupulous home repair vendors and trial attorneys are taking advantage of businesses and homeowners by forcing them to “assign their benefits” before making any repairs. When the homeowner loses control of their homeowner’s insurance policy, they generally experience inflated repair costs, and costly lawsuits are filed against the insurer who questions the bill.

Bottom Line:

Inflated claims and increased legal costs are driving up the cost of homeowners insurance across Florida.

Fighting AOB, and establishing property insurance reforms, continues to be a top priority for the Florida Chamber of Commerce. At the heart of this debate – which must be settled legislatively – is the one-way attorney fee provision which allows contractors and repair vendors to sue the insurer under the homeowner’s insurance policy and collect attorney fees, regardless of the outcome.

Take Action Now

Join our efforts to help protect Florida’s families and businesses from inflated property insurance rates. Visit www.FightFraud.Today to learn more, and share this video.

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.

Insurance Commissioner Talks Property Insurance Reforms and Cost Drivers

“We are going to… take whatever action is necessary to ensure that
Florida continues to be a viable place for businesses to flourish.”

-Insurance Commissioner Kevin McCarty

Florida Insurance Commissioner Kevin McCarty joins the Florida Chamber’s Bottom Line to discuss important insurance reforms, including workers’ comp, auto insurance fraud, assignment of benefits and flood insurance.

In order to help secure our state’s future, Commissioner McCarty understands data is a valuable tool in helping to arm leaders for the challenges ahead.

“Data is the key and we are going to get this from Citizens and we are also working with a number of our carriers that collect that data and we want to make sure that we provide the necessary information so that our lawmakers have informed decisions and we are going to help, and we appreciate the [Florida] Chamber’s leadership in this regard and look forward to working with you on this and any other issue [and] challenges to our state and to our economy.”

Register for the Florida Chamber’s Annual Insurance Summit

Join state business leaders, industry experts and elected officials as they discuss the challenges and opportunities facing Florida’s insurance industry at the Florida Chamber of Commerce’s Insurance Summit, held October 26-28 in Orlando.

Just in Time for Hurricane Season: Property Insurance Catastrophe Fund is in Good Fiscal Condition

Good news just in time for the 2015 hurricane season. For the first time since its 1993 creation, the Florida Hurricane Catastrophe Fund (CAT Fund) has enough liquidity to cover the $17 billion statutory coverage, according to state data released last week.  Claims-paying estimates provided to the CAT Fund Advisory Council show the program will have $12.8 billion in cash on hand at the end of 2015. Two years ago, the CAT Fund began transferring risk and now has $4.2 billion in pre-event bonds and private reinsurance – providing the $17 billion capacity to pay claims for the 2015 hurricane season.

The Florida Chamber of Commerce has long-supported transferring risk to the private reinsurance market to aid in the fiscal health of the CAT Fund. However, there’s more work to be done. While the CAT Fund is now in a better position to protect insurers from their initial season of losses, the CAT Fund could still experience trouble if a second season of storms occurs, according to the data.

The claims-paying estimate data released last week also examined the CAT Fund’s capacity for a second season of storms.  The report assumes that the CAT Fund would not use the pre-event bonding in the first season, and instead would turn to the market for bonds – leaving the pre-event bonding to finance a second season of storms.

The estimated bonding capacity of the CAT Fund is $7.7 billion, which is down $600 million from the October 2014 estimate.  This would allow the CAT Fund to pay only 69 percent of its obligation for the second season, leaving roughly $5 billion in losses uncovered. Post-issued bonds will be paid back through assessments, or “hurricane taxes,” by all property and casualty policyholders, including automobile insurance.  Additionally, insurers may experience trouble during a second season of storms due to the lack of capacity for the CAT Fund to pay claims in this season.

To make Florida more competitive, the Florida Chamber has long-supported reducing the size of the CAT Fund – allowing insurers to plan for more than one season of storms. Share your voice. Contact Carolyn Johnson at cjohnson@flchamber.com to learn how you can help.

Florida Chamber-Backed Bills Save Floridians Money and Improve Florida’s Insurance and Legal Climates

Thanks to the outreach of Florida Chamber members and volunteers, several lawsuit abuse reform bills have passed their committees in the Florida House and Senate. Be sure to send these legislators a thank you note by clicking the appropriate links below. The following is an update on these bills:

Property Insurance Reform – Assignment of Benefits

HB 669 sponsored by Rep. John Tobia (R-Melbourne) and SB 1064 sponsored by Sen. Dorothy Hukill (R-Port Orange), allows insurance companies to write policies that prohibit the post-loss assignment of benefits or rights other than for purposes of payment. This protects the homeowner by allowing them to maintain the rights of their policy but allows the contractor or subcontractor to be directly paid by the insurer.

This legislation is important to Florida’s business community because the bill:

  • Protects insurers against inflated claims by allowing the homeowner to maintain control of the repair and mitigation process
  • Balances the rights of the homeowner and the insurer when a loss occurs
  • Clarifies that insurers can prohibit the post-loss assignment of benefits as a part of an insurance policy
What’s Next:
  • HB 669- Has one more hearing at the Regulatory Affairs Committee, before being heard on the House Floor
  • SB 1064- Has two more hearings, with the Senate Judiciary Committee up next
Learn More:

Read an article by Rep. David Santiago on how assignment of benefits (AOB) forms are being abused. Send these legislators a thank you note for their hard work on these bills by clicking here.

Lawsuit Abuse Reform – Bad Faith/Fair Settlement

HB 1197 sponsored by Rep. Mike Hill (R-Pensacola) and SB 1088 sponsored by Sen. Jeff Brandes (R- St. Petersburg),specifies that the claimant, insured, or third party representing the claimant or insured must provide a written notice as a precedent to bringing a third-party bad faith claim. This will help improve Florida’s costly bottom 10 legal climate.

This legislation is important to Florida’s business community because the bill:

  • Allows insurers to act in good faith prior to a bad faith lawsuit being brought forward
  • Decreases frivolous litigation by trial lawyers
  • Improves Florida’s legal environment under which businesses operate
What’s Next:
  • HB 1197- Has two more hearings, with the House Insurance and Banking Subcommittee up next
  • SB 1088- Has three more hearings, with the Senate Banking and Insurance Committee up next
Learn More:

Visit our Legal Reform Page and learn where we stand on this issue. Also, send these legislators a thank you note for their hard work on these bills by clicking here.

Lawsuit Abuse Reform – Accuracy in Damages

HB 1199 sponsored by Rep. Larry Metz (R-Groveland) protects businesses from increased costs by ensuring accuracy in the damages paid in personal injury actions. This reduces “phantom damages” or inflated costs in these personal injury cases by allowing the jury to have information on the actual cost of medical care.

This legislation is important to Florida’s business community because the bill:

  • Ensures payments are made for actual and necessary medical expenses
  • Decreases frivolous litigation by trial lawyers who inflate medical damages to increase costs on businesses so they can receive a higher fee
What’s Next:

•HB 1199- Has one more hearing remaining at the House Judiciary Committee, before being heard on the House Floor

Learn More:

Visit our Legal Reform Page and learn where we stand on this issue. Also, send these legislators a thank you note for their hard work on these bills by clicking here.

Prejudgment Interest

SB 794 would allow interest to be charged on damages from the date the injury or tort occurred, not from the date the legal decision was made. More companies will be forced to settle to avoid increased legal costs as a result of additional interest in a drawn out legal system.

This legislation is bad for Florida’s business because the bill:

  • Further deteriorates Florida’s legal climate and image as a “gotcha” state
  • Increases the cost of personal injury lawsuits, which is already a significant cost to Florida’s employers, by charging interest before a legal decision has been rendered
  • Forces more companies to settle, despite the merit of the claim, to avoid paying interest for ongoing litigation

What’s Next:

  • SB 794- Has three more hearings, with the next hearing at the Senate Judiciary Committee
Learn More:

Due to the high response rate from Florida Chamber members and volunteers, this bill has been postponed in the Senate for the third consecutive week.