Florida legislators and the insurance industry are seeing success after a seven-year battle to reform the abuse of a policyholder benefit known as assignment of benefits (AOB).
For those who are not familiar, the AOB problem in Florida stems from contractors who have homeowners sign over their insurance policy rights in exchange for repairs to their homes. The contractors file inflated or fake claims, and then pursue lawsuits with an attorney against insurers when those claims are disputed.
The insurance industry and consumers advocates say the abuse has driven higher insurance premiums in the state and in some cases made insurance harder to obtain. The abuse even caused some insurance companies to stop writing homeowner’s policies in Central Florida, where the abuse increased significantly.
Florida’s one-way attorney fee statute, which the insurance industry, consumer advocates and the state’s insurance regulator agree is driving the AOB abuse, leaves insurers footing the bill for the inflated claims and the attorney fees if the insurer is found to have underpaid the claim by any amount.
The passing of SB 12 is good news for Florida homeowners. The bill may cause homeowners to see lower rates. According to Citizens Property Insurance Corp, the estimated reforms would reduce the statewide average rate need from 25.2 percent to 10.1 percent for homeowners policyholders. In South Florida, the epicenter of the AOB abuse, the average rate need would drop from 30.4 percent to 12.8 percent. Citizens said figures would change slightly as policy information and data are updated.
Do you have questions about SB 12 or AOB abuse in Florida? We’re here to help! Reach out to us with any questions you might have about your Central Florida homeowners insurance policy.