Reinsurance News

Florida insurers welcome reform to address AOB abuse

25th April 2019 - Author: Matt Sheehan

The Florida Property & Casualty Association has commended the Florida Legislature for passing a reform that aims to address assignment of benefits (AOB) abuse in the state.

assignment-of-benefits-contractorThe legislation is expected to help stabilise the recent explosion in AOB litigation and provide policyholders with the tools to protect themselves against predatory vendors, including the right to cancel an AOB agreement.

The reform also shuts down vendors’ access to policyholders’ unique one-way attorney fee rights, and instead puts vendors in a business-to-business position where the loser pays the prevailing party’s attorney fees.

“The passage of HB 7065 signals a significant step in addressing the AOB abuse that has plagued our state, resulting in some of the highest home insurance rates in the nation,” the Association stated in response to the reform.

It added that Florida Governor Ron DeSantis, CFO Jimmy Patronis, and Office of Insurance Regulation Commissioner David Altmaier all deserve praise for their efforts to pass the AOB reform legislation.

“We have seen what can happen when there are no checks and balances on water mitigation and restoration vendors who pressure policyholders to sign over their valuable insurance policy rights during home emergencies,” said William Stander, Executive Director of the Florida Property & Casualty Association.

“This lack of oversight has also given plaintiff attorneys the ability to file thousands of lawsuits without the possibility of paying the other side’s legal fees when they lose,” he explained.

“Finally, we take a step forward in the fight against AOB fraud and abuse. This a true win for Florida homeowners and our state.”

Governor DeSantis also commented on the passage of the reform: “The exponential growth in AOB abuse has contributed to mounting insurance costs for Floridians for far too long.”

“In recent years, there have been calls for reform and today, the Legislature took action,” he continued. “I thank them for their efforts in getting this done and I look forward to signing this meaningful legislation into law.”

An AOB is an agreement that transfers the insurance claims rights or benefits of a consumer’s insurance policy to a third party, giving them the authority to file a claim, make repair decisions and collect insurance payments without the consumer’s involvement.

Over the last several years, AOB abuse and fraud has grown drastically across Florida, causing insurance costs to rise and giving rise to frivolous litigation.

In 2008, there were approximately 90 property AOB lawsuits filed statewide, but by 2018 the number of lawsuits had increased by more than 19,000%.

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