The Citizens Property Insurance Corp. board of governors Tuesday approved a $1.8 million contract with a company that will examine escalating water damage claims from policyholders and determine whether the charges are excessive.
“The goal is to identify inflated or excessive charges on invoices from contractors that have performed water damage restorations for Citizens’ policyholders and to contest or adjust invoices so it comports with industry standards,” said Jay Adams, Citizens’ chief of claims.
Without debate, the board unanimously approved the five-year contract, which includes two one-year extensions, with Lynx Services, LLC.
Rising water claims have been a growing concern for Citizens officials. The property insurer, which is backed by the state, is advancing a 6.8 percent statewide rate hike for its nearly 500,000 policyholders, citing rising water-damage claims as a key reason for the premium increase.
The water-damage claim issue is particularly acute in Southeast Florida, where Citizens’ policyholders could see a rate hike approaching 10 percent. The rate hike is headed to a public hearing next month with a final decision by Citizens’ board of governors set for September.
Citizens officials have blamed the rising number and cost of water claims on Florida’s “assignment of benefits (AOB)” law, where contractors, restoration companies and others can take over the policyholder’s damage claim.
Supporters of AOB argue it allows repair work to be handled more quickly and gives contractors a direct way to be paid for their work. Critics say the AOB system has been abused, with Citizens compiling data that shows AOB claims often end up in costly litigation and even the AOB claims that don’t go to court cost more than non-AOB claims that are resolved outside of court.
Citizens and other groups pushed for limits on the AOB law in the 2016 session, but the bills failed. The issue will likely return to the 2017 legislative agenda.