Phil Ammann
As Floridians continue to rebuild after Hurricane Irma, a new consumer alert warns against bad actors trying to rip off homeowners seeking repairs from the storm.
A joint effort of the Florida Chamber of Commerce and U.S. Chamber Institute for Legal Reform, the one-minute consumer alert hitting airwaves Friday is alerting homeowners about falling victim to assignment of benefits (AOB) lawsuits.
Assignment of benefits is a document allowing third-party contractors – water extraction companies, roofers, plumbers and the like — to “stand in the shoes” of the insured to receive payment directly from the insurance company for work performed.
Although AOB is a widespread practice in health insurance and similar industries, Florida’s litigious environment emboldens unscrupulous parties to inflate bills and file frivolous lawsuits over small, simple (or even accepted) claims.
This abuse results in higher insurance rates for everyone.
“Florida trial lawyers and unscrupulous contractors are scamming millions, while homeowners are left with skyrocketing insurance premiums and shoddy or even incomplete repair work,” the alert warns. “One study shows Miami premiums could jump more than 50 percent in five years if the state Legislature doesn’t end the AOB lawsuit scam.”
Nearly nonexistent 15 years ago, AOB lawsuit fraud has now spread across Florida – with many homeowners holding the bill on these ‘get rich quick’ schemes from what the Chamber refers to as a “cottage industry of trial lawyers and shady repair vendors.”
As Florida Chamber President and CEO Mark Wilson points out: “This is a clear example of lawsuit abuse at its worst. It’s driving up the cost of homeowner’ insurance rates, and is one of the reasons Florida has the fifth worst legal climate ranking in the country.”
“Florida’s legislature should stop dubious vendors and plaintiffs’ lawyers from raiding the ‘assignment of benefits’ cookie jar. Florida homeowners face skyrocketing insurance costs because of such abuse, and the legislature can provide meaningful relief by adopting sensible reforms,” adds Harold Kim, executive vice president of the U.S. Chamber Institute for Legal Reform.
Both the Chamber and its Consumer Protection Coalition are calling on the Florida Legislature to “pass meaningful reforms” in 2018 to stop AOB abuse.
The need for an alert came after last week when the Florida Office of Insurance Regulation approved a statewide average increase of 6.6 percent for homeowners’ policyholders in Citizens Property Insurance Corp. In the tri-county area of South Florida, average rate increases are even higher in an area where AOB abuse is the worst.
In South Florida, those average rates have inched up to the maximum 10 percent increase allowable by state law for Citizens’ policies.
The alert will air for the next several weeks ahead of the 2018 Legislative Session, which begins Jan. 9.
One comment
Concerned AOB Contractor
December 21, 2017 at 11:50 am
The assignment of benefits for an insurance claim filed by a policyholder has been around since the early 1900’s and is widely used in many other industries (medical to be the biggest usage), as stated in this article. What this article does not talk about is how HELPFUL this tool is for a policy holder who does not have the money to pay upfront for emergency repairs after a loss. These fist responders can take an “limited assignment” for the work and materials that they furnish in consideration for assigning a portion of the claim to a contractor who will then begin work right away to restore the home. If this said contractor over charges for their services and then files a law suit, the opposing lawyer can file a PFS (proposal for settlement) and or a 57.105 frivolous law suit against the “overcharging contractor”. If it is found to be frivolous, then the contractor has to pay the opposing attorney fees and still will not get paid for their services… Meanwhile, the policy holder is already put back together and made whole again, while the contractor is waiting on payment from the carrier. One of the many reasons why rates are going up is due to bad claim handling practices by insurance carrier adjusters (which whom have ZERO training in water damages and mold) who are poorly adjusting the claims. Another reason could be greed. I read an article months ago about Heritage Insurance CEO making $27.5 million dollars last year… Hmmmm, I wonder why rates are high!!! Take a pay cut buddy and reduce rates for good! And yes, there are bills filed in the Senate to help reform AOB… One portion of the bill will ensure the carriers have to report how much they are paying in plaintiff lawyers fees and indemnity to contractors. Now we will really get to see how the insurance carriers spend their money! Trust me, its not the AOB that’s the problem, its GREED! I sat there and heard the main lobbyist from Statefarm get asked in a committee meeting that if all of these AOB changes were to happen (heavy restrictions and full AOB reform to take power away from contractors), will you reduce rates, and the answer was NO! Sooo, again, you make your own judgements. And to the guy who wrote this, please interview people from all sides before projecting such a one sided article. It only confuses people.
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