Count Jeff Brandes among those who believe this is the year for assignment of benefits reform.
The main vehicle to get there, Brandes said Tuesday, likely will be a bill (SB 122) by Banking & Insurance Chairman Doug Broxson, reforming Florida’s one-way attorney fee system in insurance litigation.
“Absolutely,” Brandes — a GOP state senator from St. Petersburg — told reporters during the Office of Insurance Regulation’s annual industry summit in Tallahassee.
“I think you’re going to see a stand-alone AOB bill, a stand-alone one-way attorney fee bill, and a stand-alone BI (bodily injury auto insurance) bill this year,” he said.
Brandes is a key adviser to Senate President Bill Galvano and occupies a number of leadership posts, including the chairmanship of the criminal and civil justice budget subcommittee and a seat on the insurance panel.
For at least the past three years, House legislation on reform of assignment of benefits, or AOB, contracts, the workers’ compensation system, and the state’s personal injury protection, or PIP, law has died in the Senate.
“We have to get some foundational things fixed. We have to get assignment of benefits fixed. We have to get one-way attorney fees fixed. We have to begin to address — if not address this year — mandatory BI,” Brandes said.
“Those are the three top things that the Banking & Insurance Committee tackles, I hope,” he said.
“And I think they’ve got the committee structure, at least in the Florida Senate, to do that. We’ve had at least three or four proposals from the Florida House that made it all the way through their committees over the past few years.”
Now, Broxson “understands the problems, and I think he’s driven to form solutions,” Brandes said.
The law requires carriers to cover policyholders’ attorney fees in insurance litigation, as a way of balancing the scales against insurers’ deep pockets, but to critics, the system encourages litigation that drives up rates.
Broxson’s bill would restrict these fees to policyholders only — not to contractors to whom they’ve ceded their policy rights.
“Workers’ comp has kind of moved down on the scale of must-get-done insurance items,” amid declining premium levels. “It’s partially because it’s not got the pressure that one-way attorney fees and AOB have right now,” Brandes said.
“AOB by far is the No. 1 issue, to me, in the state. And then auto, just because nobody believes $10,000 in coverage is the right amount of coverage anymore.”
Later, Insurance Commissioner David Altmaier presented his evidence, telling summit attendees that in 2014 his office approved rate increases in nearly 38 percent of filings; by 2017, that rate had increased to more than 90 percent.
The trend threatens to drive private insurers out of the market, and to reverse residual carrier Citizens Property Insurance Corp.’s progress in “depopulation” — steering homeowners into that private market, Altmaier said.
He pointed to increases in the number and severity of non-storm water damage claims, particularly in South Florida but now increasing in additional counties.
State researchers, meanwhile, reported an increase in the number of AOB-related water and auto windscreen litigation claims from 400 in 2006 to 28,000 by 2016.
Litigated payouts run treble the amount of non-litigated claims, including attorney fees, in 2018, Altmaier said.
There was no concomitant increase in consumer complaints, he said.
“Even though we’ve been calling it an AOB issue for the past several years now, in my opinion, it really is more appropriate to call it an excessive litigation issue,” he said.
The one-way attorney fee system was never intended to benefit third parties, he argued.
“It’s fine for consumers to assign their benefits. It’s fine for those third parties to ultimately litigate against their insurance companies. But we believe, at this point in time, that litigation should be treated the same way that any other commercial litigation is treated,” Altmaier said.
“In my opinion, the cleanest way to fix this is through a legislative solution that deals with attorney fees,” he said.
He wasn’t averse to additional reforms, “but, in my opinion, attorney fees are the carrot at the end of the stick that is driving a lot of this behavior. It’s only by removing that carrot that you can really remove this behavior.”