Assignment of benefits reform clears Legislature

Florida water damage AOB
“This is a great day for Florida’s consumers.”

Lawmakers on Wednesday passed an assignment of benefits reform package that includes several reforms aimed at curbing fraudulent insurance lawsuits.

Assignment of benefits, or AOB, is a practice where policyholders sign over their insurance benefits to a contractor in exchange for quick repairs to their home. Contractors often attempt to collect inflated settlements from insurers, leading to a glut of lawsuits in Florida courts.

Recent reports show the number of AOB lawsuits has outpaced Florida’s population growth and HB 7065 would take away incentives for filing those suits, mainly by eliminating provisions that put insurers on the hook for plaintiff’s attorney fees.

The bill would also require contractors to give written cost estimates for repairs and homeowners to back out of AOB agreements for any reason within 14 days or 30 days if repairs haven’t been “substantially” performed. Additionally, the bill mandates state-backed Citizens Property Insurance Corp. share post-reform savings with policyholders.

The bill passed the Senate with a 24-14 vote.

Shortly after the bill passed, Gov. Ron DeSantis said he would sign it.

“The exponential growth in AOB abuse has contributed to mounting insurance costs for Floridians for far too long,” he said. “In recent years, there have been calls for reform and today, the Legislature took action. I thank them for their efforts in getting this done and I look forward to signing this meaningful legislation into law.”

The reform is the biggest insurance issue of the 2019 Legislative Session, and marks the first major win on AOB for insurers, which have sought changes to the law for several sessions.

While insurers contend the practice has become riddled with fraud and litigation, plaintiffs’ attorneys and other groups say AOB helps make sure claims are properly paid. They accuse insurers of often trying lowball amounts paid for work.

The House passed the bill April 11, and the Senate ultimately went along with the House’s plan. As an example of one of the changes, the bill would let insurers offer policies that do not allow or restrict assignment of benefits. The concept is that such policies could be offered at lower prices to homeowners.

Opponents of the bill argued, in part, that it should guarantee rate reductions for homeowners. The Senate on Tuesday rejected a proposed amendment aimed at requiring reductions.

Sen. Gary Farmer, a Fort Lauderdale Democrat who has been an outspoken critic of the bill, questioned the insurance industry’s contentions about a “crisis.”

“This bill is designed to cure a crisis that has not been actuarially shown,” Farmer said.

But supporters of the bill focused on alleged AOB abuses, with House sponsor Bob Rommel, R-Naples, frequently saying the issue is about addressing “bad actors.” The state-backed Citizens Property Insurance Corp. said the bill will help policyholders.

“Today’s vote is a critical step in our efforts to bring relief to our policyholders, who have had to pay the bill for runaway litigation and AOB abuse,” Barry Gilway, president and CEO of Citizens, said in a prepared statement.

During a floor debate Wednesday, Gainesville Republican Sen. Keith Perry said abuses of the AOB process have led to a relative few attorneys making money, while “working people” pay higher insurance premiums.

“This is a predatory practice,” Perry said.

The bill’s passage was met with praise from the Florida Chamber of Commerce-backed Consumer Protection Coalition.

“This is a great day for Florida’s consumers,’’ said Edie Ousley, vice president of public affairs for the Florida Chamber. “Closing the AOB loophole will finally curb the rampant litigation over homeowner claims and stop the bad actors from abusing the system for their own gain. We look forward to seeing this bill signed into law.’’

CPC also collected statements from several of its member companies.

“The clock is ticking on all the fraudsters and other members of the AOB cottage industry that have been plaguing Florida’s insurance market for the last several years,” said Michael Carlson, president of the Personal Insurance Federation of Florida (PIFF).

“With the passage of HB 7065, their time will soon be up. We look forward to seeing an important set of strong consumer protections passed to Governor DeSantis, and we thank the Legislature for its hard work in crafting this legislation.”

Also issuing lauds were CFO Jimmy Patronis and state Insurance Commissioner David Altmaier

“We fought for Florida homeowners this year and passed this bill to stop the man-made hurricane of rampant AOB abuse in our state that is driving up insurance rates,” Patronis said. “Bad actors have exploited loopholes in Florida law to take advantage of a system meant to empower consumers, and today families take back control of their insurance benefits.

Altmaier added that the legislation would further the Office of Insurance Regulation’s goal of lowering insurance costs.

“The passage of HB 7065 is a significant step towards stemming the insurance product affordability and availability crisis that has grown from years of compounding AOB abuse,” he said.

“To Chair [Doug] Broxson and Chair Rommel, Senator [David] Simmons, President [Bill] Galvano and Speaker [Jose] Oliva, CFO Patronis, Governor DeSantis and the many esteemed legislators who fought tirelessly to protect their constituents from AOB abuse, thank you.

“Your unwillingness to tolerate abusive, deceptive practices that benefit only a few, while increasing the cost of living for every hardworking Floridian, is a testament to your perseverance.”


The News Service of Florida contributed to this post.

Drew Wilson

Drew Wilson covers legislative campaigns and fundraising for Florida Politics. He is a former editor at The Independent Florida Alligator and business correspondent at The Hollywood Reporter. Wilson, a University of Florida alumnus, covered the state economy and Legislature for LobbyTools and The Florida Current prior to joining Florida Politics.

One comment

  • Michael

    April 26, 2019 at 4:31 pm

    Classic case of Big Insurance Companies paying lobbyists and politicians to increase their profits. Insurance companies will underpay claims significantly now. Watch. Notice that they were not even required to show immediate discounts to premiums either, so they will get the best of both worlds. High premiums and low pay outs. Consumers will be the ones who suffer. Now they will have to pay out the difference to get their work done. No one can fight for their rights without having to give up part of their claim to a lawyer. Sad.

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