Property insurance rates in Florida are on a steady climb.
Pundits blame claims abuse as the primary culprit, specifically the abuse of assignment of benefits which makes the claims process litigious and costly.
Assignment of benefits (AOBs) involves allowing policyholders to sign over their claims to a contractor, which gives the contractor the right to collect payments from the insurance firm. Local media outfit Naples Daily News reports that these AOBs cost state-owned Citizens Property Insurance Corp $27 million in losses last year.
Michael Peltier, a Citizens spokesman, also said in the report, “The disturbing part is we are expecting an even greater loss for the upcoming year.”
The rising premiums from the past five years were also less to do with natural catastrophes than broken pipes, dishwashers and water heaters. Insurers say the rise in claims is largely due to fraudulent activity.
“The private market is experiencing the same trend that Citizen is, from all of the indications we’ve gotten,” Peltier added. “It’s not just our problem.”
Legislators are acting to address the abuse. State Senator Kathleen Passidomo recently sponsored a bill that would curb claims abuses, but it did not pass legislative muster.
“It was really a consumer protection bill that would allow consumers to get out of some of those contracts that they unknowingly signed,” she told the Daily News.
“It had some really good provisions that the Office of Insurance Regulation, the insurance industry and consumer advocates all supported. That bill was not heard.”
Passidomo and Senator Dorothy Hukill are currently working on another bill that they plan to file in the next congressional session and they’re “going to pursue this with a vengeance,” the senator said in the report.
She added that legislative remedies are needed because the fraud is spreading to other parts of the state.