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Insurance agents from across Florida marched together on the state’s capitol Wednesday to deliver a message to Florida lawmakers: It’s time for assignment of benefits (AOB) reform.

Carrying signs that read “STOP AOB ABUSE,” about 125 members of the Florida Association of Insurance Agents (FAIA) were accompanied by representatives from the Florida Consumer Protection Coalition (CPC) as they carried their message from downtown Tallahassee to the Florida Capitol building.

“We are here with folks who see it every day,” said Jeff Grady President of FAIA, which represents about 2,000 property and casualty independent agencies in the state, in a video by CPC. “Rates are going up and coverages are becoming less. Consumers are losing because of the failure of the legislature to address AOB fraud.”

Contractors and attorneys are being blamed for abuse of AOB’s by taking control of a homeowner’s policy, inflating water or roof damage claims, and then suing the insurance company when it disputes the bill.

CPC, which consists of business leaders, consumer advocates, real estate agents, construction contractors, insurance agents and insurance trade groups pushing for reforms to end AOB abuse, has worked for two years to call attention to the problem. The march was the group’s latest effort to get lawmakers attention after they have failed to agree on reform in the previous five sessions.

Barry Gilway, CEO of Citizens, the state-run insurer of last resort, also attended the march with a message for lawmakers. Citizens has faced the brunt of AOB abuse, particularly in South Florida. But Gilway says things are just getting worse.

“Here is the scary part, this used to be Southeast Florida problem – it’s not a Southeast Florida problem anymore, its spreading across the state,” Gilway said. “The ultimate payer in this situation is the consumer – it’s that simple – they will pay the price.”

Rates have already started going up for many Florida homeowners, but that’s just the tip of the iceberg, says the industry. Many insurers are also responding by refusing to write in certain zip codes or are tightening coverage offerings.

Citizens raised rates last year and was approved to do so again in 2018. The company has said policyholders should expect rate increases for the foreseeable future. Citizens also blames AOB for an expected increase to its policyholder count after several years of shedding policies to the private market.

Lawmakers have accused the industry of exaggerating the effect of the abuse and using it as an excuse to raise rates. But the numbers look to be on the industry’s side. A recent data call report from the Florida Office of Insurance Regulation (OIR) of water or roof damage claims from private insurers between Jan. 2015 and June 2017 found that the frequency of water claims per 1,000 policies increased 44 percent since 2015 and severity increased by 18 percent.

The use of AOB’s on water claims has increased from 12.8 percent in 2015 to 17 percent in 2017, OIR said. According to the Florida Justice Reform Institute, there has been a 300 percent increase in AOB lawsuits since 2010.

“This is not an emotional issue – just let the data speak for itself,” said Florida CFO Jimmy Patronis, who spoke to agents at a breakfast before Wednesday’s march and has also been vocal about the need for AOB reform.

Patronis urged lawmakers to act, saying the increase in AOB lawsuits is “a total exploitation of the law.”

“I hope the [legislature] will pass meaningful legislation that, at the end of the day, will keep insurance in the state of Florida as low as it can for our consumers,” he said. “It’s an issue that is going to potentially affect every insurance policy in the state of Florida if we don’t do something about it.”

Grady said the industry has tried to get that message across to legislators, but for the last five years it hasn’t been received. The industry is hopeful this year will be different.

“These folks are here firsthand with the experiences of their consumers to tell legislators to get this done,” Grady said.

For their part, lawmakers have been weighing several bills that would address the problem since the 2018 Florida Legislative Session kicked off earlier this month.

But which path lawmakers choose is a point of contention and concern for the insurance industry. So far the Florida House has passed a bill the industry supports, House Bill 7015, but the Florida Senate has yet to act on it.

The industry says it would be the most effective at reforming AOB because of provisions addressing Florida’s “one-way attorney fee” statute. The statute, designed to be a policyholder protection for those suing an insurance company, has been the main source of abuse, the industry says, as an assignee can sue insurers over a claim and the insurers end up paying the attorney fees.

The bill, sponsored by Rep. Jay Trumbull, would chip away at incentives for third parties to sue insurance companies by awarding fees under a formula based on the judgement obtained by the assignee and the pre-suit settlement offer.

In a press release, the Consumer Protection Coalition urged the Florida Senate to take up HB 7015, which they said include “commonsense protections for consumers and modifications to one-way attorney fee rules.”

The industry has also voiced support for Senate Bill 62, drafted by OIR and other stakeholders last year and reintroduced this session, but it has not had a hearing. Senate lawmakers let the current house bill die last year.

“The House has understood that consumers need this loophole closed, that there is fraud going on in AOB in Florida,” said David Hart, executive vice president of the Florida Chamber of Commerce, a member of CPC and part of yesterday’s march. “Consumers are long overdue for attention to this issue and this loophole to be closed.”

Senate lawmakers have called for a guarantee that property insurance rates would go down if the industry’s proposed reforms are enacted. The Florida Senate has shown preference for Senate Bill 1168 filed by Senator Greg Steube, which does not address the one-way attorney fee statute and is favored by the trial bar and water restoration contractors.

CPC said in a statement that it opposes that bill “because it does not go far enough to protect consumers and would not allow insurers to include litigation costs in their rates.”

The industry appears to have consumers on their side of the issue this year, at least according to a poll by the Property Casualty Insurers Association of America (PCI) that showed 60 percent of voters surveyed say the current system for using AOBs in property insurance claims needs to be reformed.

“Let’s keep the consumer number one in our mind. The same homeowners that I represent as an insurance agent [lawmakers] represent as a constituent, and we all ought to be working together regardless of the issue,” said Doug Wiles, chairman of FAIA and president of Herbie Wiles Insurance Agency in St. Augustine, Fla. “But in particular now, to avoid these significant rate increases, to avoid degradation of coverage, to make sure that our homeowners insurance market remains healthy in the state of Florida.”