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Wednesday, April 24 2019

After seven years of failed attempts, Florida legislators have passed property insurance reform to address the abuse of a policyholder benefit known as assignment of benefits (AOB).

The insurance industry and consumers advocates say the abuse has caused higher insurance premiums in the state and made insurance harder to obtain.

By a vote of 25-14 by the Florida Senate on Wednesday passed a measure (SB 122) that addresses the abuse of post-loss AOBs for residential or commercial property insurance claims and limits one-way attorney’s fees related to AOB agreements. The bill was a committee substitute for House Bill 7065, which passed the House on April 11.

The bill’s provisions:

  • Define “assignment agreement” and establishing requirements for the execution, validity, and effect of such an agreement
  • Prohibit certain fees and altering policy provisions related to managed repairs in an assignment agreement
  • Transfer certain pre-lawsuit duties under the insurance contract to the assignee and shifting the burden to the assignee to prove that any failure to carry out such duties has not limited the insurer’s ability to perform under the contract
  • Require each insurer to report specified data on claims paid in the prior year under assignment agreements by January 30, 2022, and each year thereafter
  • Allow an insurer to make available a policy prohibiting assignment, in whole or in part, under certain conditions
  • Revise the state’s one-way attorney fee statute to incorporate an attorney fee structure in determining the fee amount awarded in suits by an assignee against an insurer
  • Require service providers to give an insurer and the consumer prior written notice of at least 10 business days before filing suit on a claim.

The Senate bill was sponsored by Senator Doug Broxson, chair of the Insurance & Banking Subcommittee.

Florida Governor Ron DeSantis is expected to sign the bill, which would then become law on July 1, 2019.

Advocates of reform praised the passage of the bill, saying it was long overdue and will bring much needed relief to Florida homeowners.

Insurance Commissioner David Altmaier issued the following statement to Insurance Journal following the passage of the AOB reform,

“OIR’s main focus is to work towards decreasing insurance costs for consumers living in Florida, while balancing the solvency needs of companies operating in Florida. 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.”

President of the Florida Association of Insurance Agents (FAIA) Jeff Grady said the passage of AOB reform is also a big win for insurance agents.

“This a long awaited day for Florida consumers and the industry as a whole. Agents have been impacted by AOB fraud resulting in poor loss ratios and cancellations of company appointments,” Grady said. “We are grateful for the leadership within both the legislature and the Florida cabinet to finally enact AOB reform and eliminate this fraud from our insurance marketplace.”

Posted by: AT 02:04 pm   |  Permalink   |  Email
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