Business leaders encourage lawmakers to rein in AOB abuse during 2016 session
TALLAHASSEE, Fla., Dec. 9, 2014 – Citizens Property Insurance Corp. today took important steps toward addressing problems associated with fraudulent water damage claims that are resulting in higher insurance costs for its policyholders, particularly in South Florida.
Citizens’ Board of Governors approved policy changes aimed at reining in the increase and severity of water damage claims and related litigation, which are being exacerbated by Assignment of Benefits, a legal tool that allows policyholders to assign their insurance benefits to a third party, such as a home repair vendor.
Citizens Chief Risk Officer John Rollins described AOB as “an accelerant to the problem’’ that could result in a “tsunami of future litigation.’’ He joined insurance industry and state business leaders in urging the Florida Legislature to take steps to remove the incentives for filing claims litigation.
Water claims and lawsuits are the primary reason why Citizens was recently forced to raise rates in Miami-Dade, Broward and Palm Beach counties for 2016, but the problem is spreading statewide. Without the highly suspect surge in claims and lawsuits, Citizens policyholders in South Florida would be enjoying a rate decrease.
“Stopping fraud and abuse in the claims process is essential to ensuring that property insurance coverage is affordable and available to Florida’s working families, and to maintaining our state’s momentum in attracting new businesses and new jobs,” said David Hart, Executive Vice President of Governmental Affairs & Political Operations for the Florida Chamber of Commerce. “Citizens’ clearly recognizes that every additional dollar Floridians pay in higher insurance costs is one less dollar injected into our economy. With these concrete steps taken by Citizens, we are hopeful that state legislators will also act in the upcoming session to address similar abuses that are hurting consumers in the private insurance market.”
The Florida Chamber of Commerce, along with the Personal Insurance Federation of Florida, have made insurance claim and litigation abuse a priority as part of the effort to legislatively reform rapidly growing abuse involving Assignment of Benefits. In recent years, AOB has been used by unscrupulous billboard trial lawyers and home repair vendors to take total control of insurance policies away from the homeowner, inflate claims and file costly lawsuits against property insurers.