The group, of which FAIA is a member, is calling for a legislative fix to the growing problem
A broad-based group of business leaders
and consumer advocates has formed the Consumer Protection Coalition to push for
reforms to end Assignment of Benefits (AOB) abuse.
The group launched a website this week, FightFraud.Today, that includes an online
petition consumers can sign to urge lawmakers to pass meaningful AOB reform, as
well as consumer-friendly education materials detailing the AOB scheme.
‘’Assignment of Benefits
abuse is a huge threat to Florida’s families and businesses and must be
stopped,’’ said Mark Wilson, president and CEO of the Florida Chamber of
Commerce, which is leading the coalition. “Billboard trial lawyers and
questionable vendors are taking advantage of AOB to essentially steal money
from consumers and wreak havoc on our state’s insurance market. For the sake of
attracting new businesses and jobs, we can’t let that happen.’’
The coalition is concerned
about the impact of AOB abuse on the state’s consumers, insurance costs, and
overall business climate, and supports AOB legislation filed by state Sen.
Dorothy Hukill (SB 596) and Rep. Matt Caldwell (HB 1097).
AOB is a legal tool that
allows policyholders to sign over their insurance benefits to a third party,
such as a home repair vendor, without having to pay money up front to cover
repair work. While AOB can be useful in processing claims promptly, a cottage
industry of trial lawyers, unregulated water extraction firms and other vendors
have increasingly used AOB to take complete control of homeowners’ policies,
then inflate the costs of repairs and file costly lawsuits against property
insurers. These suits are often filed without the knowledge or consent of the
Coalition members advocate
that consumers don’t need to sign an Assignment of Benefit to handle insurance
claims for emergency repair work. They can simply direct their insurance
company to pay vendors and, if they don’t feel like their claim was handled
properly, they can take action against their insurer.
(See FAIA's AOB FAQ for consumer tips)
“Homeowners should not be
asked to sign away their rights simply to get needed home repairs. A practice
that depends on consumers skimming quickly over the fine print and unknowingly
signing their rights away is a recipe for exploitation, fraud and manipulation,”
said Jennifer West, executive director of the Consumer Federation of the
Southeast, which is a member of the coalition. “The state of Florida should do
everything it can to protect homeowners from Assignment of Benefits abuse.”
Inflated claims and lawsuits
involving AOB have forced premiums to go up for consumers in South Florida and,
if left unchecked, could result in a full-scale consumer crisis that increases
rates statewide. After a decade without a hurricane, Florida should be
benefiting from reduced rates—not higher ones— and focusing on protecting
against the next major storm.
Assignment of Benefits abuse
has become widespread in South Florida and is quickly spreading. Statewide, the
number of AOB lawsuits has grown from 9,424 in 2005 and 2006 to 92,521 in 2013
and 2014. In fact, state-run Citizens Property Insurance Corp. was recently
forced to raise insurance premiums more than 8 percent in areas of South
Florida because of the steep rise in lawsuits stemming from non-weather-related
water damage claims. Citizens said dubious water damage claims and AOB lawsuits
were the single reason why rates went up in Miami-Dade County, where water loss
claims now account for more than half of every premium dollar collected.
Otherwise, nearly all of the policyholders would have seen a rate decrease.
“Every honest contractor in
the state of Florida should be concerned about Assignment of Benefits abuse and
its impact on the insurance market,’’ said Cam Fentriss, a representative for
the Florida Roofing and Sheet Metal Contractors Association. “Contractors don’t
need an AOB to get paid by insurance companies, and anyone who pressures
homeowners into signing one gives a black eye to our entire industry of hardworking
professionals. We fully support reforming AOB.’’