Assignment of Benefits (AOB) Insurance Lawsuits Grew in 2017

Consumer Protection Coalition

Originally published by Consumer Protection Coalition   |   View FJRI Report

New report by the Florida Justice Reform Institute shows AOB problem not letting up

TALLAHASSEE, Fla. (Feb. 13, 2018) – Lawsuits against insurance companies that involve an Assignment of Benefits (AOB) increased 58 percent between 2015 and 2017 and represented more than half of all insurance litigation in Florida last year, hurting consumers and increasing insurance costs for everyone.

Those are among the findings of a new report from the Florida Justice Reform Institute (FJRI) highlighting the need for meaningful AOB reform this legislative session.

Contrary to some media reports and commentary in Tallahassee, AOB abuse is growing, resulting in higher premiums and threatening the affordability of home ownership for many Floridians. The FJRI report shows the total number of insurance lawsuits with an AOB rose from 82,263 in 2015 to 129,781 in 2017. Those lawsuits represented 59 percent of all insurance lawsuits in 2017, up from 54 percent in 2015.

“While opponents of AOB reform try to minimize the problem and its impact on consumers, the reality is that AOB abuse is a serious issue that’s getting worse,’’ said Edie Ousley, vice president of public affairs for the Florida Chamber of Commerce, which spearheads the Consumer Protection Coalition. “AOB lawsuits against insurers are going up and represent more than half of all insurance litigation statewide.’’

Over the past few years, the severity of water loss claims with an AOB attached has increased. According to the Florida Office of Insurance Regulation, claims with an AOB attached were generally at least 85 percent higher than claims without an AOB, fueling arguments that unscrupulous vendors use AOBs to take control of a policy, then inflate the scope and cost of work.

“An AOB was designed to help ease the claims process, but it also brings in a third party with a separate financial interest. AOB abuse happens when that financial interest overcomes the interests of insurers and policyholders,” said Liz Reynolds, regional vice president for the Southeast for the National Association of Mutual Insurance Companies. “Any insurer that wants to stay in business does more than simply pay the bill. Mutual insurers especially, given their focus on policyholders, have a vested interest in not simply paying claims, but working to help policyholder members reduce their risks and protect themselves from loss.’’

The FJRI report clearly illustrates how AOB abuse is continuing to spread into various lines of business.

“We are seeing an increase in the number of property and auto glass claims because one-way attorney fees are incentivizing AOB abuse,’’ said Logan McFaddin, regional manager for the Property Casualty Insurers Association of America. “Legislative reform is desperately needed to curtail the number of fake or inflated claims and lawsuits. Now is the time for legislators to protect Floridians from these bad actors and help reduce insurance costs."

For state-run Citizens Property Insurance Corp, the situation is also troubling. According to data mined by FJRI from the Florida Department of Financial Services, while the number of overall lawsuits against Citizens fell from 10,061 in 2016 to 7,744 in 2017, the percentage of lawsuits in which a policyholder signed an AOB increased. Last year, AOB-related lawsuits amounted to 36 percent of all lawsuits against Citizens, up from 16 percent in 2015.

In addition, although the percentage of AOB litigation based on policy count plateaued between 2016 and 2017, it is still significantly higher than it was in 2015. Viewed in the context of the increasing prevalence of AOBs in the marketplace in general, this is most likely attributable to various cost control measures introduced by Citizens that have driven vendors and lawyers to prey more on private market policyholders.

The CPC has been pushing for AOB reform the last two legislative sessions as a way to reduce the cost of AOB-related lawsuits that are harming consumers. Last week, the CPC opposed the Senate Judiciary Committee’s passage of SB 1168 by Sen. Greg Steube because it does little to curb AOB abuse and protect consumers from skyrocketing rates. While the bill contains some commonsense consumer protections, it does nothing to effectively address one-way attorney fees, which are fueling AOB-related lawsuits.

The CPC urges the Senate to support House Bill 7015 by Rep. Jay Trumbull, which contains consumer protections as well as changes to the one-way attorney fee rules that allow shady home repair vendors and their attorneys to file unwarranted lawsuits over inflated claims. The House overwhelming passed the bill on Jan. 12, but the Senate leadership has refused to take it up.

The CPC believes strongly that approving HB 7015 would effectively curb the AOB crisis and reduce the rampant filing of AOB lawsuits, resulting in lower insurance rates over time. How much rates would go down for each insurance company, however, would depend on several factors.

“You can’t predict the future accurately when a host of variables are introduced,’’ the FJRI report states. “What we do know is this: legal reform works. It worked significantly to lower both medical malpractice and workers’ compensation rates in 2003.’’

If strong AOB reform is enacted, the CPC feels confident that Florida’s Office of Insurance Regulation would hold insurers accountable and demand rate reductions, if actuarially warranted. Florida’s Insurance Commissioner David Altmaier has supported AOB reform in order to reduce losses that are raising rates.

“As the state agency responsible for regulating the insurance market, OIR’s mission is to protect Florida’s consumers and ensure the financial health of insurers,’’ said Michael Carlson, president of the Personal Insurance Federation of Florida. “Under our law, the regulator will require that rates not be excessive, inadequate, or unfairly discriminatory. Any insurer rate changes must be documented, supported and approved, whether they are seeking decreases or increases.”


The Consumer Protection Coalition is a broad-based group of business leaders, consumer advocates, real estate agents, construction contractors, insurance agents and insurance trade groups pushing for reforms to end Assignment of Benefits (AOB) abuse. Learn more about the Coalition at www.FightFraud.Today, follow the Coalition on Twitter @CPC_FL and “like” our page at