Approval of rate increases for Citizens insurance customers underscores need for Assignment of Benefits (AOB) reform

Consumer Protection Coalition

Originally published by Consumer Protection Coalition   |   View Release

TALLAHASSEE (Dec. 7, 2017) – This week’s approval of rate increases for policyholders in Citizens Property Insurance Corp. shows that Assignment of Benefits abuse is having a direct pocketbook impact on Florida families and is another clear indication that the Florida Legislature must resolve the AOB problem in the 2018 session.

On Wednesday, the Florida Office of Insurance Regulation approved a statewide average increase of 6.6 percent for homeowners’ policyholders in Citizens. Average rate increases are even higher in the tri-county area of South Florida where AOB abuse is the worst, with average rates going up close to the maximum 10 percent allowed by state law for Citizens’ policies.

The rate increases, which were the focus on a lengthy public hearing in Miami in August, are largely due to an explosion of water-loss claims and AOB lawsuits that are spiraling out of control.

“These Citizens rate increases are irrefutable evidence that AOB abuse is real and is impacting the affordability and accessibility of home ownership for many Floridians, said Edie Ousley, Vice President of Public Affairs for the Florida Chamber of Commerce, which spearheads the Consumer Protection Coalition, a group seeking meaningful AOB reforms. “Unless legislators take action this session to stop abusive AOB practices, these kinds of rate increases are going to become the norm, not the exception.” Citizens officials have testified that non-catastrophe water loss claims and AOB litigation are hammering the state-run insurer of last resort, and have caused a dramatic reversal in Citizens’ rate trends:

• In 2015, Citizens was able to provide rate decreases to 72 percent of its policies. Just three years later, only 36 percent of policies are seeing decreases. Meanwhile, the percentage of policies getting increases has soared from 28 percent to 64 percent. Virtually all of the rate increases are due to water losses.

• In South Florida, the average cost of a Citizens water claim has doubled, from $10,000 to $20,000, due to litigation.

• While many Citizens policyholders outside South Florida will likely see rate reductions in 2018, water claims and AOB lawsuits in the tri-county area are having a huge financial impact on Citizens policyholders. In Miami-Dade, the average homeowners’ policy will jump from $2,926 in 2017 to $3,219 next year. In Broward County, the average homeowners’ premium will rise from $2,390 this year to $2,926 in 2018.

• In the tri-county area, there’s been a staggering increase in the percentage of non-catastrophe water claims that are being litigated, in part due to a tsunami of billboard advertising and solicitations from trial attorneys and home repair vendors in the market. In 2008, 4.3 percent of all water loss claims in the tricounty area were litigated – by 2016, the number had skyrocketed to 71 percent of all water claims being litigated.

• In more than eight out of 10 litigated water claims that Citizens faces in South Florida, the first notice that Citizens receives of a loss comes from a trial attorney – not from the policyholder who Citizens represents.

News of the Citizens’ rate increase approvals, and their impact on consumers’ wallets, comes in the same week that the American Tort Reform Association named Florida as the worst “Judicial Hellhole’’ in the United States, based on widespread lawsuit abuse in the Sunshine State. It is the first time in the 16-year history of the rankings that Florida has faced being number one on the list.

The Consumer Protection Coalition has pushed for two years now for meaningful reforms to stop shady home repair vendors and trial attorneys from using AOBs to take control of a homeowner’s policy, inflate a claim and sue an insurance company that disputes the bill. Legislation intended to keep consumers in control of the policies they paid for and end the abuse has died each year due to special interests.

The coalition supports House Bill 7015, which passed by the House Judiciary Committee last month. The bill contains several consumer protections that would help curb abusive AOB practices. Among them, the bill would give consumers up to seven days to cancel an AOB without any penalty or fee and require repair vendors to provide insurers with copy of an AOB within three days of it being signed. Vendors would also have to provide written, itemized cost estimates for their work and give insurers notice of their intent to initiate litigation before filing any lawsuit. It would apply to homeowners as well as auto glass insurance.

“AOB abuse was almost nonexistent 15 years ago, but has rapidly become widespread in Florida,” said Logan McFaddin, Florida Regional Manager for the Property Casualty Insurers Association of America. “This Citizens rate increase is a significant indicator of the impact that this problem has on Florida. The longer this issue goes unresolved, the longer Florida policyholders are vulnerable to falling victim to these abusive schemes that are driving up costs. As a member of the Consumer Protection Coalition, PCI encourages Florida lawmakers to curb AOB abuse and help reduce insurance costs by passing meaningful reforms during the 2018 Legislative Session.”

Michael Carlson, President of the Personal Insurance Federation of Florida, also urged the Legislature to “finally resolve this problem.” “PIFF members continue to believe that the increase in rates, which disproportionately affect consumers in South Florida but is spreading throughout the state, is due in large part to the abuse of Florida’s one-way attorney fee law, which empowers bad actors to inflate claims and then sue to extort a higher payout than is reasonable,” Carlson said. “The Citizens’ rate increases are another cry for help from the consumer insurance market.”


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