Originally published by Florida Watchdog |
By John Haughey
Two insurance reform bills that seek to rewrite the state’s assignment of benefits (AOB) law have survived Senate and House subcommittee reviews and could make it to chamber floors for binding votes this session.
If so, it would be the first time in the last six years that an AOB reform bill has made it out of committee for a full vote before the Senate. A 2018 AOB reform bill passed the House in an 82-20 vote, but never made it out of the Senate Insurance and Banking Committee, then chaired by Sen. Chair Anitere Flores, R-Miami.
Now that committee is chaired by Sen. Doug Broxson, R-Gulf Breeze, who has submitted his own AOB reform bill, Senate Bill 122.
But if there is one sure indication that the inertia regarding the intensively lobbied issue is ending, it was Gov. Ron DeSantis’ comments during and after Tuesday’s "State of the State" address.
“I hope the Legislature passes legislation to reform the issue of AOB, which has really degenerated into a racket,” DeSantis said in his address.
Afterwards, DeSantis told reporters that AOB abuse, compounded by Hurricane Michael in 2018 and Hurricane Irma in 2017, will lead to higher insurance premiums and could force property insurance providers to leave the state.
“I would like to see the abuses pared back,” he said.
DeSantis said he hasn’t “picked one bill or the other,” but has been assured by Senate President Bill Galvano and House Speaker Jose Oliva the Legislature will produce an AOB reform bill this year.
“I anticipate we’ll get a bill that we’ll be able to sign,” he said.
Both bills, especially SB 122, have been discussed in January and February hearings pitting insurance carriers, regulators and homeowners critical of AOB agreements against home restoration contractors, attorneys and homeowners who support them.
Florida allows property owners to sign over insurance benefits to contractors after a loss to directly pursue payment from insurers for work. AOB agreements expedite repairs by guaranteeing payment for “up front” work.
The controversial component of Florida’s AOB statute is its “one-way” attorney fee provision, which requires insurers to pay legal costs even when they win in court. Critics contend the one-way fee clause “incentivizes” attorneys to file AOB lawsuits as a “can’t lose” business practice.
In presentations over the last two months, state officials testified that the increasing frequency and amounts of monetary awards associated with AOB-related lawsuits are driving rate hikes of up to 36 percent for many of Florida’s 6.2 million property insurance policyholders.
Citizens President and CEO Barry Gilway said residential property insurance litigation has increased 26 percent for all insurers, including Citizens – the state-backed insurer of last resort – since 2013. That is among reasons why 97 percent of its policyholders will see rate increases in 2019, he said.
Broxson’s SB 122, would award attorney fees only to policyholders who win litigated claims, not to “vendors” assigned insurance benefits in AOB agreements.
SB 122 advanced Monday out of the Senate Banking and Insurance Committee in a 5-3 vote. Its next stop is the Senate Judiciary Committee.
On Wednesday, the House Civil Justice Subcommittee approved an AOB reform bill it crafted itself, PCB 19-01, in a 13-2 vote.
PCB 19-01 survived eight amendment attempts, including seven that were voted down. Orlando Democrats Rep. Bruce Antone and Rep. Amy Mercado – the author of most amendments – were the dissenting votes.
Like the two-page SB 122, the 23-page PCB 19-01 includes restrictions on attorney fees but would also allow insurers to offer policies prohibiting AOB agreements.
Chairman Bob Rommel, R-Naples, said the bill provides a “free market option” that could lower premiums by making insurance providers and contractors more competitive.
During Wednesday’s hearing, about two-thirds of the 25 or so people scheduled to testify supported the measure.
Among proponents were representatives of the Florida Chamber of Commerce, Florida Realtors, Florida Association of Insurance Agents, Florida Justice Reform Institute, Associated Industries of Florida and the Personal Insurance Federation of Florida.
Opponents included individual restoration contractors and representatives from the Florida Association of Restoration Specialists (FARS), Florida Association of Public Insurance Adjusters and the Florida Justice Association.
Contractors maintain they are being scapegoated by the insurance industry, which as a standard business practice routinely underpays invoices, forcing businesses to sue to get fully paid.
FARS insists regulating restoration contractors, who are currently unlicensed, training claims adjusters and imposing “serious penalties” for those found guilty of fraud would be more effective.
FARS spokeswoman Amanda Prater, in a statement issued after Wednesday’s vote, said the association was “extremely disappointed” that the bill was advancing.
“This legislation serves to benefit the big insurances companies and only hampers the work of local mom and pop independent restoration contractors, leaving them at the mercy of insurance carriers who continue to deny and underpay claims,” Prater said.