Originally published by The Wall Street Journal |
Republicans in the state Senate try to block insurance reform
By The Editorial Board
Florida’s Legislature is in session, and for the sixth straight year reform-minded Republicans are trying to shut down a trial-bar scheme that’s bleeding property insurers and sending Sunshine State premiums skyrocketing. This fight will speak volumes about the character of Florida’s GOP.
At issue is assignment of benefit (AOB) abuse, whereby an insured person signs away insurance rights to a third party, who then sues the insurer. More than 28,000 AOB lawsuits were filed in Florida in 2016, up from 405 a decade earlier, raising costs for insurers and the insured. State regulators estimate Miami-Dade residents insuring a $150,000 home could see premiums rise more than 40% by 2022, thanks to this man-made litigation flood.
Panama City Republican Jay Trumbull, a leader in the reform effort, filed a bill last year that would change how court damages are calculated and reduce the incentive to file frivolous AOB lawsuits. Florida’s House of Representatives passed the measure this month, 82-20, which shows that at least some Republicans will fight the jackpot-justice lobby.
Not so in the Senate, where Republican Anitere Flores chairs the Banking and Insurance Committee. In the last legislative session Ms. Flores, backed by Senate President Joe Negron, let an AOB reform bill introduced by Port Orange Republican Dorothy Hukill languish. This year she’s doing it again.
The Miami Republican has, however, been happy to consider a bill by Sarasota’s Greg Steube that would forbid insurance companies from including litigation costs in rates and limit their ability to deny claims because of fraud. AOB fraud would skyrocket. Ms. Flores said this month that Mr. Steube’s measure “is not a bill the insurance industry loves,” but the issue is whether they can operate profitably in the state.
Florida Governor Rick Scott and Insurance Commissioner David Altmaier have been vocal advocates for AOB reform, but they can’t act unilaterally to stop the flood of lawsuits. Florida has benefited from its low-tax regime but it can’t continue to prosper if it becomes a mecca for looting by lawsuit.