Originally published by Panama City News Herald |
An Ormond Beach condominium stands as a local exhibit to why Florida needs a major property insurance reform.
As reported by The Daytona Beach News Journal, residents of Ormond Heritage needed repairs done to their high-rise condo complex after Hurricane Matthew. The condo association contracted with Paramount Disaster Recovery to fix a roof and some water damage on the ground floor. But residents wound up getting a lot more than they bargained for.
As part of the agreement, Ormond Heritage gave Paramount the power to negotiate directly with the condo’s insurer, a deal known as “assignment of benefits.” AOBs can be attractive to homeowners, who are freed from the stressful back-and-forth of the claims process. But they’ve opened the door to inflated claims, unauthorized upgrades and, at times, blatant rip-offs, insurance professionals claim.
For Ormond Heritage, its AOB opened the door to a costly ongoing legal battle between the vendor and the insurer that, more than a year later, has delayed repairs on the buildings.
Paramount and Ormond Heritage’s insurer, Ariel Syndicate 1910, are battling in federal court over whether mold is covered by the insurance policy. The condo residents are powerless and helpless. Jerry Cutter, the current Ormond Heritage association president, told The News-Journal that their condo’s insurance premium tripled for hurricane and windstorm coverage.
That’s become an all-too-common story in the Sunshine State, where insurers blame abuses of AOB for rising property insurance costs. AOB lawsuits jumped from 405 in 2006 to more than 28,000 in 2016, an increase of 6,800 percent. Before that spike, according to the American Insurance Association, property insurance rates in Florida had either decreased or stayed the same in 63 percent of insurer filings approved by the state. But by 2016 the situation flipped, and 73 percent of approved rate filings were for increases. Florida’s Office of Insurance Regulation says rates will increase as much as 10 percent a year without changes to assignment of benefits.
And that was before Hurricane Irma raked nearly the entire state in September 2017, causing more than $7 billion in insurance losses.
The Legislature needs to restore some sanity to the process, cutting down on fraud and abuse while also protecting consumers from being taken advantage of in AOB agreements.
On Jan. 12 House Bill 7015, sponsored by Rep. Jay Trumbull, R-Panama City, passed on an 82-20 vote. It would give policyholders seven business days to cancel an AOB agreement, impose restrictions on claims and make changes to changes to the state’s attorney fee rules. However, a companion bill in the Senate sponsored by Port Orange Republican Dorothy Hukill has yet to be assigned a committee. Hukill’s previous attempts at AOB reform the last two years have died.
The Senate needs step up and contribute to a solution. The status quo on AOBs can’t hold. The state can’t afford more situation’s like Ormond Heritage’s.