Florida Insurers Respond to Unchecked AOB Abuse
Thursday, July 20, 2017
Yesterday, the Insurance Journal published an article titled Florida Insurers Place All Options on Table to Address AOB Abuse. In it, the author focuses on Florida’s home insurers as they implement rate increases, initiate coverage changes and nonrenew policies as a direct result of Assignment of Benefits (AOB) abuse.
Since lawmakers reneged on enacting reforms again this year, insurance carriers are now taking matters into their own hands. They are raising rates for homeowners’ policies across the state, but say that will not be enough after several years of the unchecked AOB abuse.
Citizens is leading the charge in also submitting a series of policy changes to the Office of Insurance Regulation (OIR) that it hopes will reduce claims costs for nonweather water losses.
Among the major policy changes is a $10,000 cap on water loss repairs for customers who decide not to participate in Citizens’ Managed Repair Program.
Other policy changes include expanding obligations to third parties that accept an Assignment of Benefits. Currently, contractors who accept an assignment are not bound by the same obligations, including allowing Citizens adjusters to inspect a claim in a timely manner or providing proof that a loss has occurred.
Additionally, Citizens as well as other insurance companies are exploring managed repair and/or using preferred vendor programs to guide homeowners to providers that do not use AOBs. “Preferred vendor programs are definitely helpful because an insurer is not going to use a vendor that turns around and sues them – it gets rid of that motivation to have an attorney enter the agreement,” said Mcfadden of The Property Casualty Insurers Association of America.
Many insurers in the state are watching and waiting to see what happens with Citizens’ proposals, and will base their own requests to OIR on what is approved for Citizens.
It is disheartening that the Florida Legislature failed to address the crisis in water damage claims abuse for the fifth year in a row. But it is encouraging that there are reputable restoration companies, like Joe Taylor Restoration, who assist their customers with integrity and seek to educate them about AOB abuse. Joe Taylor Restoration is a preferred vendor for over 45 insurance carriers in South Florida, servicing legitimate water, fire, mold, and biohazard related losses for people in need.
Related article- Insurance Journal: Florida’s Citizens Requests Rate Increases, Policy Changes for 2018