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Insurance Consumer Advocate

Sha'Ron James


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Mailing: 200 East Gaines St.
Tallahassee, FL 32399-0308

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(850) 413-3089
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Former ICA: Florida's Assignment of Claims System Needs Mending

News Article

May 10, 2016

Best News Service

Sean Shaw, an attorney and Florida’s former insurance consumer advocate, said Florida must bring more balance to its system, in which firms work on damaged homes before the policyholders file claims, thereby driving up insurance costs. Shaw spoke with A.M. BestTV at the Florida Association for Insurance Reform conference in Tampa. Following is an edited transcript of the interview.

Q: Tell us a little bit about some of the issues facing the Florida insurance market.

A: Here in Florida we pay a lot of money for our property insurance. The average person would say, “We haven’t had a storm in a dozen years. Why is that so?” From a consumer perspective, where I’m coming from, people want to know why that is. They’ve been told various reasons over the years, whether it’s sinkholes, whether it’s water losses, whether it’s fraud. The consumer at the end of the day wants to know: why do I pay so much? We’ve had no hurricanes. It’s interesting that we were starting to see some rate decreases. People were starting to realize some of the benefits of a better market. Now we’re in a place where we might be in trouble again. Places like this and panels like this are great because it’s balanced. I was up there. I’m a consumer rep. The president of Citizens is up there. There’s a state senator up there and the insurance commissioner. Those are the type of discussions that have to happen because in a political environment when you try to go all one way or all the other you get into solutions that aren’t good for the market itself.

Q: What are some of the reforms you see as needed here in Florida?

A: I’m an attorney. I represent homeowners against insurance companies. I’ve seen a slow deterioration of policy language, of the rights that people have under their policies, less and less water claims are covered, more and more exclusions, more and more hoops people have to jump through. I’m sensitive to the fact that water claims are a big cost driver, apparently for Citizens in particular but it’s my opinion you don’t fix that by making it harder for people to file water claims. I don’t think that’s the right solution. I would like to see policies go back to covering what they used to cover. I would certainly like to see an educational process so that people know the take-out process from Citizens. The take-out process is, you get a notice in the mail. It says, “If you don’t do anything you’re going to go to this insurance company. If you do something you stay with Citizens.” People freak out about that. They don’t know what to do. Their policy premiums jump. They don’t know what to do. I’d like to see an education process where that’s concerned. That’s what I hear from the people I interact with.

Q: You were on a panel here. You spoke about assignment of benefits and the problems of that. Explain exactly what assignment of benefits are briefly and why that is an issue.

A: The best example is you have a pipe burst in your home. You have water pouring into your kitchen. You call someone to suck up the water. When they come they have you sign something that’s called an assignment of benefits. What that does is it puts that person in charge of your claim process. They then submit their bill directly to the insurance company. If the insurance company doesn’t pay that bill in full then they can come after the homeowner. What the alleged abuse has happened is a lot of this work and these things are signed prior to the insurance company even getting notice of the claim. That’s something, even as someone who doesn’t agree with the industry on a lot of things, that’s a terrible position for the insurance company to be in. By the time they inspect, damage has happened, costs have been incurred and the homeowner has already signed an assignment of benefits that puts the water restoration company in charge of the claim. Something needs to change. Something needs to happen. Some kind of regulation. Assignments can serve a good thing, For example, an older couple down in South Florida, a tree hits their roof and they need a new roof put on and can’t afford it. Oftentimes through an assignment of benefits a contractor will come and put on a roof for them. That’s why I think assignments can be good. We don’t need to do away with them completely. But we’ve got to fix this abuse that we’ve got going on that even I see.

Q: How do we fix it?

A: One, the legislature’s got to do something about it. I happen to be a candidate for the Florida legislature here in Tampa for District 61. The legislature’s got to pass some balanced reforms. For example, I don’t want to do away with the assignments completely but we’ve got to reform it. Maybe you’ve got to have an estimate before you do any work or maybe the insurance company has to get notice of that assignment within a certain amount of time, those sorts of things. To do away with it all completely, I don’t agree with that. We’ve got to do something.