|Date:||January 09, 2018|
Will 2018 finally be the year that property insurers and trial attorneys agree on legislation aimed at curbing costly claims abuses and excessive lawsuits?
Insurers don’t sound too confident as they prepare for Tuesday’s start of the legislative session in Tallahassee. Several industry representatives say they won’t be surprised if another Florida session concludes with nothing to show on what most say is their most pressing issue.
Solutions have eluded lawmakers because two powerful political forces — insurers and trial lawyers — have fought each other to a stand still.
“I would love to see both parties come up with a work product that would pass the Legislature,” said Paul Handerhan, senior vice president for public policy for the Fort Lauderdale-based watchdog group, Florida Association for Insurance Reform. “Reforms are needed, and I’m hopeful but not overly optimistic.”
Consumers, not insurers or trial attorneys, will pay the price for another failure to enact reform. When costs increase for insurance companies, the companies pass those higher costs to homeowners in the form of higher rates.
This year, most South Florida homeowners will see increases of 5 percent to 15 percent thanks to the Legislature’s failure to enact reforms in 2013, 2014, 2015, 2016 and 2017.
Insurers cited higher costs from claims abuses as they sought approval for rate increases throughout the year, and for the most part, the state Office of Insurance Regulation approved requested increases.
Insurers want to stop excessive lawsuits by repair contractors working under an affidavit called an assignment of benefits [AOB]. When homeowners sign the affidavit, contractors stand in their shoes when seeking payment from insurers for repair work.
Insurers contend that contractors and their attorneys, primarily from South Florida, abuse the system by submitting inflated invoices and filing suit when insurers deny or underpay them. The abuses drive up costs and rates, insurers say.
Thousands of such suits are filed each year. Insurers say attorneys are motivated by a state law allowing customers to collect legal fees from insurers if the suit results in an insurer paying any amount of money over its initial settlement offer. Under the law, insurance customers do not have to pay insurers’ legal fees if they don’t prevail in a suit — and that protection enables contractors and attorneys to file unlimited lawsuits while standing in homeowners’ shoes.
Attorneys counter that lawsuits would be unnecessary if insurers would simply pay fair costs for repairs. Too often insurers leave homeowners and contractors with no choice but to sue by failing to pay what’s necessary to return damaged homes to their pre-loss conditions.
In recent years, insurers and their allies in the Legislature have tried to enact laws barring homeowners from assigning claims without insurers’ permission. But trial attorneys and their allies blocked those efforts, and courts affirmed assignment rights.
Last year, insurers changed strategy by helping to write a bill that would prohibit third-party assignees from collecting legal fees from insurers.
That failed when Sen. Anitere Flores, R-Miami, powerful chair of the Senate Banking and Insurance Committee, refused to bring the bill up for debate.