|Date:||February 28, 2017|
|Source:||Best's News Service|
The Florida Senate is considering legislation to combat lawsuits associated with assignment of benefits cases, which insurers claim have resulted in a massive increase in the number of cases and legal costs. Senate Bill 1038 has been referred to the Banking and Insurance Committee and the Judiciary Committee for consideration.
The bill was drafted by the Office of Insurance and Citizens Property Insurance Corp., the insurer of last resort, according to Michael Carlson, president of the Personal Insurance Federation of Florida. The bill would prevent attorneys’ fees from being awarded in claims disputes to third parties acting on behalf of insureds who assigned their claims to them.
He said courts in recent years had extended to third parties the ability to gain attorney’s fees — something previously limited to the insured. The OIR said the bill will address rising costs associated with the assignment of benefits process.
“Under provisions of the bill, consumers would be held harmless, assignment of benefits could still be utilized and incentives to file unnecessary litigation would be eliminated,” the OIR said in a statement. An attempt to get comment from Citizens was not immediately successful. AOB in property insurance claims has “plagued Citizens Property Insurance Corp. and the broader homeowners’ market as well,” said Ron Jackson, American Insurance Association vice president, state affairs, Southeast Region.
The bill also says assignment agreements are valid only if the agreement is in writing and is executed by all named insureds; and that they contain a provision that allows insurers to rescind the agreement within seven days after executing the agreement.
The OIR last year granted Citizens an average 6.4% homeowners rate increase statewide for 2017, citing increased non-weather water loss claims and litigation. Barry Gilway, Citizens’ president, chief executive officer and executive director, has attributed the need for a rate increase despite the company’s depopulation efforts to costs associated with assignment of benefits cases and urged lawmakers to take action (Best’s News Service, Sept. 19, 2016).
Florida Insurance Commissioner David Altmaier recently told the Banking and Insurance Committee the trend of increasing water damage losses will ultimately harm competition in Florida’s property insurance markets and lead to policyholders returning to Citizens, the insurer of last resort (Best’s News Service, Jan. 11, 2017). The top five writers of homeowners multiperil insurance in Florida during 2015 were Universal insurance Holdings Group, with an 8.54% market share; Tower Hill Group, with 7.62%; State Farm Group, with 7.00%; Citizens Property Insurance Corp., with 5.74%; and Federated National Insurance Co., with 4.65%, according to BestLink.