|Date:||June 21, 2017|
As predicted before Session 2017, the Citizens Property Insurance Board of Governors is proposing insurance rate increases, because state lawmakers were unable to pass legislation that better controls something called “assignment of benefits” fraud.
“We’re not sitting back and saying, `Hey we’ll wait until next year, and maybe we can get something done from a legislative standpoint next year’. We can’t wait. It doesn’t make any sense and we don’t know, particularly with the current structure of the Legislature, we don’t know if we’ll be any more successful next year,” Citizens President and CEO Barry Gilway said.
The proposed rate increase would hit South Florida policy holders the hardest, starting next year. The Citizens Property Insurance Board of Governors voted unanimously for the increase, saying “out of control” water damage claims are the reason for the needed increase. The proposal must be approved by the state Office of Insurance Regulation.
For years, the insurance industry has been urging lawmakers to make changes to “assignment of benefits” or AOB. Insurance companies in Florida say it’s become a magnet for fraudulent claims, especially for water damage claims.
With AOB, homeowners sign over their benefits to contractors. Then the contractor seeks payments from insurance companies.
Efforts to get new legislation better controlling AOB failed during Session 2017. The insurance industry warned lawmakers a failure to re-vamp the AOB process would result in higher insurance rates.
“We have to go under the assumption that we’re not going to get any legislative relief. We’re just going to have to come up with a defensive game plan to do the best we can to mitigate it because I’m not convinced we’re going to get any relief next year, the year after, who knows,” Citizens Vice Chairman Don Glisson said.
On the other side of the AOB fight, attorneys for insurance policy holders and contractors say the way AOB works now, it assits insured property owners to hire contractors to repair damage faster while forcing insurance companies to pay claims.
Citizens also wants coverage for water-damage that isn’t weather related to be capped at $10,000 for customers who are not in a “managed repair” program which is a program using contractors approved by Citizens.
The proposal boosts rates include 10.5 percent in Miami-Dade County, 10.4 percent in Broward County, and 9.4 percent in Palm Beach County.
Today the average multi-peril policy is $3,421 in Miami-Dade, $2,842 in Broward and $2,631 in Palm Beach County.