March 10, 2016
Insurance Business America
Insurers operating in Florida have raised concerns regarding the rampant assignment of benefits abuse in the state and said that insurance rates are increasing as a result.
Florida’s state-run insurer, Citizens Property Insurance Corp., has also been suffering from such claims abuse, if not much more. Citizens warned policyholders in South Florida that they will see 10 per cent increases every year should conditions persist.
One property insurance company executive told the Sun Sentinel that insurance rates among a number of insurers in South Florida are set to increase next year due to the abuses. If the situation continues, prices across the rest of the state could also be affected.
The rate hikes are the result of steep surges in non-weather-related water claims in South Florida over the past few years, caused by contractors supposedly exploiting the assignment of benefits arrangement. The trend is slowing spreading across the rest of the state.
The issue of assignment of benefits abuse has been the focus and main debate in the most recent session of state legislature. On one hand, insurers and the proponents want more control over costs incurred once policyholders sign over their benefits to contractors. On the other, contractors support licensing water damage restoration companies and other solutions that do not restrict the practice of assignment of benefits.
On March 4, bills in the House and Senate intended to address the abuse of assignment of benefits did not pass. Concerns that no reforms on the matter will be enacted—for the fourth straight year—were raised. Lawmakers have one week left in the legislative session to come up with another solution.