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Citizens vows to keep seeking 'assignment of benefits' changes


Date: September 28, 2016
Source: News 4 Jax
Author:  News Service of Florida


State-backed Citizens Property Insurance will continue pushing lawmakers next year to approve changes that would address surging water-damage claims.

Shifts of policies from Citizens into the private insurance market have "slowed dramatically" due to the claims, Citizens President & CEO Barry Gilway said Wednesday during a Citizens Board of Governors meeting.

Gilway warned that unless the Legislature makes changes dealing with water-damage claims, Citizens can expect to see its policy count grow as private insurers avoid the market, particularly in South Florida.

"We're quickly becoming a South Florida company," Gilway said. "In many areas we're becoming the only solution because many in the private marketplace, particularly in the tri-county (Miami-Dade, Broward and Palm Beach counties) area, are literally shutting the door to new business."

The number of policies handled by Citizens fell below 500,000 in January, one-third the count nearly three years ago.

Since the start of this year, the "depopulation" efforts have stalled, with about 491,000 policies currently on the books, Gilway noted.

Citizens premiums will jump an average of 6.4 percent for residential multi-peril accounts statewide on Feb. 1.

In requesting the hike from the state Office of Insurance Regulation, Citizens pointed to water-damage claims.

Citizens and other insurers are seeking restrictions on a practice known as "assignment of benefits."

When homeowners need repairs for problems such as water damage, they sometimes sign over benefits to contractors, who ultimately pursue payments from insurance companies.

In lobbying the Legislature for the restrictions, the insurance industry contends that assignment of benefits can lead to fraud and increased litigation.

Plaintiffs' attorneys and contractors argue, in part, the practice helps homeowners hire contractors quickly to repair damage and also can help force insurers to properly pay claims.

The plaintiffs' lawyers and contractors also contend that assignment of benefits can help prevent consumers from having to fend for themselves in insurance disputes.

Lawmakers could not agree during this year's legislative session on assignment-of-benefits changes.

Earlier this year, the Office of Insurance Regulation reported Florida had seen a 46 percent increase in water-damage claims and a 28 percent increase in costs since 2010.