Assignment of benefits reforms ardently sought by the insurance industry and business passed the Florida House Wednesday on a vote of 91-26.
A spokeswoman for the Consumer Protection Coalition, a business-oriented lobby aligned with the Florida Chamber of Commerce, immediately praised the action.
“The House’s action is a big step toward ending costly AOB abuse and protecting Florida’s homeowners and businesses,” chamber spokeswoman Edie Ousley said in a written statement.
“With less than two weeks left in the legislative session, we urge the Senate to recognize the impact that AOB abuse is having on consumers’ wallets and approve the House bill before another year passes without protections for Florida families,” she said.
A less industry-friendly Senate version is pending in the Regulated Industries Committee.
In debate, Democrat Joe Geller argued against the attorney fee provision.
“It’s going to result in more, not less, litigation,” Geller said. “It’s going to be tied up for the next two years.”
Co-sponsor James Grant replied that the problem has festered too long and that it was time to act.
“Vote up on this good bill, and make sure we do not go home yet again having done nothing with the assignment of benefits problem,” Grant said.
The House bill, PCS/HB 1421, would tighten requirements for contractors to report claims to insurance companies and establish a graduated scale for determining whether contractors holding these agreements qualify to recover litigation expenses from carriers.
It would require the Office of Insurance Regulation to collect data on trends in assignment of benefits, or AOBs, and related litigation.
Grant has said that the bill would forestall increases in property insurance rates approaching 50 percent.
The idea is to make it harder for unscrupulous contractors and attorneys to abuse AOBs to run up repair costs and use the litigation process to inflate claims and extract attorney fees from carriers.
Business interests would have preferred repealing a law requiring carriers to pay fees entirely, the coalition said, but the bill passed “does provide some restrictions on their use aimed at reducing incentives for third parties to sue insurers over inflated claims.”
“This bill isn’t perfect, but it addresses many of our concerns and, hopefully, will weed out many of the bad actors who are preying on consumers and driving up the cost of home repairs,” said Cam Fentriss, lobbyist for the Florida Roofing and Sheet Metal Contractors Association.
“AOB abuse hurts the reputations of all the good roofers and other contractors who just want to work for an honest living. We have to stop it,” Fentriss said.
“Skyrocketing litigation costs are a major problem and if we go another legislative session without a solution this type of abuse will only get worse and insurance costs could continue to rise,’’ said Logan McFaddin, regional manager for the Property Casualty Insurers Association of America.
“We have an opportunity to enact meaningful reform to keep home ownership affordable and attainable for many Floridians,” she said.