Florida Senate, House Insurance Reform Bills Advance at DeSantis’ Prodding

Recently, two insurance reform bills that hope to rewrite the assignment of benefits (AOB) law made it past Senate and House subcommittee reviews. The bills could actually make it to the chamber floor for a binding vote this session.

This would mark the first time in six years that a bill regarding AOB reform has actually made it out of committee for a full vote in the Senate. In 2018, an AOB reform bill passed the house but never made it out of the Senate Insurance and Banking Committee.

One factor that may push AOB legislation over the finish line is support from the Governor according to a recent article from Florida Watchdog. According to the article, Gov. Ron DeSantis’ called out AOB legislation in his State of the State address. 

“I hope the Legislature passes legislation to reform the issue of AOB, which has really degenerated into a racket,” DeSantis said in his address.

DeSantis later told reporters that AOB abuse, which has been compounded by Hurricane Michael in 2018 and Hurricane Irma in 2017, will lead to higher insurance rates and could even lead to property insurance companies to stop writing policies in the state. 

The article said that DeSantis doesn’t favor one bill over the other but said that he been reassured by Senate President Bill Galvano and House Speaker Jose Oliva that the Legislature will produce an AOB reform bill sometime this this year.

“I anticipate we’ll get a bill that we’ll be able to sign,” DeSantis said.

What is AOB Fraud?

In Florida, property owners can sign an Assignment of Benefits (AOB) form which basically signs over their insurance benefits to the contractor working on their home. This allows the contractor to make decisions on the job and bill the insurer directly. 

Unfortunately, some less than honest contractors overbill for repairs or bill for work that has not even been done. When the insurance company denies the claim as too costly, the contractor works with a law firm to sue the insurance company. It is often cheaper to settle than go to court so insurers end up settling. These legal costs are passed onto all policyholders via higher premiums. 

The biggest issue with Florida’s AOB law is the “one-way” attorney fee provision. This requires insurers to pay all parties legal costs even when they win in court. This one-way fee means there is no downside to suing for shady law firms who partner with contractors. 

Over the last two months state officials have been testifying that the increased frequency and award amounts within AOB lawsuits has pushed up insurance rates at least 36 percent for most of Florida’s 6.2 million property insurance customers. 

These Bills Would Help

The bills that have worked through the sub committees would help curb some of this abuse and hopefully slow rate increases. SB 122 would only award attorney fees to the actual policyholder, not vendors who have been signed over the insurance benefits via an AOB form. This would remove the incentive to sue for less than honest claims. 

SB 122 moved out of the Senate Banking and Insurance Committee in a 5-3 vote. It is now headed to the Senate Judiciary Committee. The House Civil Justice Subcommittee approved an AOB reform bill, PCB 19-01, in a 13-2 vote.

This bill also restricts attorney fees but also allows insurers to offer policies that completely prohibit AOB agreements.