Claims abuse reform bill advances, but senators
want attorneys, insurers to compromise
Article Courtesy of The Orlando Sentinel
January 26, 2018
Score one for the trial attorneys in their
long-running battle with Florida’s property insurers over third-party
claims assignments, but this year’s war is far from over.
The state Senate Banking and Insurance Committee rejected a proposal
favored by insurers and OK’d a bill supported by plaintiffs attorneys
and water damage restoration contractors on Tuesday.
But several committee members said they expected changes to the
attorney-friendly bill in upcoming hearings and called for negotiations
by lawmakers to continue.
Sen. Anitere Flores, R-Miami, painted by the property insurance industry
as unwilling to support reforms to prevent fraudulent claims, called for
insurers to guarantee that rates would go down if changes they seek are
enacted. Insurers have blamed several years of rate increases on claims
“There’s been a lot of testimony on how much rates will go up if there’s
no action,” she said. “But if we take away the problem … they can’t tell
us how much rates will go down. I have a real problem with that, and I
think other members do as well.”
Tuesday’s meeting was the latest chapter in a years-long battle between
Florida’s property insurers and trial lawyers over an affidavit called
an “assignment of benefits” (AOB).
Contractors require homeowners to sign an AOB before commencing repairs
because it gives them authority to bill insurers on homeowners’ behalf.
Insurers say contractors abuse that authority by inflating invoices or
performing unneeded work and then filing suit when insurers balk at
paying the invoice.
Attorneys counter that insurers are too slow to pay legitimate invoices,
especially when policyholders try to expedite repairs by signing an AOB.
Last fall, state-run Citizens Property Insurance Corp. said its average
water claim cost increased from $10,279 in 2012 to $19,800 in 2016 and
the percentage of claims resulting in lawsuits increased from 12 percent
to just under 50 percent over that period.
Statewide, the number of water damage claims that resulted in lawsuits
increased from 989 in 2011 to 8,488 in 2016, according to data from the
Department of Financial Services.
For a second year, Sen. Dorothy Hukill, an Ormond Beach Republican,
filed a bill intended to prevent contractors and their attorneys from
collecting attorneys fees from insurers that agree to settle lawsuits
for any amount — even $1 — over their initial claim settlement offers.
Those fees are claimed under the so-called one-way attorney fee
provision, in place in Florida law for more than a century, that was
originally intended to allow homeowners to sue their insurers without
risking having to pay for the insurers’ legal fees if their challenges
Insurers, however, say that contractors and attorneys have been using
the one-way attorney fee law to extract excessive money from insurers.
They want to preserve homeowners’ ability to use the law for suits they
file themselves while barring third parties from using it on their own
Hukill’s bill -- unacceptable to plaintiffs attorneys — was met with a
competing bill by Sen. Greg Steube, R-Sarasota, that would bar insurers
from including the legal fees they pay to settle lawsuits in the pool of
expenses used to calculate insurance rates the following year.
Steube’s bill was equally unacceptable to insurers.
On Tuesday, the Banking and Insurance Committee rejected an amendment by
Sen. Doug Broxson that would have replaced Steube’s entire bill with
But in supporting Steube’s bill, two Republican senators on the
committee — Rob Bradley of Duval County and Rene Garcia of Miami-Dade
County — said they wanted to see compromise, and wouldn’t vote for
Steube’s or Broxson’s versions if either advanced to a vote of the
“Here we go again,” said Bradley. “I encourage folks to continue talking
to one another.”
Next, the bill faces consideration by the Judiciary and Rules