Florida AOB Reform Bill Passes Final Committee, Heads to Full Senate

April 18, 2019 by

A bill the Florida insurance industry says will help reign in assignment of benefits abuse that is plaguing the state and raising insurance costs has passed its final committee in the Florida Senate and is now headed to the full Senate floor for debate.

The Florida Senate Rules Committee passed SB 122 on Wednesday, inching AOB reform one step closer to being a reality after seven years of failed attempts by the Florida Legislature.

“Year after year we have watched the AOB crisis negatively impact our consumers – many of which are recovering from hurricanes. Now, more than ever, is the time to pass meaningful reform so we can protect consumers and start recovering from years of compounding abuse,” Florida Insurance Commissioner David Altmaier said in a statement Wednesday. “The advancement of SB 122 is a significant step towards protecting Floridians from future AOB abuse.”

The Senate bill, introduced by Senator Doug Broxson, is now identical to Florida House Bill 7065, which passed that chamber last week.

“This is a great development. For the first time in nearly seven years we are poised for final passage of meaningful AOB reform. The bill will directly address cost drivers that are pushing up rates by reducing AOB abuse and fraud. Florida consumers will benefit, and the insurance market will be healthier as a result,” said Michael Carlson, president of the Personal Insurance Federation of Florida (PIFF).

The bill includes certain consumer protection provisions such as rescission and emergency services sublimit provisions, and creates a new rate filing requirement for Citizens Property Insurance Corp., which has filed rate increases for the last several years that it has largely blamed on AOB.

Barry Gilway, CEO, president and executive director of Citizens, said after HB 7065 passed the Florida House that AOB reform enacted this year would allow the insurer to reassess its 2019 rate recommendations now pending before the Florida Office of Insurance Regulation.

“While not providing immediate premium reductions to all Citizens policyholders, the legislation would go a long way toward stabilizing rates and shortening the time it takes for Citizens to provide rate reductions to its policyholders,” Gilway said last week.

But most importantly to the industry, the two bills address Florida’s one-way attorney fee statute that the insurance and consumer advocates say is fueling the abuse. The statute would be revised to incorporate an attorney fee structure in determining the fee amount awarded in suits by an assignee against an insurer. Service providers would also now be required to give an insurer and the consumer prior written notice of at least 10 business days before filing suit on a claim.

SB 122/HB 7065 also allow insurance companies to offer a residential or commercial property insurance policy or comprehensive or combined additional coverage motor vehicle insurance policy restricting, in whole or in part, the assignment of post-loss benefits under certain circumstances.

“This is a big step forward for consumers,” said Edie Ousley, vice president of public affairs for the Florida Chamber of Commerce, which spearheads the Consumer Protection Coalition. “We are extremely grateful that members of the Senate Rules Committee took a stand against AOB abuse and the harmful impact it is having on Florida’s consumers. We hope this vote sends a signal to the entire Legislature that the status quo is no longer acceptable and something must be done to stop unscrupulous vendors from using AOB to boost their profits at the expense of hardworking Floridians.”

AOB reform for auto glass — another facet of AOB abuse that has been increasing — was included in a prior version of the Senate bill but was removed to match the House bill. Industry advocates, including the CPC and APCIA, have encouraged lawmakers to include auto glass in the final legislation.

“Addressing AOB abuse is vital to putting a stop to the number of AOB lawsuits filed in Florida, which are only growing steeper with each passing year and resulting in higher insurance costs,” said Logan McFaddin, APCIA regional manager of State Government Affairs. “The time is now to end AOB abuse for Floridians. We look forward to working with our elected officials as this good public policy readies for the Senate floor to ensure Florida home and business owners alike are protected from bad actors who are taking advantage of them and our legal system just to put more money in their own pockets.”

The full Senate is likely to debate the bill next week. Florida Gov. Ron DeSantis has not indicated if he would sign this particular legislation if it passes but has said he would like to see AOB reform passed this year. The 2019 Florida Legislative Session ends on May 3.

Elizabeth Blosfield contributed to this report.