TALLAHASSEE - A revamped bill that aims to address rising assignment-of-benefits concerns in Florida passed the state Senate’s Judiciary Committee Tuesday, but still failed to win support from the insurance industry and business interests.
SB 1168, authored by the chairman of the judiciary panel, Sen. Greg Steube (R-Sarasota), passed the committee on a 7-3 vote, but representatives of insurance companies and other business groups said it does not go far enough to curb abuses of the process involving homeowner rights and property insurance claims.
Under state law, homeowners whose properties sustain water damage can assign their insurance policy rights over to third-party vendors, who promise to make timely repairs and deal with insurers directly.
Property insurance rates have risen in recent years because such vendors charge exorbitant rates to insurances companies, critics say. Insurers can fight such charges in court, but if they lose, the insurers have to pay the plaintiffs’ attorney fees as part of the AOB process.
A previous version of the Steube bill that passed the Senate Banking and Insurance Committee last month prohibited insurers from including attorney fees paid through the AOB process in their rate calculations, but the panel voted to remove that language from the bill.
“Pretty much I’ve done everything that the insurance industry has asked, with the exception of the attorney fee provision,” Steube said during Tuesday’s hearing.
Steube’s bill would also would strike down the validity of assignment-of-benefits contracts unless certain conditions are met, and assignees would be required to provide a copy of an AOB contract to the insurer within five days.
“It seemed to be the most controversial, most antagonistic piece of the bill,” the senator said in response to a question on why he removed the provision restricting companies from raising rates based on attorney fee charges.
The bill’s modifications did not win over business organizations, though their representatives said the changes were positive.
“We still have concerns about the bill in relation to the one-way attorney fee provision,” Carolyn Johnson, director of business, economic development and innovation policy with the Florida Chamber of Commerce, told senators. She added that the provision should be available to homeowners only, not to third parties.
The bill slightly misses the mark, according to Michael Carlson, president of the Personal Insurance Federation. The contractor has too much leverage in settlement talks with insurance companies under the terms of the bill, Carlson said.
Other insurance industry officials also hammered the Steube bill.
“We don’t believe it addresses the primary cost driver, which is the transfer of the enforcement mechanism of the attorney fee statute,” William Stander, executive of the Florida Property and Casualty Association, said at the hearing.
Attorney John Derr, representing the Florida Justice Reform Institute, criticized a provision of the amended bill that, he said, allows vendors to establish an insurance claim by informing a state agency that a structure is in immediate danger of collapse.
“I’m concerned that particular portion of the amendment is a pot of gold at the end of the rainbow for unscrupulous vendors,” Derr said.
Caitlin Murray, director of government affairs at the Florida Office of Insurance Regulation, said the OIR has concerns about the amended bill.
“The office believes that without meaningful attorney fee reform, then the crux of the problem has not been fixed,” Murray said.
But Sen. Anitere Flores (R-Miami), who chaired the Senate insurance panel’s hearing on Steube’s bill last month, defended the process of assigning policy rights to vendors and the one-way attorney fee provision because the vendors ultimately represent consumers’ interests. On the other hand, Flores said, insurers are the ones paying claims, and their business model allows them to make more money if they pay less in claims.
She also criticized insurers for not estimating by how much insurance rates would decline if the legislature decided that the one-way attorney fees provision should be limited to homeowners.
The AOB concept is similar to transactions consumers make with health care providers, according to Flores.
“We do it every time we go into a doctor’s office,” she said, adding that patients allow health providers to deal with insurers because the patients lack the detailed expertise needed to do so.
The Steube bill offers the outlines of a workable compromise on the issue, Flores said.
“Maybe this is the year we actually will get something done,” she said.