‘Assignment of benefits' changes get on track in Florida Senate

TALLAHASSEE, Fla. – Three weeks after the issue stalled, a Senate committee Monday moved forward with a proposal that would revamp the controversial insurance practice known as “assignment of benefits.”

The Senate Banking and Insurance Committee voted 5-3 to approve the proposal, which Chairman Doug Broxson, R-Gulf Breeze, overhauled after an earlier version did not have enough support to get out of the committee.

With the 60-day legislative session starting Tuesday, assignment of benefits is the biggest insurance battleground of the year. On Monday, insurers and business groups lined up behind Broxson’s proposal (SB 122), while plaintiffs’ attorneys and several officials from home-repair and windshield-repair firms were opposed.

In assignment of benefits, property owners in need of repairs sign over benefits to contractors, who ultimately pursue payments from insurance companies. Insurers contend that the practice has become riddled with fraud and litigation, while plaintiffs’ attorneys and other groups say it helps make sure claims are properly paid.

The controversy originally centered on water-damage claims to homes in South Florida, but it has moved to other parts of the state and insurance claims for windshield damage.

State Chief Financial Officer Jimmy Patronis appeared at the Senate committee and implored lawmakers to address the issue, which he said is driving up insurance premiums. He also pointed to the divisions among groups lobbying on what is known in the Capitol by the shorthand “AOB.”

“All we’ve got is 60 days to fix this,” Patronis said. “And if we don’t do anything for another 60 days, then we’re just sticking the citizens of the state of Florida with another higher bill because we will continue to pass on the struggles and frustrations that these sides will not get together to discuss and work out. So unfortunately, sometimes you have to be the adult in the room and force legislation upon them.”

Broxson’s original version of the bill only addressed imposing limits on attorney fees, the main request of insurers and business groups. But he had to pull back the proposal after Sen. Tom Lee, R-Thonotosassa, joined Democrats on the committee in opposing it.

The revamped proposal was broader than the original version and won the support of Lee. But it created the same divisions as the earlier version among interest groups.

The proposal, in part, would place limits on assignment of benefits in emergency circumstances. It would include a maximum payment of $3,000, or 1 percent of a homeowner’s coverage limit, when AOBs are used for emergency repairs to homes.

The bill also would place a series of restrictions on AOBs that are outside of emergency repairs. For example, it would set time frames in which consumers could rescind the assignment of benefits. Also, it would revamp attorney fees in disputes between insurers and contractors. The bill would allow the “prevailing party” in such cases to receive attorney fees from the other side.

Critics of the proposal argued it was tilted toward insurers. Lee Jacobson, an Orlando attorney, raised concerns about issues such as the $3,000, or 1 percent, limit on AOBs for emergency repairs to homes.

“When someone is standing ankle deep, they don’t want to be told that their senator voted for a bill that caps damages at 1 percent of what they paid premiums for,” Jacobson said.

But state Insurance Commissioner David Altmaier supported the bill, issuing a statement calling Monday’s vote a “win for consumers across our state.”

“Addressing the AOB crisis will remain a top priority in the coming weeks and months,” Altmaier said. “We must protect Floridians from the bad actors who seek to maximize profits at the expense of every policyholder in our state.”