DeSantis signs insurance ‘assignment of benefits' overhaul

Insurers expect lower rates after Florida governor signs 'AOB' reform

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TALLAHASSEE, Fla. – After repeated legislative battles about the issue in recent years, Gov. Ron DeSantis on Thursday signed a bill that will revamp the controversial insurance practice known as “assignment of benefits.”

DeSantis and other supporters of the bill (HB 7065) pointed to abuses of the so-called AOB process. The bill signing, while expected, was a major victory for the insurance industry, which contends that AOB fraud and excessive litigation have helped lead to higher property-insurance rates.

“I thank the Florida Legislature for passing meaningful AOB reform, which has become a racket in recent years,” DeSantis said in a prepared statement. “This legislation will protect Florida consumers from predatory insurance practices.”

Assignment of benefits is a decades-old practice that has become controversial in recent years, at least in part because of an increase in residential water-damage claims. Those claims have primarily dealt with issues such as broken water pipes and leaks, rather than hurricane damage.

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In assignment of benefits, property owners in need of repairs sign over benefits to contractors, who ultimately pursue payments from insurance companies.

"Oftentimes when an assignment of benefit is signed over, it's kind of a panicky situation -- there's water coming out of the pipes in your house," said Michael Peltier, with Citizens Property Insurance.

While insurers have complained about fraud and litigation, plaintiffs’ attorneys and other groups argue AOB helps make sure claims are properly paid. They accuse insurers of often trying to lowball amounts paid for work.

Lawmakers in recent years considered changes to the AOB process but could not reach agreement, amid heavy lobbying by groups on both sides of the issue. This year, however, the House and Senate bridged differences and sent the bill to DeSantis.

The bill includes numerous changes, including creating a system that will effectively limit attorney fees in AOB lawsuits filed by contractors against insurers. The fee changes, which involve a formula, would not apply to lawsuits filed by policyholders.

Also, the bill will let insurers offer policies that restrict or do not allow assignment of benefits. The concept is that such policies could be offered at lower prices to homeowners.

"It provides incentives for both insurers and contractors and restoration companies to come to the table with reasonable offers of settlement," Peltier said.

The bill will also give homeowners at least 14 days to opt out of an AOB agreement and requires contractors to give insurers 10 days' notice before filing suit.

"What we've seen in the past is a lot of the times, we're getting notices for lawsuits even before we've had a chance to see the claim," Peltier said. "I think that this bill will help to alleviate a lot of those issues."

According to Citizens Property Insurance, prior to the DeSantis signing the bill, it expected 3% of customers to see rate decreases, but now expects the number to be much higher.

Groups representing contractors are opposed to the measure, arguing it will make it easier for insurance companies to make lowball offers.

The AOB bill was one of 25 that DeSantis signed into law Thursday. Several of the measures were what are known as “local” bills, which deal only with issues in specific parts of the state.

Also, DeSantis signed a series of “claim” bills, which direct government agencies to pay money because of injuries or deaths. Ordinarily legal damages in such situations are capped by the state’s sovereign-immunity laws.

Among the other bills signed was a measure (SB 186), sponsored by Sen. Tom Lee, R-Thonotosassa, that creates a public-records exemption for photos, videos or audio recordings that depict the killing of victims of mass violence. Such incidents of mass violence are defined in the bill as involving the killing of three or more people, not including the perpetrators.

The bill pointed to the potential impact on victims’ family members if such photos or recordings are made public and cited mass shootings in recent years at Pulse nightclub in Orlando, the Fort Lauderdale-Hollywood International Airport and Marjory Stoneman Douglas High School in Parkland.

In addition, DeSantis signed a measure that will make it a crime to sell, distribute or show child-like sex dolls. Supporters of the measure (SB 160), such as Senate sponsor Lauren Book, D-Plantation, said it is designed to combat pedophilia.

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