Lawmakers set to take another stab at fixing insurance claims abuses

Jan. 07--Groundhog Day isn't until Feb. 2, but two legislative meetings scheduled next week in Tallahassee will likely have a "been-there, done-that" feel to many of the participants.

Banking and insurance panels from the state Senate and House will kick off this year's efforts to solve the "assignment of benefits" problem that home insurers say will trigger annual insurance rate hikes for South Florida homeowners indefinitely if not resolved.

Officials from state-run Citizens Property Insurance Corp. and the Florida Office of Insurance Regulation plan to address the Senate Banking and Insurance Committee on the issue Tuesday at 10 a.m. at the Senate Office Building. The next day, the House Insurance & Banking Subcommittee plans a discussion on Wednesday at 3:30 p.m. at the House Office Building.

This year will likely be the fifth straight year lawmakers will file at least one bill that would attach strings to contractors' ability to "stand in the shoes" of policyholders when seeking payment for repairs.

Claims costs have skyrocketed in recent years, insurers say, from increased lawsuits over non-weather-related water emergencies, mostly stemming from Miami-Dade, Broward and Palm Beach counties, that begin with contractors convincing policyholders to sign over the right to their policy benefits as a condition of beginning repair work.

So far, all of the bills died after insurers and trial attorneys failed to agree on reforms.

But just as the recurrence of Groundhog Day ultimately ended for Bill Murray's character, prospects for ending the standoff over "assignment of benefits" reform seem stronger this year, said Paul Handerhan, senior vice president of public policy at the Florida Association for Insurance Reform, a statewide industry watchdog group based in Fort Lauderdale.

"A number of reforms are needed," Handerhan said Friday. "The longer the problem exists, the longer rates will continue to go up."

Citizens and other insurers blame abuses for premium hikes over the past two years. They point to a handful of law firms, mostly in South Florida, that routinely file hundreds of lawsuits accusing insurers of offering too little or denying responsibility altogether for claims.

Under current law, those law firms can force insurers to pay all of their legal invoices if the insurers agree to settle the claims for as little as $1 over the amount initially offered.

In a legislative wish list released in December, Citizens proposed prohibiting attorneys from seeking legal fees if they are representing contractors working under assignments of benefits.

Other reforms sought by Citizens include requiring a written estimate of work to performed under an assignment, requiring a copy of the assignment to be furnished to the insurer within three days after it is signed, limiting assignments to just the work being performed and not the whole claim, and enabling consumers to rescind agreements. In addition, Citizens wants to prohibit fees in assignments for check processing, overhead, profit or cancellations, and wants bar contractors from being able to place liens on properties for work completed under assignments and paid for by insurance proceeds.

Handerhan predicted that enough support exists to push through some reforms during the legislative session that begins in March. He said FAIR especially supports proposals requiring stronger notice that policyholders are signing over the right to collect their insurance benefits. Currently, some companies hide those disclosures in the middle of forms that policyholders are told are simply work authorizations, he said.

FAIR also supports barring repair contractors from giving referral kickbacks to plumbers who are usually the first called to a flooding emergency, he said.

Ryan Banfill, spokesman for the trial attorneys' trade organization, Florida Justice Association, said representatives plan to attend both meetings to present their arguments on the attorneys fee issue.

Jeff Porter, the association's legislative and political director, said in a statement that the association plans to "vigorously oppose any attempts to take away homeowners' and their assignees' rights with respect to attorneys' fees and limiting what homeowners can do with their insurance policies."

The association "remains committed to attempting to solve the problem of unscrupulous contractors, but not by throwing away people's rights," Porter said.

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