Florida Senate Banking and Insurance Committee Seeks Compromise, Solutions to Assignment of Benefits Challenges

At its meeting yesterday, October 24, 2017, the Florida Senate Committee on Banking and Insurance (“Committee”) convened a panel of expert witnesses to testify on the effects of Post-Loss Assignment of Benefits (“AOB”) and one-way attorneys’ fees.

The panel comprised experts representing both the public and private sectors of the insurance industry, as well as trial attorneys, and the owner of a Florida Panhandle-based water mitigation company.

Both sides of the AOB issue presented conflicting arguments that led to Committee members essentially questioning the verity of the information.  

Committee Chair Anitere Flores noted there didn’t seem to be much middle ground on the question of whether or not to eliminate one-way attorneys’ fees.  She suggested that, given the contention, perhaps committee meeting should have taken place under oath.

Citizens Property Insurance Corporation (“Citizens”) executive Christine Ashburn indicated that she did not believe that these were industrywide issues, but more geographical issues that mainly emanate from South Florida’s Tri-County area (Miami-Dade, Broward, Palm Beach). She stated that 50 percent of Citizens’ book of business consists of policies from southeast Florida; but that 96 percent of Citizens’ claims-related litigation involves water damage sustained by policyholders from those three counties.

Lee Jacobson, a civil litigation attorney, stated that roughly 60 percent of his law firm’s business is generated through AOB litigation.  He requested that the testimony given yesterday by Citizens’ representatives not be considered because–unlike for-profit insurers–Citizens constantly attempts to move their book of business to the private sector, he said.  Citizen’s goal of minimizing its book of business will help alleviate taxpayers’ burden, he added.

Mr. Jacobs also stated that he felt the biggest issue consumers face today is insurers “lowballing” claims estimates.  He explained that this leads to the insured and affiliated contractors having to seek remedies through litigation.  The only ways claims are being paid, he said, is either through litigation or after an insurer finally admits fault and pays.

Calling the statements made by Mr. Jacobson “patently false,” Jeff Scott, Chairman, CEO, and President of Gemini Financial Holdings Corporation and its subsidiaries, including Olympus Insurance Company, said that if an insurer has to conduct business the way that Mr. Jacobson suggestion, then “they are really bad at it.”

Mr. Scott pointed out insurers’ sustained Florida underwriting losses, pointing out that four insurance companies are no longer in business because of related financial duress.

Speaking to Mr. Jacobson’s statement on payment and the effect of one-way attorneys’ fees Mr. Scott added that, just because an insurer is willing to pay in order to avoid the hefty cost of litigation does not equate to an admission of wrongdoing, but rather a “confession of judgement.” In other words, he said, it makes more sense for an insurer to pay a $10,000 claim than it does to spend hundreds of thousands of dollars in legal fees.

It was explained that Florida’s one-way attorney fee statute requires insurers that agree to settle cases for any amount of money over the amount of the original settlement offer to pay legal fees incurred by the policyholder – or the policyholder’s assignee.  Thus, if litigation theoretically ends with $1 being awarded to the policyholders or their assignee, it may also conclude with the plaintiffs’ legal bills that could–depending on the scope of work-be substantial.

Dave DeBlander, founder and owner of Pro Clean Restoration and Cleaning in Pensacola, added that, if it were not for Florida’s AOB law, he would end up having to sue the homeowners and place a lien on their homes when conflicts over pricing arose.   

He questioned the fairness of changing the existing AOB law, inasmuch as homeowners must pay their insurance premiums and then also must pay to fight a battle in court if their insurance company will not cover a service they believe they have already paying for.

Mr. Deblander added that his issues with insurers often come down to the amount of time it takes for them to pay him.  Last month, he said he had to take a company to court because 90 days had passed and the insurer would not pay him roughly $800 owed for his completed work.  He added that an average job price billed by his company is roughly $2,500.

Chair Flores concluded that she believes there is room for compromise.  She said the Committee will be evaluating alternatives such as a sliding payment scale.

• News coverage of yesterday’s hearing by FloridaPolitics.com:  Senate committee considers sending AOB disputes to mandatory arbitration

To access audio, video and the final packet for yesterday’s meeting, click here.

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