Consumer Advocates, Roofing Contractors
Call on Lawmakers to End AOB Abuse
Nearly 1,000 consumers sign petitions calling for reforms
TALLAHASSEE, Fla. (Feb. 10, 2016) – Consumer advocates and roofing contractors said today that homeowners’ insurance laws must be reformed to stop Assignment of Benefits (AOB) abuse from increasing insurance rates and harming Floridians trying to protect their homes.
The Consumer Federation of the Southeast, a former three-time Florida Insurance Consumer Advocate, and the Florida Roofing and Sheet Metal Contractors Association urged state lawmakers to pass legislation that will keep homeowners in charge of their insurance policies and prevent trial attorneys and unscrupulous home repair firms from taking control of the policies, which can lead to inflated costs and lawsuits.
“Florida can no longer stand by and watch this problem spread into a full-scale consumer crisis across the state,’’ said Jennifer West, executive director of the Consumer Federation of the Southeast. ‘’Homeowners should stay in control of the insurance policies they paid for. They shouldn’t feel pressured to sign away their rights in order to get repairs done.’’
The groups are part of the broad-based Consumer Protection Coalition, which formed in January to pass meaningful AOB reform during the 2016 legislative session. Spearheaded by the Florida Chamber of Commerce, the coalition today delivered nearly 1,000 petitions signed by residents, business owners and other interested parties to Senate President Andy Gardiner and House Speaker Steve Crisafulli asking lawmakers to reform AOB laws before consumers statewide face higher insurance costs.
“These petitions clearly demonstrate that Floridians are starting to understand the scope and severity of the problem,’’ said Steve Burgess, a former three-time Insurance Consumer Advocate for the state of Florida. “They are concerned about the impact to their pocketbook and want protections to keep them in charge of their policies should something happen to their home and they need to file a claim.’’
The state’s largest association of roofing and sheet metal contractors said they support provisions of Sen. Dorothy Hukill’s bill, SB 596, that keeps policyholders in charge of the claim and their insurance policy. The bill requires that an insurance company be informed of a claim in a timely matter and allows an insurer to communicate with a policyholder, regardless of whether an AOB has been signed.
“We’re seeing a lot of companies tell homeowners they need to sign an AOB to do work that doesn’t need to be done. Then they bill the insurance company for needless costs and sue if they don’t get paid. It’s abusive and unethical,’’ said Cam Fentriss, a spokeswoman for the Florida Roofing and Sheet Metal Contractors Association (FRSA). “For the sake of all businesses doing honest work, AOB needs to be reformed.’’
Ralph Davis, owner of Streamline Roofing and Construction in Tallahassee, said bad actors give the entire profession a black eye. To prevent abuse, he supports insurance companies co-writing checks to both the property owner and contractor after the work is done to ensure claims cover actual work performed.
“We pride ourselves in high quality work and strongly oppose any contractor who recommends work that doesn’t need to be done,’’ Davis said. “We need rules in place to ensure the system isn’t abused.’’
The 800-member FRSA is particularly concerned that the high costs of inflated claims and legal fees when a lawsuit is filed are hindering the state’s ability to protect policyholders against future hurricanes. Fentriss cited statistics from Citizens Property Insurance Corp. showing that for every insurance premium dollar collected, only 18 cents goes toward saving for a future hurricane, while 28 cents goes to cover non-weather-related water damage costs.
The call from consumer advocates and roofing contractors follows the release of a report by the Florida Office of Insurance Regulation (OIR) showing that water damage claims and the use of AOB are rising rapidly statewide. The analysis of the top 25 private homeowners’ insurance companies in Florida showed that water claims involving AOB cost, on average, about 50 percent more than claims without an AOB, and that the total number of water claims with an AOB rose from 6 percent in 2010 to 16 percent in 2015.
The OIR report warned that if current trends persist, consumers could face rate increases of 10 percent or more annually, as insurers grapple with rising losses associated with an increase in water claims.
Water remediation companies supporting AOB reform said AOBs aren’t necessary and open the door to abusive business practices.
“We don’t need to obtain AOBs from homeowners to make sure repair work is done properly and we get paid by insurance companies,” said William “Bubba” Ryan, president and CEO of Rytech, a 30-year-old water damage remediation firm that operates in 20 states, including Florida. “In recent years, we’ve seen an explosion in the solicitation of AOBs and questionable practices by some vendors operating in Florida. Assignment of Benefits abuse hurts consumers and the reputation of companies that are trying to do the right thing.”
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The Consumer Protection Coalition is a broad-based group of business leaders, consumer advocates, real estate agents, construction contractors, insurance agents and insurance trade groups pushing for reforms to end Assignment of Benefits (AOB) abuse. Learn more about the Coalition at FightFraud.Today.