A new effort is underway in the Florida Senate to further regulate a controversial practice that property insurers say is leading to rate increases.
The Senate General Government Appropriations Subcommittee on Wednesday unanimously approved a proposal (SB 1248) dealing with the practice known as "assignment of benefits." The state-backed Citizens Property Insurance Corp. and Lt. Gov. Carlos Lopez-Cantera have raised concerns the industry is on the verge of a crisis unless action is taken.
The proposal is considered a placeholder as lobbyists and lawmakers continue working on the issue.
Earlier efforts (HB 1097 and SB 596) to tackle the issue, which divides trial lawyers and the insurance industry, stalled. But Lopez-Cantera and Citizens have been raising alarms during the past week, as the legislative session draws closer to its March 11 end.
Lopez-Cantera told senators that problems with assignment of benefits have been growing for years without legislative action and are leading to higher premiums for property owners.
"It is only a problem right now, but it could become a crisis," Lopez-Cantera said.
Meanwhile, Citizens Property Insurance on Tuesday sent a brief to Gov. Rick Scott, state Chief Financial Officer Jeff Atwater, House Speaker Steve Crisafulli and Senate President Andy Gardiner warning that years of work to move policies into the private market could be reversed unless action is taken on the issue.
"The absence of reform will lead to a weaker yet larger Citizens, higher rates for years to come, and fewer private insurance options for many thousands of Floridians," said the brief, put together by Citizens Chief Risk Officer John Rollins.
Assignments of benefits often arise when homeowners need repairs for problems such as water damage. Homeowners sign over benefits to contractors, who ultimately pursue payments from insurance companies.
The insurance industry is seeking restrictions on the practice, which it contends leads to fraud and a proliferation of lawsuits. But plaintiffs' attorneys and contractors argue, in part, the practice helps homeowners hire contractors quickly to repair damage and also can help force insurers to properly pay claims.
Opponents of changes have also argued that the effort by Citizens to alter rules about assignment of benefits will leave consumers to fend for themselves and as a result get fewer dollars for repairs.
When Citizens asked for an average rate hike in September, it pointed to a growth in claims in Miami-Dade, Broward and Palm Beach counties, which comprise a large portion of the state-backed insurer's portfolio.
"It is clear that the fate of Citizens is inextricably linked to the health of Florida's private insurance industry," Rollins' brief said. "The endgame for a healthy market with reasonable rates is to get claims out of the courtroom and back into the control of the consumer assisted by their insurer. Consumers must not be pressured to sign away their rights under duress."
Under the current Senate proposal, which sponsor Miguel Diaz de la Portilla, R-Miami, referred to as "assignment of benefits light," people who perform emergency remediation-restoration services would be prohibited from adjusting claims unless they are also licensed as public adjusters. Among other things, the measure would cap at $25 the possible payment for referring business for repairs or restoration in which property insurance money is payable.
The proposal is the product of a two-hour meeting Tuesday in Diaz de la Portilla's office with representatives of the insurance industry, the Florida Justice Association, water remediators and Citizens Property Insurance.
Diaz de la Portilla expects proposals later this week from both sides that would seek to further change the bill.
"We're not trying to hurt anybody or put anybody out of business in the process," Diaz de la Portilla said.
