Florida Insurance Commissioner David Altmaier

Assignment of benefits contracts for property damage claims may be going the way of the dinosaur in Florida. A recent Florida Insurance Bulletin notes that the new statute allows insurance companies to issue policies preventing an assignment of benefits if insurers offer a premium discount.

The bulletin outlines what insurers must do:

Section 2 of the Act creates Section 627.7153, Florida Statutes, which provides standards for policies that restrict the assignment of benefits in whole or in part under a property insurance policy. The new language provides that an insurer may restrict assignments of benefits under a property insurance policy in whole or in part only if it meets all of the following requirements:

• The insurer must also contemporaneously offer to the insured or applicant a policy that does not restrict assignment;

• The restricted policy must be offered at a lower cost than an unrestricted policy;

• The policy restricting assignment in whole must be offered at a lower cost than a policy restricting assignment in part; and

• The restricted policy must include, on the face of the policy or the declarations page, a statutorily required disclosure.

Insurers wishing to make available a policy that restricts in whole or in part an insured’s right to execute an assignment agreement must file such forms or endorsements and rates with the OIR for approval. The OIR will make every effort to approve these new policy forms and rates as soon as practicable. Rate filings made for these restricted policies must provide actuarial support for the difference in rate between an unrestricted policy and a policy that restricts assignment in whole or in part.

So, this is my take on the truth of this new law and what is going to happen:

  1. The truth is that this legislation passed because of the scapegoat publicity of a few lawyers and law firms filing thousands of lawsuits. Their actions and greed changed the regulatory and political landscape.
  2. Good, reputable contractors will be harmed by the law.
  3. Insurers will gain more leverage to pay less than adequate amounts to properly and legally complete quality restoration work.
  4. Bad contractors and bad lawyers gaming the insurance claim process are hurt very badly by the new law.
  5. Policyholders may find fewer scamming contractors and lawyers doing shoddy work and taking their rights but will also be faced with personally fighting for the quality of the construction they deserve with insurance companies caught in a competitive downward spiral, paying for as little as possible.
  6. Some of the AOB lawyers creating this mess will still find ways to market for cases and game the system with obvious loopholes in the statute’s written language. The insurance lobbyists have made an annuity with this legislation and will still be making money fixing what they failed to properly write into law in the last legislative session.

The resources of the Florida Office of Insurance Regulation are not infinite. While all this AOB flurry of discord and legislative activity has been going on, insurers have been busy rewriting Florida property insurance policies to reduce what have been otherwise nationally standard insurance benefits. Citizens Property Insurance Company is the leading bad actor in this regard.

Since the citizens of Florida should not be harmed by supporting leaders within the Citizens Property Insurance Company that they have paid for and created, it is time to start looking for a lot more transparency about the behind the scenes lobbying efforts and wrongful actions being made by this entity. It is also time to demand that the leaders running Citizens stop harming the policyholders and citizens they are supposed to serve. The Florida Office of Insurance Regulation needs to be more of a watchdog for consumers rather than a lapdog for insurers when it comes to accepting new policy forms limiting and restricting coverage.

Quote of The Day

Nearly all dogs can stand adversity, but if you want to test a dog’s character, give him a bone.
—Abraham Lincoln