The main battle may be at the Florida state capitol as lawmakers consider reforming the state’s assignment of benefits law, but insurers, trial lawyers and contractors staked out their positions this week in a separate skirmish at the state Supreme Court that may close the door on some claims.
The Supreme Court since Saturday has received amicus briefs from the Florida Justice Reform Institute, Florida Bankers Association, Florida Defense Lawyers Association, American Property and Casualty Insurance Association and National Association of Mutual Insurance Companies, the Personal Insurance Federation, the Florida Roofing and Sheet Metal Contractors Association and the Coalition Against Insurance Fraud.
Each of them argues that the high court should affirm a decision by the Florida Fourth District Court of Appeal that would allow insurers to require signatures of all policyholders, including mortgage lenders, before accepting an assignment of benefits.
Insurers say that assignment of benefits agreements are often abused by shady contractors who sue insurers for inflated repair costs despite shoddy work and sometimes no work at all.
“It is inescapable that each individual consumer policyholder has every right to require their written consent to be obtained before their very right to control the proceeds is signed away,” the Coalition Against Insurance Fraud argues in its brief.
Matthew Smith, government affairs director for the Coalition, said his organization supports the right of policyholders to assign their claim benefits and has no position on reform legislation. But Smith allowing insurers to require the approval of all the insureds on a policy is a sensible step that will protect consumers by ensuring that all parties involved have a chance to vet a decision to hand over their claim rights. Otherwise, he said, insurance carriers “are stuck between a rock and hard place.”
“Their only option real option is they they have to go to court and ask a judge to intervene and say, ‘We don’t know who owns this claim any more.'”
The Roofing and Sheet Metal Contractors Association said in its brief that legitimate contractors don’t need benefits assigned to them in order to repair damaged buildings.
“The exponential growth in the abuse of AOBs in Florida’s construction industry has resulted in harmful secondary effects for legitimate, ethical roofing contractors, by undermining the reputation of the roofing industry, eroding customer confidence in their work performance, and taking business away from reputable roofers who are trying to make an honest living in the industry,” the association says in its brief.
On the other hand, the Florida Justice Association argues that the Supreme Court ruled in 1917 that any conditions placed on right to assign benefits is unconstitutional.
“Any additional conditions or restrictions on post-loss assignments grant no additional protections and are only a thinly-veiled attack on the practicability of the notion of post-loss claims being freely assigned,” the Justice Association said in its brief.
The Supreme Court’s ruling will likely resolve conflicting rulings by Florida appellate courts. While the Fourth Court of Appeal ruled that Ark Royal Insurance Co. can add an endorsement to its policies requiring all insureds to accept an assignment of benefits, in 2017 the Fifth Court of Appeal reached the opposite conclusion when ruling in Security First Insurance Co. v. Florida Office of Insurance Regulation.
The insurance office had rejected a similar endorsement that Security First wanted to add to its policies and an administrative hearing officer agreed that such restrictions are contrary to state law.
Even though his office didn’t give Security First what it wanted, Florida Insurance Commissioner David Altmaier supports a change to state law. He issued a press release last week when a reform measure, Senate Bill 122, cleared the Senate Judiciary Committee. The bill would amend a “one-way” provision of state law that allows plaintiffs to collect all of their attorney fees from insurers if they can show they obtained even $1 more in benefits after taking a claim to court. Similar bills have failed to pass the legislature in the past seven sessions, according to the Insurance Journal.
“An insurance affordability crisis has been identified and if left unchecked, rates will likely continue to rise, and companies will likely stop writing policies in zip codes where AOB abuse is most prevalent,” Altmaier said. “As a result, consumers will be left to navigate a crippled insurance market as they prepare for the next major hurricane to make landfall.”
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