Get ready for another legislative fight over proposed changes to state law the insurance industry says it needs to lower costs and stop premiums from rising.
State Sen. Anitere Flores, R-Miami, is promising to scrutinize the industry’s contention that skyrocketing water damage claims in South Florida is driving up losses for insurers and premiums charged to consumers.
“I would like to see further proof that this is a cost driver,” Flores said in an interview Tuesday. “And if the cost driver is fixed or removed, what will be the benefit for policyholders?”
Flores is the new chairwoman of the Senate Banking & Insurance Committee, which gets a first look at any insurance regulation proposed for the 2017 Legislature. Flores, in her role as chair, can schedule committee votes to advance bills or ignore bills and let them die.
Reform bills have been proposed in each of the past four years, but none survived.
At the year’s first committee meeting at the state capitol on Tuesday, forces on both sides of the long-running “assignment of benefits” question previewed arguments that will shape debate over any reform bill filed for the upcoming spring session.
An assignment of benefits is an affidavit repair companies often require from homeowners that transfers benefits of the homeowners’ insurance policies. Insurers say contractors use assignments to file inflated claims and costly lawsuits. Contractors say assignments protect their interests and allow repair work to begin right away.
Yet without changes, costs will continue to grow and insurers will continue to pass those increases to consumers, insurers warn.
Barry Gilway, president and CEO of state-run Citizens Property Insurance Corp., said costs from increased water damage claims and lawsuits justify the company charging $6,900 for an average homeowner policy in the tricounty region. But state law allows only 10-percent annual increases, limiting Citizens’ average policy cost increase from about $2,900 to $3,200 in 2017.
Without changes to how assignments are allowed, “this 10 percent increase will simply continue almost into infinity until it reaches that $6,900 number,” he said.
Dave Deblander, owner of Pro Clean Restoration and Cleaning in Pensacola, countered that insurance companies routinely delay paying his invoices for more than 90 days, forcing him to take them to court. Instead of restricting assignments of benefits, Deblander said the legislature should regulate the water damage restoration industry that insurers say are ripping them off.
“Regulate us,” he said. “Get rid of those bad companies in South Florida. Don’t ruin it for the whole state by getting rid of AOBs.”
Sha’Ron James, the state-appointed consumer insurance advocate, called for a “balanced solution” that considered effects on consumers first. “The time to act is now,” she said.
But Flores pledged to look critically at any proposals backed by the insurance industry and ask for more data to back up claims that a crisis exists.
Reforms sought by Citizens includes requiring copies of assignments to be delivered to insurers within three days, limiting assignments to just work being performed, and barring attorneys from seeking legal fees when representing contractors working under assignments.
Flores noted that regulating water damage repair contractors is “one proposed solution with universal acceptance.”
As for other measures sought by the insurance industry, she said, “before we move forward on a fix, we need to make sure the issue needs fixing. And if it is fixed, will it have a positive affect on policyholders?”
