House and Senate Remain Apart on AOB Reform
Just two weeks into the 2018 legislative session, the Florida House of Representatives and Senate continue to take distinct approaches to the “assignment of benefits” concerns affecting Floridians through increased insurance premiums. The House passed a bill containing reforms directed at the root of the problem– the one-way attorneys’ fee statute against insurers, which has been used to spur litigation and drive inflated loss settlements. The House proposal would require vendors and insurers to put forth reasonable settlement proposals and would expose each side– not just one side, to attorneys’ fee exposure if its proposal turns out to be unjustified (measured in relation to the actual recovery). Many observers, including Insurance Commissioner David Altmaier, expressed confidence that the House approach would be beneficial in helping address the current problems in the market.
Meanwhile, the Florida Senate didn’t get to its AOB proposals in a recent Banking & Insurance Committee meeting. After reforms languished in the committee last year, the committee’s continuing reluctance to tackle the issue this year is disappointing. Further still, several aspects of the Senate’s proposals would perpetuate the AOB problem, if not make it worse. Senate proposals would preclude insurers from including third party attorneys’ fees in their ratemaking process, would codify a prohibition against restricting assignments in insurance policies, and would specify that vendors are not required to comply with conditions in homeowners’ insurance policies.
The consequences of inadequate reforms to Florida’s AOB problem remain clear– insurance rates continue to rise, and are expected to do so going forward. As the 2018 session continues, we can hope that policymakers bridge the current gap and take action to curtail trends that have persisted now for several years.