AOB Reform Advances Without Auto Glass Fix
The Florida House of Representatives has passed its version of Assignment of Benefits (AOB) reform. The bill has been a priority of key policymakers, including CFO Jimmy Patronis and Insurance Commissioner David Altmaier. You can learn more here. The bill is aimed at reducing abuses that have plagued the Florida property insurance market when consumers assign the rights and benefits of their policies to third party vendors involved in the loss.
Unfortunately, the final version of the House bill does not include similar reforms for the auto insurance market, which also has seen increasing problems with assignments related to replacing windshields.
The House version of AOB reform now heads to the Senate for its consideration. Throughout the session, the Senate has been pursuing its own version of AOB reform. There are a few key differences that will have to be worked out between the chambers in order to have a final bill that passes and is sent to the Governor.
One of the primary differences between the House and Senate has been the approach to prevailing party attorneys’ fees. Under current law, assignees have a one-way right of attorneys’ fees against insurers. The Senate most recently has been considering a standard prevailing party attorneys’ fee approach, while the House adopted a provision that awards attorneys’ fees based on the amount of any recovery— if a plaintiff recovers an amount greater than the insurer’s offer by at least 50% of the amount in dispute, the plaintiff also receives its attorneys’ fees. However, the plaintiff would not recover its fees if the difference is less than 50% greater than the insurer’s offer, and the plaintiff actually would have to pay the insurers’ fees if it fails exceed the insurer’s offer by at least 25%.
The Senate also continues to consider auto glass reforms, which the final version of the House bill does not address. The chambers will have to reconcile whether they’re going to take on both property and auto reforms this year, or whether the auto reforms will fall by the wayside.
Among the other important differences, the House developed an option whereby an insurer may make available versions of its policy with and without restrictions on assignment. A version restricting assignments would be subject to a discount or other rate reduction. The Senate proposals thus far have not contemplated this type of differential in product forms.
After several years of debate, this year’s Florida House has put Florida in a position to finally achieve some form of relief on the property insurance AOB crisis. However, there’s still work to do as the House and Senate try to find common ground in the remaining weeks of session.