Florida House of Representatives and Senate legislators have each developed advanced legislation that would help Florida insurance authorities, industry representatives and consumers turn the tide of abuse that is spreading across the state and leading to higher rates for consumers.
And both accounts tackle the biggest problem that according to AOB reformers fuels the abuse: the one-way lawyer law of Florida.
Pressure from the state supervisor and new state governor can help to shift things into what is now the seventh year that the issue has been for state lawmakers.
"AOB abuse has a negative effect on our consumers and directly undermines Floridians' ability to have reliable insurance products available at affordable prices. I remain a proponent of measures that induce AOB abuse and protect consumers from the violent tactics of bad actors who operate the unique Florida law firm structure, "said Florida Insurance Commissioner David Altmaier after passing an invoice through a Florida House week committee.
The new Florida governor, Ron DeSantis, considered the issue in his first state state on March 5 and said, "There are areas where Florida can do better. I hope that the legislature will pass legislation to resolve the AOB issue. reform, which has become a bit of monotony. & # 39;
DeSantis told journalists after his speech, as reported by the Sun Sentinel, and further commented on the need for AOB reform.
"I would like the abusive words to shrink," the Sun Sentinel told him. "I think it's going to drive up insurance premiums. I think the fact that we've had bad storms lately will raise insurance rates. This, I think, just fuels that, and I want to help the insurance market."
The AOB problem in Florida stems from unlicensed water remediation and roofers who have homeowners who sign their insurance rights in exchange for repairs to their homes. Contractors usually work with a lawyer, instigate bloated or fake claims, and prosecute insurers when those claims are disputed or denied.
Florida's one-way lawyer, accused of driving AOB abuse, has insurers pay the bill for inflated claims and attorney fees if it appears that the insurer has underpaid the claim by a certain amount.
The consensus among all stakeholders is that any reform should address the statute of a one-way lawyer.
"The current right to a one-way lawyer leads to abuse and excessive litigation. OIR recommends limiting the current one-way lawyers' fees lawyer litigation with an AOB agreement to discourage AOB abuse while maintaining consumer protection," Altmaier explained to Insurance Journal.
The current remedy in the Senate supported by the industry and Altmaier was introduced by Florida Sen. Doug Broxson, an insurance agent who chairs the Senate Bank and Insurance Committee, before the 2019 session began on March 4.
Senate letter 122 would continue to allow policyholders and beneficiaries to collect attorney fees under Florida one-way lawyer, but would have prohibited sellers from getting attorney fees.
SB122 was submitted at the committee meeting on 11 February after several committee members expressed concern about the invoice. Senator Jeff Brandes, a member of the legislative support committee, has successfully tried to postpone the law in the hope that lawmakers could reach a consensus on how to proceed.
"There is no perfect invoice to resolve [AOB] – This is a great attempt. We must support this bill. We must continue to refine and refine and work on this bill, "he said.
That was exactly what lawmakers did. At the beginning of the legislature, an amendment was added with more consumer protection and an existing structure for party contributions with regard to lawyer fees. Some of the additions for consumer protection in the amendment include:
- Restricts AOB & # 39; s between service providers and consumers in urgent or emergency situations by stating that if a consumer acts in urgent or emergency situations to protect property from damage and enters into an agreement with a service provider to stabilize, protect, restore such goods or improve, the service provider may at any time give the consumer the right to payment for the work necessary to stabilize, protect and prevent, contract, receive or acquire the home.
- Restricts an AOB after loss for homeowners in an emergency to $ 3,000 or 1 percent of coverage A limit
- Limits an AOB to $ 500 for automatic policy for damage to the windshield
- Requires that consumers provide the insurer with a copy of the AOB within 3 business days after the AOB has been performed.
- This allows the consumer to dissolve the AOB within 14 days after the execution, or at least 30 days after the execution if the service provider has not yet begun substantial work on the premises.
The amendment would amend the Florida lawyer statute to create a prevailing, changing price for the compensation of parties that gives the dominant party – the insurer or service provider – the right to collect fees and fees for lawyers in AOB cases . The amendment defines the dominant party as the party that dominates the main issues of the case. However, the court can determine that there is no current party in a case.
The amendment states that when determining whether there is a ruling party, the court must take into account: 1. the points of dispute; 2. The amount of claims from the service provider versus the recovered amount; 3. The existence of any settlement and counterclaims; and 4. the amounts offered by both parties to solve the problems prior to or during a process.
The prevailing change of party in the statute of lawyers' money is intended to remove the incentive for contractors and law firms to sue the insurer, experts say.
Lawyer Michael Packer, who defended the insurers in AOB cases, says that SB 122 would be "a pretty big change in the way these cases are litigated".
"It would certainly have an effect on the cases being submitted and the willingness to negotiate," he said. "At the moment everything is stacked against the insurance company – this could raise the playing field a little or at least create a situation where these service providers have something to lose if they are not reasonable."
But Packer said that the ultimate benefit of SB 122 is the consumer protection it offers.
"Ultimately, it's about getting these invoices back to reasonable amounts that companies would charge if there was no insurance involved," he said.
Altmaier issued a statement after SB 122 praised the commission that Sen. Broxson praised for his dedication to "helping Floridians who suffer from AOB abuse and the exploitation of Florida's unique law firm." He said that the progress of SB 122 is a victory for consumers throughout the state.
"Tackling the AOB crisis will remain a top priority in the coming weeks and months. We need to protect Floridians from the bad actors trying to maximize profits at the expense of every policyholder in our state," he said.
SB122 is on the agenda of March 18 of the Judicial Committee of Florida Senate.
Florida House Bill
The option to be considered by the Florida House was submitted by the House Peace Subcommittee on March 6 and is now House Bill 7065.
The House bill also includes consumer protection features such as:
- Provide homeowner and automatic policy AOB requirements, including allowing consumers to revoke an AOB within seven business days of execution for homeowners and two calendar days for car glass.
- Requires the service provider to provide the insurer with a copy of the AOB within three business days after the AOB has been performed or the work has commenced, which is earlier for homeowners and within one calendar day for automatic glass
- Requires that the AOB include a written, specified unit cost estimate of services and, if the estimate also includes water repairs, provide proof that the successor is certified by an entity for which services must be performed according to a nationally recognized standard.
The bill deals with attorney fees by requiring the service provider to notify an insurer and the consumer in writing in advance of at least 10 business days before submitting a claim.
It also says:
- The notice to prosecute cannot be served until the insurer has determined the coverage ratio according to the schedules & requirements of current legislation. The notification must state the amount of compensation in dispute, the amount claimed and the pre-suit settlement request, and must include a specified, detailed written invoice or estimate of the work performed or to be performed.
- If the work includes water-repairing services, the invoice must include proof that the service provider is certified by a body that requires repairs to be carried out to a standard approved by the American National Standards Institute.
- The insurer must respond to the notification in writing within the 10-day period by making a settlement offer or demanding an assessment or other alternative dispute resolution.
- If the parties fail to reach a solution and the subsequent lawsuits result in a decision, the PCB offers the exclusive way in which both parties can collect lawyer's fees.
- The bill allows for the award of attorney prices based on the difference between the amount recovered and the amount offered during the settlement negotiations. To achieve this, the invoice defines the difference between the pre-suit offer from the insurer and the pre-suit request from the successor in title as & # 39; the disputed amount & # 39 ;.
Fees are then awarded based on a percentage of the difference between the judgment obtained and the settlement offer.
On the basis of the House account, insurance companies can offer insurance for homes or commercial properties or comprehensive or combined supplementary insurance coverage for motor insurance, which limits the granting of compensation in whole or in part under certain circumstances.
An additional bill in the Senate that had passed the Banking & Insurance Committee this week was SB 754, which only applies to AOB abuse by windshield glass. If assumed, the invoice would prohibit motor vehicle repair shops and their employees from offering something valuable to a customer in exchange for making an insurance claim for replacement or repair of automotive glass. However, the bill does not cover attorney fees.
Insurance association APCIA said it supports this bill, since the number of AOB lawsuits for car glass has risen from 400 in 2006 to 20,000 in 2016.
"Auto-glass repair schedules become another example of AOB abuse in Florida and this bill helps address this growing problem," said State Government Affairs regional manager Logan McFaddin.