Northwest Florida Sen. Doug Broxson found himself in the center of a maelstrom during the first week of the legislative session as a controversial Assignment of Benefits bill passed through the Banking and Insurance Committee he chairs.
Senate Bill 122 was pushed out of Broxson’s committee Monday and has landed in the Judiciary Committee chaired by Sen. David Simmons.
“The thunderstorm has moved to a different part of the building. It’s moved away, but it’s not gone,” Broxson said.
As Broxson, a 47-year veteran of the insurance industry explained it, an Assignment of Benefits occurs when a vendor — in most recent cases vendors looking to repair water damage — show up with an offer to do a job and a contract to be signed by the homeowner/insurance carrier.
The contract basically removes all rights in dealing with the insurance company from the homeowner and gives them to the vendor.
When manipulated unethically, the vendor goes to the insurance company under the AOB for reimbursement with a claim “many times elevated what the standard costs are,” Broxson said.
“If the companies refuse to pay the amount, the vendor simply files a lawsuit, which they’ve already prearranged with their attorney friend, and what should be a $5,000 claim becomes a $50,000 claim,” Broxson said.
For 100 years until 2000, only one AOB lawsuit had been filed. This year the state has seen 36,000 filings, “and it’s doubling and tripling,” Broxson said.
Gov. Ron DeSantis called on legislators Wednesday to pass meaningful reform and said AOB “has really degenerated into a racket.”
Broxson said the goal of the Senate is to pass reform that will protect homeowners and limit the ability of vendors to take advantage of the law.
AOB was originally conceived as a way to protect property owners from paying double costs in an event they ever had to sue their insurance carrier.
“We did not want the expense of hiring an attorney taking away from what it would cost to repair their home,” Broxson said. “So we established a standard no other state has: that if you ever have to sue an insurance carrier, you only have to win by one dollar, and if you do you get not only an extra dollar but attorney’s fees.”
The system wasn’t designed to give the tremendous benefit that some third parties are now reaping, he said. But some attorneys have found they can bill hours, go to court “and make quite a bit of money from these small claims,” Broxson said.
Broxson said the bill now moving through the Senate would retain the one-way provision that has protected a policy holder’s right to sue a carrier.
The biggest change in the law if SB 122 is passed is that certain restrictions would be put in place so that, if an AOB is signed a “prevailing fee” would come into play in the event the vendor holding the AOB contract and an insurance company become involved in litigation.
“Whoever wins pays, and it would have to be by a substantial enough amount that the judge would determine that either the insurance company was not acting in good faith or the vendor was not acting in good faith, and make the settlement based on that provision,” Broxson said.
Broxson said he likes the chances of the AOB bill in the Judicial Committee because Simmons, the committee chair, authored much of SB 122.
“I think it will survive. I negotiated with the next chairman to make sure this bill would be OK coming out of next committee,” he said.