AOB & Roofers?!

Rapidly becoming Florida’s biggest residential insurance cost driver and once thought to involve mostly water extraction companies, abuse of AOB (Assignment of Benefits) has now metastasized into the roofing industry.

I use the phrase “roofing industry” loosely. The prime abusers don’t appear to be roofers at all but, fly-by-nighters, scammers and sometimes even criminals–with no experience, no license and, far too often… no conscience!

Similar to the bad apples of water extraction, they’ve learned their trade at trial lawyer seminars promising “insider secrets” on how to get the most out of AOB.

The Division of Insurance Fraud (DIF) is currently investigating over 100 claims involving abuse of AOB in the tri-county area of Hillsborough, Pinellas and Pasco counties. The result of roofers, or those posing as roofers, trolling neighborhoods, acting as public adjusters and promising new roofs at no cost–for damage that often isn’t even covered.

Incentivized by potential huge payoffs with little chance of any consequence and armed with “insider secrets”, they hire subs to do the actual work and force insurers to pay inflated bills.

Then, they stop paying the subs. Jobs are half done. Workmanship shoddy. Angry subs redress homeowners with liens and lawsuits. (See NOTE #1 below)

Homeowners, even angrier than the subs, turn to their insurers only to find they’ve already paid in full.

Here’s what I learned from one insurer only a few days ago.

For five years, from 2007 to 2012, hail claims were barely on its radar, accounting for a mere 1-2% of total claim volume.  Enter the “roving roofers” armed with “insider secrets”. In 2013 hail claims rocketed 700% to over 7.9% of its total claim volume.

Last year the same insurer had an astounding 11.24% of its total claim volume from hail.  In other words—for five years (2007-2012) it paid $1.8m in hail claims.  Then, in just two years (2013 and 2014) it spent $8.3 million!

What will 2015 look like for this insurer? What will premiums look like for Florida policyholders if every insurer suffers a 400% increase in fraudulent roofing claims?

Once you get the answer(s) add in the cost of AOB by water extractors inflating bills to cover deductibles and plumber “kickbacks” and you’re on the edge of another perfect storm similar to the one that drove sinkhole premiums up 5000%!

A few weeks back I was on a panel in Orlando for the Florida Chamber of Commerce discussing the widespread abuse of AOB. Last week I participated in a workshop for the House Banking and Insurance Committee on the same subject.

During the House Committee hearing some of my fellow panelists, including the usual suspects in support of AOB (trial lawyers, water extractors, et al) offered the same overriding theme:

“Get rid of the bad apples who abuse AOB but don’t get rid of AOB. It’s necessary to insure emergency remediators get paid!”


Eighty percent of emergency remediation is performed by companies that don’t use AOB at all, but…they’re all being paid just fine.

Roofers too! In fact, most roofers haven’t even heard of AOB. According to testimony at the House hearing from Florida’s premier roofing organization, the Florida Roofing, Sheet Metal & Air Conditioning Association (FRSA), AOB abuses are rampant and AOB should be “done away with.”

Like honest water extractors, honest roofers have few problems getting paid for honest work!

While a myriad of solutions have been lofted, lawmakers still have the option of two lasered approaches, in my opinion.   One, ban the use of AOB in property insurance claims altogether, or; two, allow insurers to limit the use of AOB in the terms of their policies. (See NOTE #2 below)

Policyholders win with either approach!


NOTE #1:

Example 1–In October of 2014 the Division of Insurance Fraud released the following statement. “Today, we arrested five NBRC Roofing Company employees for organizing a $525,000 insurance fraud scheme. This Tampa-based company is accused of leaving 97 Florida homeowners with unfinished roof repairs and liens on their homes after stealing insurance money intended to pay subcontractors. Our investigation discovered the roofing scam involved visiting homeowners following a storm, convincing them roof repairs were necessary, helping the homeowners file insurance claims for repairs and finally convincing them to give NBRC the sole right to make the repairs and the assignment of benefits for the insurance claims. But once NBRC was paid for the insurance claim, the repairs would not be completed and the insurance money would be pocketed by NBRC employees.”

Example 2– In a previous blog on Assignment of Benefits I pointed to a roofer advising on insurance claims as a means to help people get a “free” roof. “We know Roofs and we Know Insurance Companies” they allege. At the time the website called Get Free described the company’s offer this way:


  • PAY NOTHING for our inspection
  • PAY NOTHING for our detailed Insurance based estimate
  • PAY NOTHING, unless we get you a roof replacement and then PAY ONLY your deductible.

NOTE #2: Security First Insurance Company (SFIC) has sued OIR for denying it’s request to limit AOB’s in its’ policy form (AOB suit against OIR). In my previous blog titled “Assignment of Benefits…The Brewing Storm” I state that if SFIC wins “…the AOB problem conveniently and thankfully goes away.” There seems to be some debate about whether that’s true but, regardless of the courts’ decision, a well worded statutory change could also solve the problem, perhaps even on a more permanent basis.

IMPORTANTIf you enjoyed this post you’re invited to subscribe for automatic notifications by going to: Enter your email address where indicated. If you’re already on the website at Johnson Strategies, LLC, go to the home page and enter your email address on the right hand side. Remember, you’ll receive an email confirming your acceptance, so…check and clear your spam filter for notifications from Johnson Strategies, LLC. ENJOY




Speak Your Mind