Assignment of Benefits–The Bone Dry Rebuttal!

Most of us know what happened to AOB reform bills during this year’s regular session.  Meaningful, helpful, changes were approved in the house.  However, fearing the senate might follow suit, two trial lawyers—Sen. Anitere Flores (R-Miami) and Sen. Gary Farmer (D-Ft. Lauderdale) teamed to shut down the companion bill by Senator Dorothy Hukill (R-Port Orange) and Senator Kathleen Passidomo (R-Naples).  No senate vote.  Not even a debate.

Oh well!

It all results in another sad day for homeowners facing steep rate increases.  Accurate projections are on the OIR website and, ironically, are materially worse in territories represented by the aforementioned trial lawyers. (See Note #1 below).

The thousands of abusive AOB lawsuits, stemming mostly from water losses, have already forced Commissioner David Altmaier to order two companies to raise their rates higher than requested.  Dozens more increases are pending, (See Note #2 below).  Citizens policyholders, and thus the constituencies of Senators Flores and Farmer, are in for a long rough ride.  This, according to well over a dozen media reports (See Note #3 below) on Citizens pending rate increases and coverage limitations.

Citizens board member and former state representative from Cape Coral, Gary Aubuchon said Citizens “…is sailing into shark-infested water in a ship that was created by the legislature.  Each year they send us out, and we come back asking to fix our ship and they send us out with duct tape.”  No need to remind voters which lawmakers are most culpable.  The Wall Street Journal editorial titled “A Florida Republican keeps a trial bar payday going for another year” has already done that.

The reform march will not abate, of course.  At this point, legislative proposals may as well contain everything necessary, including and most importantly, repealing the attorney fee statute held sacrosanct by the trial bar, water remediation firms and at least two senators.  Near term? More bad news for policyholders. Insurers will continue as they have, raising rates (when approved or when ordered) and reducing coverage for water losses or seeking other form changes to slow the bleeding.  This, along with more and more managed repair programs channeling claimants away from the abusive water firms.

Speaking of water firms.  The Tallahassee Democrat published the opinion of the president of FLARS (The Florida Association of Restoration Specialists).  Written by the owner of Bone Dry Restorations, Inc., it reads like a trial lawyer hymnal.

If you see any more reality skewing opinion pieces (Op-ed’s), please let me know.  In the meantime, here’s my Bone Dry Rebuttal, in 500 words or less.

ASSIGNMENT OF BENEFITS—Setting the Record Straight!

Recently the Democrat published an opinion by Jeff Grant, owner of local water extraction firm, Bone Dry.  Mr. Grant’s piece mischaracterized the debate regarding abuse from Assignment of Benefits (AOB), a practice I’m convinced is the worst insurance crisis in Florida history.

AOB allows some remediation vendors to take advantage of homeowners via language directing “all” insurance proceeds to the vendor after a homeowner suffers a loss, such as a water leak.  Legislative testimony leaves little doubt too many homeowners didn’t know what they signed and that too many water firms are just fine with that.

Mr. Grant wrote on behalf of the Florida Association of Restoration Specialists (FLARS).  He didn’t mention that these water firms operate with zero state regulation.  They have no state licenses, no standards of conduct and no statutory guidelines.  Too many are unethical.  Some are being investigated or sued and, yes, even arrested.

I believe Mr. Grant’s firm is not one of the abusers but, his predecessor at FLARS was troubled enough by the abuse to repudiate the use of AOB.  After testifying in favor of AOB, he eventually said he would stop using it due to “… the unethical practices of AOBs from numerous restoration companies throughout the state along with hundreds of plumbers, roofers, and contractors.”

Mr. Grant was wrong saying recent reforms force homeowners to “pay out of pocket for repairs despite having insurance.”  Most reputable firms use an approach called “Direction to Pay” which pays the water firm directly without usurping the homeowners’ rights.

Why do some water firms decry AOB and others defend it?  The truth is, AOB isn’t needed if water invoices aren’t exaggerated.  Florida’s one-way attorney fee statute forces insurers to pay invoices inflated nearly 600%.  Attorney fees averaging $7,000 are added on.  DFS data shows nearly 30,000 AOB suits annually.  Do the math.

Grant wrote that adjusters show up “several weeks” after a loss.  Legislative testimony proved that water firms, those armed with AOB and a trial lawyer, intentionally delay reporting the claim.  This, for extra time to perform unnecessary repairs or remodel.   When the insurer is finally notified, the remodeling is done and any questions generate an expensive suit.

State data for some territories shows 90% of claim notices from a lawyer or public adjuster, not the policyholder.  Think about that! Nine out of 10 claims are alleged to have a controversy before it’s physically possible to know if there is a controversy.  That’s not a lawsuit.  That’s a shakedown.

See what this scam is doing to your premiums by going to the OIR’s website (   Commissioner Altmaier just had to order two insurers to raise premiums.  The President of Citizens says his company’s rates, which have an annual cap of 10% will, none the less, double every five years.  All due to water firms and trial lawyers in cahoots.

My advice? Until lawmakers implement the needed reforms, be careful who you call to dry out your home. And never, ever, sign a contract that contains Assignment of Benefits.


NOTE #1: According to the OIR, a Miami-Dade homeowner with a $150,000 home is paying an annual premium of $2,732.  That’s today.  In just five years, without the needed reforms, that premium will be a devastating $4,441.60.  (See OIR’s 5-year rate projections for all territories, here).

NOTE #2: A few weeks ago, OIR approved a rate hike of 16 percent for People’s Trust based in Deerfield Beach, when it asked for only a 14.5 percent increase.  OIR also approved a 6.4 percent overall rate hike for Citizens for 2017 on top of a 3.2 percent increase last year.  Despite a 10% cap on increases, Citizens president says Citizens rates will double every five years if lawmakers don’t act.  Other Homeowner rate increases approved so far: First Protective Insurance Co. — 4.2 percent; Florida Peninsula Insurance Co. — 8.1 percent and 9.7 percent for its “elite” and “preferred” products; U.S. Coastal Property & Casualty Insurance Co. — .2 percent; Addison Insurance Co. — 9.9 percent; United Fire & Casualty Co. — 9.9 percent; People’s Trust Insurance Co. — 16 percent; Homeowners Choice Property & Casualty Insurance Co. — 8 percent; Omega Insurance Co. — 9.3 percent. Other requests for rate hikes are pending.

NOTE #3: Unlike previous articles regarding a Citizens rate increase, these all place the blame squarely on AOB, water losses and the legislature’s failure to act.  My favorite is the piece by the Miami Herald “drip, drip, drip” but, all media outlets appear to finally be getting the picture.

Daytona Beach News-Journal–Florida’s Citizens insurance OKs rate hikes.

Ft. Myers News-Press–Citizens Property Insurance to increase rates because of water damage claims

Lakeland Ledger–Citizens Property Insurance seeks rate increases, blames water damage claims

Miami Herald–That drip, drip, drip you hear is the cost of your homeowners insurance rising.

Orlando Sentinel–Citizens to ask Florida for insurance-rate hikes, blaming water claims

Palm Beach Post–Citizens OKs 9.3% rate hike in Palm Beach County, water damage caps

South Florida Sun-Sentinel–Citizens Insurance targets South Florida with steep rate hikes

Sunshine State News–Abuses Force Citizens’ to Increase Rates in 3 South Florida Counties

Tampa Bay Times–Citizens Property blames abusive claims for statewide hike, Tampa Bay rates remain stable

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