The epidemic of assignment of benefits (AOB) abuse that has been plaguing Florida for several years is only getting worse, says a new report from the Florida Office of Insurance Regulation (OIR).
The most recent data call of water or roof damage homeowners claims closed between Jan. 1, 2015 and June 30, 2017 shows the frequency of water claims per 1,000 policies has increased 44 percent since 2015 and severity has increased by 18 percent, according to OIR.
The report was released by OIR in early January and analyzed detailed information for 144,983 water claims from the top 25 homeowners and dwelling fire writers as of 2015.
OIR omitted information in the data call from Citizens Property Insurance Corp., which has borne the brunt of the abuse, stating the state-run insurer of last resort has submitted its own data that has already been examined and reported on.
OIR said Southeast Florida has the highest frequency of water losses, and the region experienced a 60 percent increase in water claims frequency during the two-year period. But the highest combined change in frequency and severity occurred in Central West Florida, where there was a 35 percent increase in claim severity between 2015 and 2017, underscoring how the abuse has spread from South Florida to other parts of the state in the last few years. OIR noted that all regions of Florida experienced significant increases in water losses.
When water loss claims are coupled with an AOB, the severity of a claim is generally at least 85 percent more, according to OIR’s data. Since 2015, OIR found the use of AOB’s has increased from 12.8 percent of water claims to 17 percent of water claims.
OIR concluded in its report that the increase in both the frequency and severity of water losses, the rising use of AOBs, and the acceleration of those trends over the last several years is “resulting in tangible consumer harm.”
“Absent any intervening changes in the way AOBs are being used today, it is expected that these trends will continue to deteriorate,” the report states.
Florida Insurance Commissioner David Altmaier took the release of the data call report as an opportunity to stress the need for lawmakers to enact reform during the 2018 Florida Legislative Session.
“Without a legislative remedy, this problem will lead to an increase in homeowners insurance premiums and lack of consumer choice as insurers stop writing or renewing policies in areas with high water losses,” he said.
Lawmakers are weighing AOB reform options in the current legislative session, which ends on March 9.