View this article online: https://www.insurancejournal.com/magazines/mag-features/2018/11/05/506197.htm
In an effort to keep the Florida assignment of benefits (AOB) crisis from further worsening in the state, Florida’s insurance industry, regulators and consumer advocates are on high alert for AOB activity in the wake of Hurricane Michael and working to educate consumers on the pitfalls of signing over their policy rights.
“Consumers need all the information they can get to help navigate making repairs to their homes and vehicles, and we’re working hard to provide resources to help prevent Floridians from becoming victims of AOB scams,” said Mark Wilson, president and CEO of the Florida Chamber of Commerce, which spearheads the Consumer Protection Coalition, formed in 2017 to tackle the state’s AOB epidemic.
Recovery efforts are underway in the Florida Panhandle from the Category 4 storm that hit the region on Oct. 10, and with that comes plenty of opportunity for fraudulent activities, officials say.
“I’ve already heard of crooked contractors who are asking for cash up front and pressuring some to sign an assignment of benefits contract. Check with your insurance agent, insurance company, or call my office before you sign anything,” Florida CFO Jimmy Patronis said on Oct. 15.
Florida’s AOB problem has stemmed from unlicensed water remediation and roofing contractors who have homeowners sign over their insurance policy rights in exchange for needed repairs to their homes, and then file inflated or fake claims with the insurer. When those claims are disputed or denied, the contractors file a lawsuit that insurers are typically left footing the bill for.
Florida Insurance Commissioner David Altmaier said before Michael hit that one of his top concerns was the situation worsening after a large storm, and that the quick handling of claims would keep people from being taken advantage of.
Consumer awareness is now a key strategy of Florida regulators and consumer advocates. The insurance industry will play a key role in stemming any abuse by educating policyholders on why they don’t need to and shouldn’t sign an AOB, as well as by responding to claims in a timely manner, officials say.
But officials are doing more than just urging consumers and insurers to work together on their hurricane claims. During the 2017 hurricane season, the Department of Financial Services formed the Disaster Fraud Action Strike Team (DFAST) that consisted of three teams of insurance fraud investigators deployed to areas heavily impacted by Hurricane Irma. Now, the fraud teams are deployed in areas impacted by Michael.
“… Anyone who tries to scam this community in the wake of Hurricane Michael will be found by my Disaster Fraud Action Strike Teams,” Patronis said.
The Consumer Protection Coalition also deployed resources to the Panhandle to warn home and auto owners of the dangers associated with signing an AOB contract to start repairs on Hurricane Michael damage.
It has launched a multi-platform public service announcement campaign in Panama City and Tallahassee urging residents to contact their insurance agent or insurer first before signing any documents. The CPC also is educating home and auto owners at insurance claims villages in Panama City and Tallahassee and answering consumer questions about AOB abuse.
“[CPC] is committed to helping residents get through the difficulty of putting their lives back together,” said Wilson.
For its part, the insurance industry says it’s ready to assist consumers with their recovery and is in the area doing so.
“Insurers want to prevent policyholders from being taken advantage of by bad actors that prey on Florida storm victims. Unfortunately, events like Hurricane Michael often bring out greater numbers of those bad actors,” said Logan McFaddin, regional manager for industry group PCI.