The Florida Office of Insurance Regulation recently approved two first-of-their-kind programs designed to help the state’s property insurer of last resort – Citizens Property Insurance Corporation – control the rapidly rising claims and litigation costs among its current 450,000 policyholders. Citizens will now be able to limit coverage on non-weather water claims to $10,000 unless the policyholder agrees to use Citizens’ approved contractors in its new managed repair program. The company can also waive deductibles on such claims as a further incentive for its policyholders to use the managed repair program.
Citizens President & CEO Barry Gilway sat down with host and former deputy insurance commissioner Lisa Miller on the eve of last week’s OIR decision to outline the reasoning behind the program and the reforms still needed in Florida’s property and casualty insurance marketplace. Also joining Lisa on the podcast is Cam Fentriss, Legislative Counsel for the Florida Roofing and Sheet Metal Contractors Association. She and Gilway found common ground on some key Assignment of Benefit concerns whose costs, Citizens says, is driving its requested statewide average 6.7% homeowners policy hike and an 8.1% commercial lines increase.
“We’re not going to solve the problems until we get legislative reform on the Assignment of Benefits issue to curb some of this ridiculous litigation that is taking place,” Gilway said on the podcast.
Citizens is slated to lose $85 million this year because of the exponential growth in non-weather related water losses, such as leaking pipes, and isn’t the only insurance company suffering such losses in Florida. The insurance industry has warned for the past five years about increased use of Assignment of Benefits by contractors who submit inflated claims on all sorts of work and then file lawsuits if insurers deny or underpay the claims.
“The Office of Insurance Regulation and Citizens Insurance have acted where the legislature has so far failed to act, to bring measures of responsibility and accountability to an out of control Assignment of Benefits system that is causing double-digit property insurance rate increases on Floridians,” said host Miller afterward. She predicts that other insurance companies will now seek the same newly approved coverage cap from OIR.
OIR also approved Citizens’ requested policy changes that will now require contractors to submit damage reports and repair estimates, participate in appraisals by Citizens’ adjusters, and answer questions under oath.
“We understand the need for managed repair programs because we know there are abuses out there…so long as they’re done in a way that the contractors in the program are determined on an objective basis, we’re comfortable with that,” said Fentriss.
This Wednesday (August 23, 2017), Citizens will face some of its policyholders at a public hearing being held by OIR in the heart of “AOB Abuse Alley”: Miami-Dade County. There, Citizens’ proposed rates would go up by the maximum 10% for the second year in a row. It says AOB costs are behind its requested statewide average 6.7% homeowners policy hike and an 8.1% commercial lines increase.
Links and Resources Mentioned in This Episode:
- Citizens Property Insurance Corporation Managed Repair Program
- Florida’s Citizens CEO Gilway Responds to Claims About Managed Repair Program (Insurance Journal, 7-7-2017)
- Florida Roofing and Sheet Metal Contractors Association (www.floridaroof.com)
- AOB Fraud: An Unchecked, Growing Problem in Florida (WTSP-TV, Channel 10, Tampa, FL, 8-1-2017)
- 2018 Florida Legislature Assignment of Benefits Bill – SB 62 by Senator Hukill
- Florida Homeowner Claims Bill of Rights (http://floir.com/siteDocuments/HomeownerClaimsBillofRights2014.pdf)
- LMA’s Assignment of Benefits webpage
** The Listener Call-In Line for your recorded questions and comments to air in future episodes is 850-388-8002 or you may send email to [email protected] **