The Florida House of Representatives sent two pieces of legislation to the Senate this afternoon that could have big implications for the state’s economy.
One of those measures should be advanced immediately. The other still needs work.
The House passed, 82 to 20, a measure aimed at curbing assignment-of-benefits (AOB) lawsuit abuse. AOB claims stem from entrepreneurial plaintiffs’ lawyers and home improvement contractors, who promise work in exchange for a homeowner’s insurance benefits. The contractors and lawyers also get the right to sue the homeowner’s insurance company- even without the homeowner knowing. When the insurer doesn’t pay the bill, which is usually inflated, they get hit with a lawsuit. These types of lawsuits have skyrocketed in Florida, going from 460 in 2000 to 28,000 in 2016.
AOB lawsuit abuse is costing both business and consumers. One study found the average AOB claim to be 50 percent higher than the average non-AOB claim. As a result, Florida regulators said property insurance rates in Miami-Dade County will rise more than 50 percent by 2022.
The Senate should take up this bill immediately and rein in a system that so clearly has run amok.
On the other hand, the House also voted to replace the state’s auto insurance system. Unfortunately, the new bill does not include much needed bad faith reform. The new system would still allow lawyers to sue insurance companies for excessive amounts above and beyond the monetary limits of an insurance policy by filing a third-party bad faith lawsuit. These lawsuits, according to the Berkeley Research Group, raise the cost of auto insurance by more than 30 percent.
The Senate has its work cut out for it on this bill. Like AOB reform, bad faith reform is necessary to keep costs down on both consumers and businesses alike. Potential provisions should create a more streamlined process to give insureds fair compensation and limit abusive ‘gotcha’ tactics.
It's now up to the Florida Senate to deal with rising car insurance premiums and bad faith lawsuit abuses to fix this broken system.
Overall, the Florida legislature was certainly busy this Friday afternoon, but there is still much more work to be done.