The Insurance Information Institute released a report yesterday that found that Florida’s assignment of benefits (AOB) practice has cost the state’s drivers and homeowners an extra $2.5 billion in inflated claims costs and unnecessary litigation over the past twelve years Insurance Journal reports.
AOB involves a policyholder signing insurance benefits to a contractor in exchange for work, which allows the contractor to work directly with the insurer to recover claims. This has led to an explosion of lawsuits in the state. In 2000, there were 1,300 AOB lawsuits. That number grew to 135,000 through Nov. 9, 2018. The group attributes the state’s rising insurance costs to this practice.
The Institute’s chief actuary said “Florida’s auto and homeowners policyholders have paid about $2.5 billion in insurer legal costs over the past dozen years, a troubling trend driven by plaintiff’s attorneys who are abusing Florida’s current AOB system.”