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Florida’s assignment of benefits (AOB) reform will take effect July 1, and the insurance industry is getting ready to respond to new requirements because of the law. The bill is a consumer-friendly law that will bring much-needed relief to Florida policyholders.

“This reform protects consumers, not just by impacting their overall premiums, but by giving them protections from unethical practices that they didn’t have before,” said Victor Mandia, Partner at Jaffe Tilchin Wealth Management.

Mandia said, “We are also on the lookout for the next ‘scheme’. The ones who have profited from the AOB scam ( ) for many years will probably try to find ways around the new law.”

Florida Governor Ron DeSantis signed the House Bill on May 23, signifying the end of a seven-year battle by the industry and reform advocates seeking solutions to the increasing abuse of a policyholder benefit that they say has led to higher rates for Florida property owners and less coverage. 

“By signing House Bill 7065, we will better protect consumers from those who would take advantage of them by abusing the Assignment of Benefits process,” Florida Insurance Commissioner David Altmaier said in a statement after DeSantis signed the bill.

The bill has multiple provisions:

  • Define “assignment agreement” and establish requirements for the execution, validity and effect of agreements
  • Prohibit certain fees and alter policy provisions related to managed repairs in an assignment agreement
  • Transfer pre-lawsuit duties under the insurance contract to the assignee and shift the burden to the assignee to prove that any failure to carry out such duties has not limited the insurer’s ability to perform under the contract
  • Require each insurer to report specified data on claims paid in the prior year under assignment agreements by Jan. 30, 2022, and each year thereafter
  • Allow an insurer to make available a policy prohibiting assignment, in whole or in part, under certain conditions
  • Revise Florida’s one-way attorney fee statute to incorporate an attorney fee structure in determining the fee amount awarded in suits by an assignee against an insurer
  • Require service providers to give an insurer and the consumer prior written notice of at least 10 business days before filing suit on a claim

The Florida Office of Insurance Regulation told insurers in an informal memo that no form or rate filings are required to comply with the new assignment agreement provisions in the bill because they do not relate to the terms of an insurance policy itself. Insurers can choose to notify their policyholders of the new assignment agreement provisions without filing a notice with OIR. However, OIR said if insurers chose to modify their policy forms “to provide, for instance, a designated location for the receipt of assignment agreements,” they must file the policy form change and have it approved. Insurers making rate changes will need to file with OIR, as is current standard practice.*

The required data elements for the first insurer data call due in 2022 will be specified in a rule to be promulgated by the Financial Services Commission, OIR said, and must include data about claims adjustment and settlement timeframes and trends, grouped by whether litigated or not litigated and by loss adjustment expenses.*

Consumer Education

 “Our agents and brokers will help communicate the changes in the new law, plus its consumer protections, to customers.” Mandia said. “We have an obligation to advise our clients about what their rights and opportunities are for them with an AOB.” 

Agent associations are already working on trainings and seminars on what agents need to know. In addition, agents and brokers should read the bill’s statutes and speak to an attorney they trust so they know what’s going on and the current state of the law.

What’s the Next Scheme?

While the industry celebrates this legislative victory, it is prepared for another insurance-related scheme that is probably coming next.

According to Sunshine State News, “Even before the ink on the just-passed ‘assignment of benefits’ (AOB) legislation had dried -- before Gov. Ron DeSantis had a chance to sign the bill into law -- Orlando attorney Harvey Cohen was trying to bleed every last penny out of the scam he invented to make a killing on storm victims' misery.”

“It’s likely that there are already attorneys working on how they can get around the new legislation,” said Mandia.



Posted 11:44 AM

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