Florida proposed legislation last week would prevent motorists in the state from assigning their legal rights in auto insurance claims to repair shops.
Assignment of Benefits (AOB) is standard practice in the world of insurance. In Florida, however, this efficient and customer-friendly way of resolving claims has long served as a magnet for fraud. The state’s legal environment has encouraged providers and their attorneys to request unwarranted AOBs from tens of thousands of Floridians, perform unnecessary or needlessly expensive work, and then file tens of thousands of lawsuits against insurers that deny or dispute the claims.
approved legislation in the final weeks of 2022, it took several crucial steps to resolve the state’s property/casualty insurance crisis, including removing the state’s AOB laws regarding property claims. But it did not affect auto-related AOBs.
Intended to help consumers
Florida’s auto glass law, originally intended to encourage drivers to repair or replace damaged windshields by prohibiting insurers from charging deductibles for windshield damage, is being exploited by glass repair shops throughout Florida. Unscrupulous dealers hire workers to survey neighborhoods, prompting vehicle owners to sign up for “free” windshield replacements. They get car owners to sign an AOB contract that assigns the owner’s legal rights to the repair shop.
The store can then sue the consumer’s insurer if it does not pay what the store demands. The result is a lawsuit by the seller on behalf of the consumer.
Lawyers have a strong incentive to sue, since the insurer is obligated to pay their fees if they lose in court. This has resulted in a “demand to settle” system, in which lawyers file lawsuits for very small disputes to force a settlement.
hope for the future
“What started out as a small regional problem a decade ago with a few lawyers and a few auto repair shops has become a major issue across the state,” said Mark Friedlander, director of corporate communications for Triple-I and a resident of Florida. Between 2011 and 2021, the number of auto glass lawsuits in Florida increased more than 4,000 percent, from 591 to more than 28,000. An analysis by the National Insurance Crime Bureau (NICB) found that Florida had the highest number of questionable auto glass claims among all 50 states in 2020.
While Florida is a “no-fault” state, meaning that both parties to an accident file claims with their own insurer, regardless of fault, it ranks high in accident claim attorney involvement. the Insurance Research Council (IRC) has found. Attorney involvement is associated with higher costs, and the IRC has also found that Florida is among the least affordable auto insurance markets.
The new measure, introduced for the 2023 legislative session that begins March 7, offers hope that Florida will finally get serious about fixing the decades-old mechanisms that have fueled the state’s current insurance crisis. Taken together, the two laws will help stabilize Florida’s insurance market, but it will take years to eliminate the impacts of fraud and abuse of the legal system.
Fraud and litigation push Florida’s insurance market to the brink of collapse
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