Florida lawmakers might sit out on legislative remedies to the mounting problem of costly claims abuses in the state yet again, with just two weeks left in this year’s session.
As legislators straddle the fence on the contentious assignment of benefits issue, more insurers are opting out of the tri-county region in South Florida by refusing to take on new customers, according to Corey G. Matthews, chief executive and executive vice president of an insurance trade group.
“Unfortunately, from what we’re hearing, it’s already happening. I’m hearing from agents who say they submitted (a new policy) in a zip code they wrote (a policy in) last week, and the insurer is saying ‘Sorry, we’re closed in that zip code,” Matthews told the
Sun Sentinel.
As a result, state insurer Citizens said it expects to absorb 50,000 policyholders from the South Florida area, after it transferred more than one million of its subscribers to the private market following an active depopulation plan, as mandated by the state government.
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Citizens and other carriers have been lobbying with lawmakers to enact a measure that will help contain issues arising from the increase in litigation caused by South Florida contractors and about a dozen law firms. The industry has observed that contractors often convince policyholders to sign over the benefits they stand to gain on their coverage in exchange for expediting a water damage restoration job. These contractors then “quickly file suit if insurers refuse to pay inflated claims,” the
Sun Sentinel reported.
“Attorneys are motivated by a law that shields policyholders from paying their insurer’s legal fees if they sue a company in a claim dispute and lose, but lets them collect legal fees if the insurer loses or agrees to pay more than originally offered,” the report noted.
“Contractors have learned to secure an assignment of benefits to assert the same right, and that encourages them to file a large numbers of suits with little risk, insurers say.”
This is the fifth year that the insurance industry has asked lawmakers to address the issue. The Senate Banking and Insurance Committee has yet to bring it up for debate.
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