Insurance officials call for cap on attorney fees

Insurance officials call for cap on attorney fees | Insurance Business

Insurance officials call for cap on attorney fees

Florida’s most influential insurance officials are encouraging members of a Senate committee to consider regulations that would stamp out the rampant abuse of “assignment of benefits” by attorneys in the state.

On Tuesday, Florida chief financial officer Jimmy Patronis, state insurance commissioner David Altmaier, and Citizens Property Insurance president and CEO Barry Gilway appeared at a Senate Banking and Insurance Committee meeting, pushing legislators to introduce reforms that would reduce costly claims and lawsuits.

Florida has been subjected to a flood of assignment of benefits lawsuits in recent years – an issue that even major insurers operating in the area have called out.

The insurance officials warned that while the assignment of benefits practice makes it convenient for homeowners to sign over their claim to repayment to their contractors to save time, it could ultimately hurt them in the end. The surge in assignment of benefits lawsuits and related claims could force insurers to raise their premiums even more.

According to data presented by Gilway during the meeting, the number of lawsuits involving residential properties against all insurers in Florida increased from 27,416 in 2013 to 82,663 last year. Gilway also added that since litigation adds about $25,000 to the cost of resolving a claim, the additional 55,247 suits in 2018 cost all homeowner insurance policyholders in the state an extra $1.38 billion in premiums.

The officials might have a chance to see new rules in place, as Doug Broxson (R) has been selected to serve as the committee’s newest chairman. Broxson has filed a bill which would remove the right to collect attorney fees under an insurance policy, unless the attorney is representing a named insured or named beneficiary and not when representing anyone “assigned or extended by agreement.”

Broxson said during the meeting that he expects to amend the bill so that it only applies to property insurance and the auto glass portion of auto insurance – two popular areas of insurance claim that have been plagued by assignment of benefits abuse.

Paul Handerhan, senior vice president of the Florida Association for Insurance Reform, told South Florida Sun Sentinel that he does not foresee “any scenario” in which Broxson’s bill does not advance out of the committee.