Barrett Harding Insurance Encourages AOB Reform

TAMPA, Fla.–(BUSINESS WIRE)–Florida has experienced a 90,000% increase in Assignment
of Benefits (AOB) lawsuits since 2000, according to the Consumer
Protection Coalition, clogging an already overburdened judicial system
with frivolous claims. That’s one of the primary reasons that Florida
has one of the highest home insurance premiums in the nation – a trend
that has little chance of stopping unless meaningful AOB reform bills
are passed during this year’s legislative session.

An AOB is an agreement that transfers the rights to an insurance claim
from the policyholder to a third party, such as a contractor. It gives
the third party authority to file a claim, make repair decisions and
collect insurance payments on behalf of the homeowner. This practice,
used frequently with medical claims, was originally designed to
streamline the claims process, but some contractors use it to inflate
their claim payments and even file claims-related lawsuits, with or
without the policyholder’s knowledge or consent.

How prevalent is this issue?

  • A December 2018 Insurance Information Institute (I.I.I.) study found
    that Florida’s auto and homeowner policyholders, through their
    insurance companies, have had to pay approximately $2.5 billion in
    legal costs since 2002 (Personal Injury Protection or Physical Damage
    auto claims in Florida are also ripe for AOB abuse).
  • These skyrocketing costs don’t include excess claim settlement
    payments that I.I.I. estimates have also cost Florida auto and home
    insurance customers billions of dollars.

While contractors may play a part in AOB abuse, it’s ultimately the
“one-way attorney fee” statute that’s at the heart of the issue. The
statute allows a plaintiff’s attorney who sues an insurer, and loses, to
be under no obligation to pay the insurer’s legal fees. But an insurer
must pay a plaintiff’s attorney’s fees (often with a fee multiplier) in
the event the plaintiff prevails.

The one-way attorney fee is the driving incentive which has brought bad
acting contractors and attorneys together to take advantage of a law
that was meant for individual homeowners, not business to business
disputes. Florida is the only state in the country where access to the
one-way attorney fee is being combined with an assignment of benefit.

The result? Insurers often settle and pay claims that are often inflated
or sometimes even not covered by policy language to avoid paying
hundreds of thousands of dollars PER CLAIM in legal fees. And there is
NO LIMIT to legal fees that can be collected.

In essence, if a contractor holding an assignment were to demand $40,000
for a claim an insurer believes should cost $10,000, the contractor
would only need to receive a judgment in court for $10,001 in order to
receive an attorney fee award totaling six figures. This award is NOT
shared with the policyholder who signed their rights away.

While past efforts to enact reform that will help curb AOB abuse have
failed, we can be encouraged by the fact that Governor DeSantis has
recognized and publicly acknowledged the issue. In his first State of
the State Address, Gov. DeSantis said, “I hope the Legislature passes
legislation to reform the issue of AOB, which has become a racket.”

AOB abuse, which almost acts as a tax Floridians must pay, has gone
unabated for years, reaching epic, crisis proportions. Now is the time
to for state lawmakers to pass legislation that will offer much needed –
and deserved – rate relief to home and auto insurance consumers in the
Sunshine State.

If the Legislature does not act, and these bills do not become law, the
Office of Insurance Regulation estimates that consumers will see 10%
annual increases in their premiums for the foreseeable future. With
almost 6 million homeowners in our state, that increase means consumers
would collectively be paying between $600 Million – $1 Billion more per
year than the year prior. Florida’s homeowners are bearing the full
brunt of this hidden tax which is subsidizing the racket of a cottage
industry who specialize in profiting off of the misfortune of others. SB
122 & HB 7065 are our only hope for ending the abuse and skyrocketing

About Barrett Harding Insurance

Barrett Harding is a multiple generation service-oriented insurance
family with more than 80 years (40 in Florida) experience and commitment
to our community. By being true to our ideals and doing what we do best,
we continue a tradition of unrivaled service and advocacy to our clients.

In business in Florida since 1979, first as Dillion Agency, in 1986 we
changed our name to BARRETT-HARDING, but the owners remain the same,
today Lori Harding & Jeromy Harding carry on a tradition of service that
began in central Ohio in 1952. With a professional staff and
collaborative approach, we continue to specialize in Personal and
Commercial products tailored to its clients’ needs. Visit
to learn more about the agency.


Media Contact:
Jeromy Harding