Florida Special Session to focus on fraud, AOB abuse & affordability: CFO Patronis
Florida’s lawmakers are set to focus on affordability of property insurance for citizens of the state at the upcoming Special Session, with tackling fraud and abuse of assignment of benefits (AOB) both key areas to reform, according to the states CFO Jimmy Patronis.
Speaking in the last hour, alongside Florida’s Citizens Property Insurance Corporation CEO Barry Gilway, Patronis laid out five key areas for reforming Florida’s property insurance marketplace.
All five are related to fraud, which Patronis highlighted as the major issue facing Florida’s property insurance market, on which Gilway agreed.
Patronis said, “In this Special Session, my office will be pushing forward five different initiatives aiming at cracking down ton he kind of fraud and litigation that drives up rates for every single one of us.”
First, is the setting up of three new anti fraud homeowner squads that will “live and breathe property insurance fraud,” Patronis said.
Second a $3 million funding for a fraud related public education campaign to help Florida’s property insurance policyholders understand their rights when signing away a claim.
Third, amendments under qui-tam law, putting in place “a reporting mechanism that will incentivize the public to come forward and report the fraud taking place.”
The fourth area of focus is to “incentivize people financially to call our Florida blocked Florida Fraud Fighter tip line.”
Finally, the fifth is perhaps most of interest to the reinsurance community, with changes to be made to the AOB laws, “including banning the bundling of these assignment of benefits,” Patronis said.
On AOB, Patronis summarised, “Much of the fraud and abuse in our legal system we have highlighted this morning started with a policyholder assigning their benefits away to somebody else, to a fraudster. We cannot allow law firms and public adjusters to get into the business of bundling these AOB’s and selling them the same way you would a security for a profit.
“I want to deter this feeding frenzy of bad actors going after our consumers to sell AOB’s on the open market, which again ultimately drives up rates, which drives carriers out of the state of Florida, because the environment allows that type of activity to exist in the first place.
Patronis said the Florida state of play right now is “a game of whack-a-mole”, in trying to stop attorneys that move around and establish new companies to take advantage of the system, exploiting the statutes to use loopholes that enable their fraud.
With these fraud and AOB focused changes to be discussed and potentially embedded into the legislature, it promises to help stem the tide of fraudulent claims in the Florida property insurance market.
This is what both insurance carriers and reinsurance capital providers want to see, but these changes will need to meaningfully move the needle on litigated claims and quickly, if the state is to stabilise the insurance market relatively quickly.
Gilway of Florida Citizens also said, “One of the ways Citizens is attempting to keep the premiums down and realistic is taking a hard line on fraud.
“I’m thrilled to hear the CFO today announce all of these aspects that will make such a significant difference.”
Of course, these five areas of focus for the CFO of Florida still need to be adopted and codified into law through the Special Session.
They will also take time to have any effect on the marketplace, to restore the profitability of insurers and for any benefits to flow onto reinsurance capital providers, through their views of risk in the state of Florida.
Which means Florida insurance and reinsurance market participants will need to carry on almost regardless of what is happening in a few weeks at the Special Session and what could change or be improved, as evidenced by the continued quest for more rate among primary insurers, which we explained earlier today.
But, these five areas of focus from Patronis all seem eminently reasonable proposals for stemming the litigation tide. The question is whether they will be enough? Or will there be reforms tabled for the FHCF and other factors as well?
Read our coverage of Florida’s property insurance crisis below:
More insurers seeking rate hikes of 23% to 49% in Florida.
Cat Fund reform is crumbs, Floridians need a feast: Demotech’s Petrelli.
Florida litigated claims rise again, but “hope” in Special Session: CaseGlide,
Florida – “The theatre is on fire,” FHCF change won’t solve it: RenRe CEO.
Swiss Re not optimistic on Florida reinsurance pricing: CFO Dacey.
To ensure progress in Florida reinsurers could pull capacity: Assured Research.
Full placement of Florida reinsurance programs to be challenging: AM Best.
Florida Governor sets property insurance special session for end of May.
“Cause for concern” as AOB & litigated claims rise in Florida: CaseGlide CEO.
FedNat downgraded, posing another threat to Florida’s insurance ecosystem.
Ida insolvencies continue, as Florida runs out of road: ALIRT.
Florida property insurance market “in collapse”, special session uncertain.
Florida renewal “one of the toughest in recent memory” – JMP Securities.
Policy growth means more cat bonds & reinsurance for Florida Citizens.
Florida Citizens seeks higher rate increases at upcoming hearing.
Lighthouse the first to lose Demotech rating, as Ida losses weigh.
AIG’s Lexington pulls-back in Florida, raising questions on E&S market.
AM Best cites Florida market challenges as it downgrades Florida Farm Bureau.
Demotech calls for Florida market reform with rating downgrades likely.
Florida Citizens targets “the best deal we can get” on risk transfer: Montero.
Florida insurers’ litigation exposure still of concern: CaseGlide CEO Todd.
No quick fix as Florida property insurance reforms fail to pass.
Another one bites the dust – Florida’s insurance failures continue.
Florida P&C claims litigation concerning, as cases soar: CaseGlide CEO Todd.
Florida P&C rate filings show reinsurance firming needs to continue.
Assignment of benefit (AOB) claims rising for Florida P&C insurers.
Florida Special Session to focus on fraud, AOB abuse & affordability: CFO Patronis was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.
