Citizens has a wish list

Insurance firm produces wish list for legislators

Insurance company wants legislators to address the collection of attorneys fees.

Citizens Property Insurance Corp. unveiled a 2017 legislative wish list for new laws officials say would help staunch hemorrhaging losses from water damage claims, primarily in MiamiDade, Broward and Palm Beach counties.

Topping the list: Preventing attorneys from collecting fees in lawsuits involving assignments of benefits.

This year, the wish list does not seek to end or restrict policyholders’ ability to assign benefits to thirdparty contractors. Previous efforts to restrict assignments have hit dead ends in the legislature, and courts have affirmed assignment rights in numerous cases.

Yet, assignment of benefits, or AOBs, are at the heart of the claims crisis, Citizens and other insurers contend. Policyholders seeking repairs following ruptured pipes or appliances in their homes are often coerced by water damage restoration contractors into first signing over their right to seek reimbursement from the insurance companies.

Armed with assignments, contractors and their attorneys then bill the insurer for repairs and file suit if the insurer denies the claim or offers to pay less than the invoiced amount.

A handful of law firms, mostly in South Florida, routinely file hundreds of lawsuits, according to state civil court data. From January to October, 8,097 new lawsuits were filed against Citizens, a 30 percent increase from the previous year, according to Citizens documents. As a result, Citizens projects a $100 million loss from its personal lines accounts next year, Citizens President and CEO Barry Gilway said. That loss could swell to $184 million in 2018 if the trend continues, he said.

“In my opinion, it is just absurd,” he said. “It is a completely out-of-control situation.”

Dan Sumner, Citizens chief legal officer and general counsel, said the increase in assignments are driven by what’s called the one-way attorneys fee statute which allows plaintiffs to collect attorneys fees from insurers “if there is a judgment or a decree in favor of the insured and against the insurer in any amount.”

In other words, if an attorney for a water restoration company named in an assignment sues an insurance company over a claim, then negotiates a settlement of as little as $1 over the insurance company’s initial offer, the insurance company must pay the attorney’s bill for pursuing the claim.

The provision has been law since 1893 and is intended to provide access to competent counsel for insurance claimants, according to a 2005 Florida Senate report.

Topping Citizens’ legislative wish list is a call to prohibit attorneys representing vendors working under assignments from seeking fees under the one-way attorney fee statute when lawsuits are filed.

Other items on Citizens’ legislative wish list:

Require assignments to include written itemized estimates of work to be performed by the assignee.

Require a copy of the assignment agreement be furnished to the insurer no later than three days after executed by the policyholder.

Limit assignments to just the work being performed and not the whole claim.

Prohibit fees in assignments for check processing, overhead, profit or cancellations.

Provide consumer protections, including the ability to rescind the assignment.

Prohibit contractors from placing liens on properties for work completed under assignments and paid for by insurance proceeds.

Whether reforms are possible remains to be seen, officials said.