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Miami Herald: Contract scam hits South Florida

Thursday, July 13, 2017

LETTERS TO THE EDITOR

Across the state, some unsavory contractors and attorneys are encouraging Florida homeowners to sign up for an Assignment of Benefits (AOB) scam that inflates repair and legal costs and pushes litigation through the courts. The repairs are often associated with water damage, which often need rapid attention.

The scam works because, under a 1950s statute, if insurance companies lose in court, they are forced to pay their own legal costs and the plaintiff’s costs. That leaves little downside for attorneys to demand an unreasonable settlement. The courts don’t seem to care and the abusive costs end up in the insurance company’s rates for next year.

Homeowners in Miami-Dade, Palm Beach, and Broward counties account for 93 percent of all water damage claims. These claims are expected to increase annual insurance rates up to $1,800 by 2022.

Financial pain is not limited to future rates for the three counties. Citizens Property Insurance reports that, absent the AOB scam, rates would have decreased everywhere in the state. The rest of Citizens’ performance reflects the benefits of 11 years without a major hurricane. Water damage is an exception.

Earlier this year, State Sen. Anitere Flores did not allow the Hukill-Passidomo reform bill onto the Banking and Insurance Committee’s agenda, effectively killing it. Ironically, it is Senator Flores’ South Florida community that is most afflicted by AOB scams.

Senate and House bills offered a reasonable solution to the problem. Unfortunately, the trial attorneys’ lobby forced these honest proposals to die in committee without a vote.

Perhaps next year, Florida legislators will break the shameful habit of skewering taxpayers, again and again. We should pay attention to who is looking out for the interest of Florida’s citizens. Apparently, the legislative leadership is not.

ALAN DALEY, AMERICAN CONSUMER INSTITUTE

Read here: http://www.miamiherald.com/opinion/letters-to-the-editor/article161321238.html

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