For Immediate Release: Tuesday, December 13, 2022

Contact: Office of Communications, Communications@MyFloridaCFO.com, 850.413.2842

CFO Patronis Testimony: We Must Put Policyholders First

Tallahassee, Fla. – Today, Florida Chief Financial Officer (CFO) Jimmy Patronis delivered testimony to the Florida House Appropriations Committee during Special Session in support of the Legislature’s efforts to reform Florida’s insurance industry.

CFO’S REMARKS AS PREPARED FOR DELIVERY

I believe in a citizen-ran Legislature, and it means a lot to your constituents that you’re here to make their lives easier.

Thanks to Governor DeSantis and the Florida Legislature, our economy is exceptional

We’ve got nearly 900 people a day moving here and they’re bringing income with them.

That’s about $23 billion in income coming to Florida. That’s annualized too.

Contrast that with California, where they’ve had $18 billion in income leaving their state.

Tackling the property & casualty market will make us even more competitive.

This Special Session is so important, and as this body has discussions, we must put policyholders first!

This bill puts policyholders first for three reasons:

First, it fixes Florida’s legal environment by eliminating one way attorney’s fees.

I’m sure you’ve heard this stat a million times: Florida makes up 9% of the nation’s claims, but 79% of lawsuits.

You cannot have a normal, healthy, functioning insurance market with that much litigation.

Those legal costs are passed on to the consumer – and it makes it harder for insurers to remain in business.

Second, this bill puts policyholders first by forcing insurance companies to be more responsive to claims.

I’ve been through enough storms to know that when a policyholder’s home is ravaged, time is everything.

Right now, insurers have 90 days to act on a claim.

This bill reduces that timetable to 60 days.

The bill also forces a physical inspection within 30 days.

And, it requires that the adjuster report be sent to the policyholder within seven days.

Ultimately, these provisions work together to empower policyholders, so that if an insurer is not taking a claim seriously, then OIR has more teeth to issue fines, and hold insurers accountable.

The third way this bill puts policyholders first is by fighting fraud.

There are a lot of drivers for why we’re seeing premium increases: litigation, inflation, storms, increased reinsurance rates, and fraud.

As CFO, fighting fraud is the main lever that my office has for fighting rate increases.  

I’ve got 125 sworn law enforcement officers in my agency who investigate all types of insurance fraud.

There are a lot of great provisions in these bills, but I want to focus on where we see a lot of fraud driving up costs.

Florida needs to empower policyholders and that means eliminating Assignment of Benefits otherwise known as “A-O-Bs”.

Ideally, AOBs are supposed to let policyholders handoff their claims to contractors, so that they can get their cash easier.

Unfortunately, this tool generates more cost and enriches others; not the homeowner.

These extra costs are passed down to us as higher premiums, and removing AOBs from the claims process would help policyholders.

These AOBs are often executed when policyholders lack resources, are stressed, and they are vulnerable.

I saw how they were abused in hurricanes Michael and Ian.

People find themselves in tough times where the roof is gone - and there’s water in their homes.

Then a friendly face shows up with a tank of gas, or storm supplies, promising they’ll help them get back on their feet.

Sure enough, the homeowner hands over their $300,000, $400,000 or more, policy to someone they just met.

The fact is when policyholders sign their claims away, they’re no-longer in the driver’s seat.

By eliminating AOBs, the Legislature has an opportunity to cutout the middle-man.

Moreover, if the policyholder runs into any issues, they can call my office, where we can mediate, or you hire an attorney.

Removing AOBs would remove a lot of fraud from Florida’s insurance market which is a major driver of costs.

For example, Strems Law Firm used AOBs to defraud Citizens Insurance to the tune of $112 million.

They filed 5,000 claims and used Assignment of Benefits as the main tool for their alleged fraud.

It took our law enforcement sting operation, and coordination with Citizens Insurance Corp., to stop these bad claims in their tracks.

If left unchecked, it could have cost policyholders $16 million per year in premium costs.

In Florida, AOBs are used to muddy-the-water by inserting multiple layers of employees between the policyholder and the company that they assigned the AOB to.

This makes it hard for prosecutors to go after unscrupulous attorneys and other bad contractors.

If we get rid of AOBs, it’ll frankly be a lot easier to prosecute fraud cases.

I say this all the time: there are good lawyers, good contractors, and good public adjusters, BUT there are also bad ones.

(It’s the law of numbers.)

It’s time to cut-bait, and put an end to these abuses, by banning AOBs within the property casualty market.

Thank you Chair.

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About CFO Jimmy Patronis

Chief Financial Officer and State Fire Marshal Jimmy Patronis is a statewide elected official and a member of Florida’s Cabinet who oversees the Department of Financial Services. CFO Patronis works each day to fight insurance fraud, support Florida’s firefighters, and ensure the state’s finances are stable to support economic growth in the state. Follow the activities of the Department on Facebook (FLDFS) and Twitter (@FLDFS).

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About CFO Jimmy Patronis 
Chief Financial Officer and State Fire Marshal Jimmy Patronis is a statewide elected official and a member of Florida’s Cabinet who oversees the Department of Financial Services. CFO Patronis works each day to fight insurance fraud, support Florida’s firefighters, and ensure the state’s finances are stable to support economic growth in the state. Follow the activities of the Department on Facebook (FLDFS) and X (@FLDFS).