Florida's AOB Reform: A Step Forward or Just the Beginning?

Florida's AOB System: A Long Overdue Reform

The Florida Senate has recently passed a bill aimed at reforming the state's insurance assignment of benefits (AOB) system. Governor Ron DeSantis has indicated his intention to sign the bill into law, marking a significant step towards addressing the longstanding issues with Florida's AOB system. An AOB is a contract that allows a third party, such as a contractor or medical provider, to bill an insurance company directly for services rendered to the policyholder. While this process is common and generally harmless, Florida's unique legal system has incentivized inflated billing and subsequent lawsuits, leading to tens of thousands of legal disputes.

Focus on Property Insurance: A Narrow Approach

The new AOB bill targets property insurance, aiming to curb some of the abuse by regulating how AOBs can be executed and how plaintiff's attorneys can be compensated. This focus on property insurance is understandable given the growing problem of AOB abuse in homeowners' insurance. However, it is crucial to recognize that AOB abuse is not limited to property insurance. It initially emerged in personal injury protection (PIP) claims in personal auto insurance and later spread to homeowners and auto glass coverage following PIP reform in 2012.

Potential for Abuse to Shift: A Continued Concern

While reforming AOBs in property insurance could significantly impact the problem in Florida, it remains uncertain whether overall abuse will decrease. Some argue that abuse could persist in other lines of insurance not covered by the reform, such as auto glass. There are also concerns that abusive AOB claims could surge just before the reform takes effect. For a comprehensive understanding of the scope of the problem, readers are encouraged to download the detailed report available online.

In conclusion, while Florida's AOB reform is a positive development, it may not be sufficient to completely eradicate the issue. Policyholders and insurance companies should remain vigilant and informed about potential shifts in AOB abuse to other lines of insurance.