Florida legislation proposed last week would prevent the state̵
7;s motorists from assigning their legal rights in auto insurance claims to repair shops.Assignment of Benefits (AOB) is standard practice in the insurance world. In Florida, however, this efficient and customer-friendly way of settling claims has long served as a magnet for fraud. The state’s legal environment has encouraged providers and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, perform unnecessary or unnecessarily expensive work, and then file tens of thousands of lawsuits against insurance companies that deny or dispute the claims.
Legislation passed in the final weeks of 2022 took several crucial steps toward solving the state’s property/casualty insurance crisis, including eliminating the state’s AOB laws with respect to property claims. But it did not affect auto-related AOBs.
Intended to help consumers
Florida’s auto glass law — originally intended to encourage drivers to repair or replace damaged windshields by prohibiting insurers from charging deductibles for windshield damage — is being exploited by glass repair shops across Florida. Unscrupulous suppliers hire workers to neighborhood areas, luring vehicle owners to sign up for “free” windshield replacements. They get car owners to sign an AOB contract that surrenders the owners’ legal rights to the garage.
The store can then sue the consumer’s insurer if it does not pay what the store demands. The result is a lawsuit filed by the seller in the name of the consumer.
Lawyers have a strong incentive to bring suit, because the insurer must pay their fees if it loses in court. This has resulted in a “sue-to-settle” system, where lawyers file lawsuits over very small disputes to force a settlement.
Future hope
“What started as a small regional issue a decade ago with a few lawyers and a few auto repair shops has blown up and become a huge statewide problem,” said Mark Friedlander, Triple-I’s director of corporate communications and a Florida resident. Between 2011 and 2021, the number of auto glass lawsuits in Florida increased by more than 4,000 percent, from 591 to more than 28,000. An analysis by the National Insurance Crime Bureau (NICB) found that Florida had the highest number of questionable auto glass claims among the 50 states in 2020 .
Although Florida is a “no-fault” state — meaning both parties to an accident file claims with their own insurer, regardless of fault — it ranks high for attorney involvement in accidents, the Insurance Research Council (IRC) has found. Attorney involvement is associated with higher costs, and the IRC has also found Florida to be among the least affordable auto insurance markets.
The new measure, filed for the 2023 legislative session that begins March 7, offers hope that Florida is finally serious about solving the decades-old mechanisms that have fueled the state’s current insurance crisis. Together, the two laws will help stabilize Florida’s insurance market, but it will take years for the effects of fraud and abuse of the justice system to be wrested from the system.
Read more:
Fraud, litigation push Florida’s insurance market to the brink of collapse
Florida’s AOB Crisis: A Social Inflation Microcosm
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