Florida insurers, consumer and insurance advocates, as well as regulators, are hoping 2016 may finally be the year that legislators address the misuse of assignment of benefits (AOB) for water loss claims that they say has become a rampant and costly problem in the state.

The Consumer Protection Coalition, formed in January to raise awareness of AOB abuse, reports Florida AOB lawsuits have increased 90,000 percent since 2000. Claims of misuse have been primarily isolated to South Florida – particularly in Miami-Dade County – and the stories have stayed under the radar for the most part.

However, the AOB abuse became a statewide headline this past summer when state-run insurer Citizens Property Insurance Corp. highlighted the problem in its 2016 rate filing and requested a rate increase of 3.2 percent for all personal lines policyholders.

“I want to be crystal clear on this issue: water losses are the major reason Citizens is seeking rate hikes for the coming year, especially in South Florida,” President and CEO of Citizens Barry Gilway said at its Aug. 25, 2015 rate hearing before Florida regulators.

Policyholders often don’t understand what they are signing over and unaware if a repair company turns around and sues their insurer. Law firms and repair contractors have been working together on executing these water loss claims because they consider it easy money. Carlson said in most cases, insurers opt to settle the claims.

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