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Abuse of assignment of benefits (AOB) from water loss claims has become a full-blown Florida insurance crisis that will mean higher insurance rates next year and for the foreseeable future for every Florida policyholder, according to Citizens Property Insurance Corp. CEO Barry Gilway and Chief Risk Officer John Rollins.

“We are going to have a round of rate increases from private carriers,” said Rollins. “South Florida will definitely have a rate increase. The question is more open in the rest of the state, but the trends are very disturbing.”

Private insurer executives have echoed the warning—and say hikes of as much as $1 billion will be needed.

The issue now most commonly referred to as just “AOB” took center stage at the Florida Association for Insurance Reform’s conference on April 28. Several industry experts said AOB is no longer just a problem for Citizens, the state-backed property insurer, and maintained the impact will go far beyond rates if the “crisis” isn’t addressed. The overall Florida market will also suffer, especially if the state is hit by a serious catastrophe.

“[AOB] is also trickling into the reinsurance pricing,” Bruce Lucas, chairman & CEO of Heritage Insurance said at the FAIR event. “The number one question asked of us by reinsurers is, ‘What are you doing about AOB?’ because after a storm, it could be a big issue.”

Citizens, which has seen AOB claims skyrocket, was the first to highlight the issue in its rate filing last summer. Now the insurer is retooling its efforts to combat the AOB abuse in light of Florida lawmakers’ failure to enact a legislative solution.

Please enjoy the full article below!

http://www.insurancejournal.com/news/southeast/2016/05/03/407257.htm

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