Citizens CEO calls for AOB reform at rates hearing

Citizens CEO calls for AOB reform at rates hearing

Citizens CEO Barry Gilway told a hearing before the Florida Office of Insurance Regulation (FLOIR) today that without legislative reform to tackle the assignment of benefits (AOB) crisis homeowners premiums will climb for years to come in the state.

The state-backed insurer has proposed 2018 rates that call for double-digit increases for many South Florida homeowners where AOB related claims have been most prevalent.

In his presentation, Gilway noted that the average cost of water claims has increased in South Florida by 100 percent from $10,000 to $20,000.

He said the carrier had been forced to make policy changes and to seek rate increases again for more than half of its 452,000 policyholders.

"While policyholders outside the Tricounty area, in contrast, will likely see rates reductions in 2018, continued water losses and skyrocketing litigation in South Florida, especially Miami-Dade and Broward Counties, require rates in those areas be increased by nearly 10 percent again this year," he said.

He said that if trends had stayed in line with what was seen prior to the explosion of third-party claim involvement, three out of every four homeowners multi-peril customers would have seen a rate decrease this year.

"Instead over two-thirds will see increases. That's over 40 percent of our policyholders that swung from a decrease to an increase solely due to water loss trends," Gilway continued.

As previously reported, Citizens has already had other measures including policy changes approved to address soaring claims and litigation costs.

But in the hearing, Gilway added that rate increases and policy changes are not enough on their own to curtail the problem.

"To ensure that Citizens will remain financially able to protect Floridians when they need us most, we need assistance from our legislative partners," said the executive.

Legislative reform proposals sponsored by the industry and supported by the FLOIR and the Florida executive failed to make it past the committee stage in the state's law-making session earlier this year.

The Consumer Protection Coalition added its voice to the need for lawmakers to take action to end AOB abuse in a statement today.

"Florida has a great story to tell when it comes to job creation and record tourism. Unfortunately, we're making headlines for the Legislature's failure to enact assignment of benefits reform to protect consumers,'' said Mark Wilson, president and CEO of the Florida Chamber of Commerce, which leads the coalition.

"It's time lawmakers address this AOB lawsuit hurricane and put Floridians first."

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