South Florida rates driven up by AOB water claims
An analysis conducted by Citizens Property Insurance Corporation for state insurance regulators has found that water loss claims, exacerbated by assignment of benefits, are driving higher rates in South Florida and increasingly across the state.
Responding to a mandatory data call from the Florida Office of Insurance Regulation, the analysis further indicates that the frequency and severity of claims filed under an assignment of benefit is growing at a disturbing rate.
Citizens’ actuaries analysed data for both litigated and non-litigated claims, with and without an assignment of benefits (AOB), under which homeowners sign over control of their claim to water remediation companies, contractors and/or attorneys.
The analysis found that cases in which customers assigned benefits to contractors or remediation companies were almost twice as expensive on average, and more likely to lead to litigation. The average litigated claim cost is more than double that of a non-litigated claim, showing that AOB and litigation work both separately and together to drive average claims costs more than four times higher than that of a simple non-assigned, non-litigated claim.
“Consumers are losing control of their claims by transferring their authority to contractors and attorneys under the current assignment of benefit system,” said Chris Gardner, chairman of Citizens Board of Governors.
“This analysis shows clearly that AOB is raising water claims losses. Those higher costs are paid by all policyholders. We have a dual obligation of protecting our policyholders while keeping premiums as affordable as possible.”
The analysis reaffirms earlier studies showing that water loss claims are the leading cause of higher insurance rates, especially in Palm Beach, Broward and Miami Dade counties. Water claims are being filed at double the rate of just two years ago in the Tri-County area and triple the rate of two years ago across the rest of the state.
