The Florida insurance industry is hoping to put an end to its AOB crisis with education. Barry Gilway, president, CEO and executive director of Citizens Property Insurance Corp. says the key to slowing Assignment of Benefits (AOB) abuse in Florida is for the insurance industry to link AOB to its impact on the consumer and the premiums they are paying.
Insurance carriers from across the state have seen an increase in litigation due to AOB lawsuits from homeowners who work with unlicensed contractors who file inflated and fake claims on their behalf. According to the Florida Department of Financial Services, AOB lawsuits in Florida have increased from 405 to 28,200 between 2006 and 2016 with South Florida being the worst region for this issue.
Florida insurance industry leaders are hoping for a legislative fix with the new Senate leadership coming in next year.
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Corrupt public adjuster Jorge Fausto Espinosa recruited dozens of homeowners via his firm, Nationwide Adjusters, in an insurance fraud plot where he inflated insurance claims to the tune of $14 million.
Espinosa paid marketers to lure homeowners with free kitchens and remodeling jobs if they allowed him to manufacture damage to their homes. He earned around 30% of the insurance payouts he lined up for the homeowners. Espinosa earned payouts of more than $317,000 at times.
Insurers were pushed to pay overblown insurance payouts from claims resulting from rigged fires to water damaged. Espinosa hit at least 14 insurers with more than 50 inflated claims. He was sentenced to 20 years in state prison for racketeering and insurance fraud among many other charges.
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Since Hurricane Season is underway, here’s a Daily Business Review article published by Roig Lawyers Partner Patricia Preciado that still holds true today.
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Aerial image of Florida Keys after Hurricane Irma
Filed under AOB, Assignment of Benefits, Claims Handling, Florida, Hurricane Andrew, Hurricane Irma, Hurricane Matthew, Insurance, Insurance Claims, Insurance Defense, Insurance Fraud, Lawsuits, Property Insurance
According to the Florida Department of Financial Services, Timothy Matthew Cox, owner of Nationwide Catastrophe Services, Inc. and Restoration Response Services, Inc., has been arrested for an alleged Assignment of Benefits (AOB) fraud scheme, stealing nearly $140,000 for home repairs due to tropical weather events that he never provided. Cox’s scheme impacted 19 homeowners throughout Florida and Texas, leaving the victims’ homes to sustain additional damage from other tropical weather events, including Hurricane Irma.
Cox’s team never started any of the work they were contracted to perform on the 19 homes after receiving insurance payments. He was arrested and booked into the Polk County Jail facing multiple counts of grand theft and racketeering. Cox could face up to 30 years in jail.
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Recently, there has been an uptick in changes to the language in the assignment of benefit contracts which emergency mitigation companies are having Insureds sign.
One of the changes in the contracts is that the Insured’s execution of the assignment of benefits authorizes the carrier to not only directly pay them for their services, but to also include them on all checks regardless of the coverage they are for. For example, if the carrier pays the insured under Coverage A for repair, Coverage C for contents, or Coverage D for additional living expenses, this contractual language may require that the AOB company be listed on these checks.
A second change in the contracts is that the assignment of benefits may have a single sentence seeking to exceed any emergency services cap the carrier’s policy may have. Once the carrier receives this contract, the clock begins ticking on the time frame for the carrier to respond. If the carrier fails to respond within the timeframe detailed in the policy, this cap is waived.
With an influx of insurance claims due to recent natural disasters, being aware of these changes is key to how you handle these claims. Hopefully, this overreaching on behalf of the AOB companies will be the final push needed to have some laws passed to regulate this AOB realm.
If you have any questions on this issue, please feel free to contact our First Party Property Team at email@example.com.
ROIG Lawyers attorneys have provided presentations on Assignment of Benefits as well as other areas that are beneficial to our clients in the Property Insurance industry. For more information on how to schedule a complimentary Continuing Education course via webinar or live presentation, please contact the Marketing Department of ROIG Lawyers.