The sudden rise of abuse in assignment of benefits in water loss claims likely means that there is going to be a steep hike in insurance rates over the next year. Even those who have not made a water loss claim are going to be affected, according to the Citizens Property Insurance Corp. South Florida is likely going to be hit the hardest, though the entire state is going to see rate increases from all private insurance companies. Just about every executive from private insurers has confirmed that there will be rate increases.
The issue, now often just called AOB, came to light early this year. It was originally an issue just for Citizens Property Insurance Corp, which is backed by the state, but the issues has now spread to private insurers, as the crisis was not addressed. If there are any serious water claims this year, because of hurricanes, flooding, heavy rains, etc., the impact is likely to be even worse. If there is a big storm, there is going to be a major issue.
Now, most insurance companies are scrambling to find an issue to this impending crisis. Legislation was introduced that could have helped, but it was not enacted. It is left to the insurance companies to find ways to deal with AOB abuse. All insurance companies have a cap on how much they can increase their rates, but Citizens has stated that in order to cover their costs, they would need to increase rates by as much as 189 percent. Most insurers will be raising rates by between five and fifteen percent, hoping that the increases in premiums will help to cover what has quickly become a billion dollar problem in Florida.
