I recently went to Tallahassee to meet with the Miami-Dade delegation and some lobbying groups. What I found was going on there is fascinating. First, the Miami-Dade delegation is in extremely powerful seats including the second most powerful, which is Carlos Trujillo, as chair of the appropriations committee. He is the chair of the committee who controls the State purse. However, the most interesting part is that in every conversation I had, whether it was with a legislator or a lobbying group, it was inevitable that assignment of benefits and worker’s compensation came up in conversation.

Florida insurance companies are pushing really hard to get a complete overhaul of both systems. When it comes to assignment of benefits, the Florida insurance companies are saying that there is “crisis” that is going on in the State of Florida. They are saying to the Florida legislature that they should be making more profit because there has not been a major hurricane to hit South Florida in approximately 11 years. They are saying to the Florida legislature that they are having to pay too many claims. They are saying to the Florida legislature that there are too many claims. They are saying to the Florida legislature that there are too many claims that utilize assignment of benefits and when that is done, they are inflating claims beyond what is reasonable. They are saying to the Florida legislature that the record profits they are making are not enough.

All of this information these insurance companies are feeding to the Florida legislature is false. While there may be some instances of bad actors out there what we don’t see is referrals to the Department of Financial Services, the Office of Insurance Regulation or even the State Attorney’s office of insurance fraud. Why don’t we see that? Because it is not happening how these insurance companies are saying it is happening.

Currently, there is Senate Bill 1038 pending in the Florida Senate. What this bill is trying to do is trying to strip away the rights of the companies utilizing assignment of benefits to obtain attorney’s fees and costs from the insurance company. Moreover, what it is trying to do is put vast restrictions on those utilizing this great tool. What this is going to force homeowner’s across the State of Florida to do is pay the water mitigation company out of pocket as they will stop trying to go after the insurance company on their own.

Why is this a bad thing? Homeowner’s don’t have the thousand of dollars these necessary services cost. Therefore, these services will be performed, passed on to the insurance company, where they will have to pay for them anyways or the homeowner will chose not to get them and the insurance company will deny the claim for failure to protect the property from further damage, a common condition precedent under many insurance policies.

Why do insurance companies want this? Many reasons. First and foremost, it will decrease the amount of lawsuits against them. The less lawsuits, the less amount of attorney’s fees, costs the insurance companies will have to pay, and the more profit they will make. Second, they will force the homeowner into a terrible position where the insurance company can leverage the pressure put on by the water mitigation company to force the homeowner to accept a low settlement and thus making more profit for the insurance company. Third, they argue that this will allow them to decrease the amount of premiums that they have to pay. The best example of this is in the context of worker’s compensation.

In 2009, the Florida legislature passed a law limiting the amount of attorney’s fees and costs. Despite the law limiting attorney’s fees for prevailing Plaintiff’s, which was enacted in 2009, from the years of 2011 to 2014, Insurance Companies continued to increase rates. Why? There was no attorney’s fees problem? What did we see when attorney’s fees were limited, we saw a decrease in the amount of claims, a decrease in the indemnity and medical loss ratios, but an increase in profit and contingency provisions, and an increase in rates. Is there a correlation? Yes.

Let’s look at Travelers, we all see their commercials on TV with their umbrella logo. This is one of the larger insurers in the State of Florida. Let’s look at their stock price on January 4, 2007; before the 2009 legislative changes. One share of their stock was worth $53.55. As of January 4, 2010, the stock price was $50.15. As of December 29, 2016 their stock price is $122.29. Who is winning? The Insurance Companies are. Our small business owners are getting squeezed out so that Jay Fishman, the former CEO of Travelers could make $30.3 million in 2014 and $29.6 million in 2015.

Insurance Companies will stop at nothing to squeeze their bottom line (ie State Farm allegedly paying off an Illinois Supreme Court Justice for a verdict in their favor; State Farm’s altering of engineering reports in regards to Hurricane Katrina in New Orleans, and FEMA altering engineering reports for Hurricane Sandy in the Northeast to name a few). Therefore, why are we trusting them with increasing our rates for what “could be.” If the Plaintiff does not prevail in litigation they will not owe attorney’s fees and can even possibly collect their attorney’s fees and costs, therefore, what is the problem if they are acting ethically?

Everyone must contact their legislators and tell them to vote NO on Senate Bill 1038 as it would destroy any chance to level the playing field against these gigantic insurance companies.

~Steven Silverberg