Florida recently took a big step in stopping skyrocketing property insurance rates— but seeing the financial benefit isn’t right around the corner.
Last week, the governor singed the “assignment of benefits” or "AOB" reform bill. It was hailed as a way to cut back on rampant lawsuit abuse that was costing property insurers millions, which they passed on to consumers.
The new law aims to fix that by making it harder for contractors to get homeowners to sign over insurance claim benefits, including the right to invoice and sue.
But, eliminating those lawsuits and reducing rates could take awhile, insurance experts warn.
“The reform, doesn’t take effect until July 1,” Lynne McChristian said, who acts as spokeswoman for the Insurance Information Institute. “So, anything that is in [litigation] right now won’t be impacted, because that applied to the old law.”
It could take years for those costly lawsuits to get resolved. Plus, even more cases can be filed before the new law begins.
“It will take some time to see how the legislation works,” said McChristian. “But, it’s a step in the absolute right direction.”
There’s also some concern in the industry that reinsurers— the folks that insure insurance companies— will raise rates, passing the cost on to consumers and wiping out any savings from AOB reform. Recent hurricanes cost those companies big and that’s what they’ll be looking at when setting future rates. However, other industry experts remind that reinsurers work on a global market and say not to worry about impacts just yet.
Those who own a home in Florida, likely already know that property insurance rates aren’t cheap. Florida is regularly one of— if not the highest in the nation.
Homeowner and Tallahassee Realtor Stephanie Wise was excited for the AOB reform considering high insurance rates were costing her personally and professionally.
“I’m going to have to live with that insurance cost because I am receiving the benefits and the value of home ownership,” she said. “On top of everything else you’re paying, we’re pricing people out of the market.”
Wise hopes cutting those high insurance rates would encourage millennials— a generation that has chosen to rent in record numbers— to consider buying.
“Everyone should own a home, Wise said. “Insurance shouldn’t stop you from owning.”