One of the most challenging phone conversations we have at our Agency is explaining and justifying to our clients the reasons that their insurance premiums continue to increase. Many understand and accept that like many other services and products, the cost of their insurance coverage now will be more than they paid for that same policy back in 2010. A natural and reasonable increase is palatable.
Many ask for a solution to keep their costs affordable. Can I reduce coverage? Can I find another company with better rates? Can I finance my premium to spread out my payments? All these questions can be addressed with an agent that will give options and explanations relevant to coverage.
Conversation about the "reason" costs seem to increase endlessly needs to include the enormous impact that the Assignment of Benefit (AOB) fraud and abuse is having on the industry. The AOB causes the insured to loss control of the policy that they have purchased. People get caught up in a crisis situation with their property. When they are standing in water inside their home, they need help. It becomes very easy to "sign over" your insurance benefits to the water extraction company so that you can start to repair the damages. Only later does the insured find out that the charges submitted to the insurance company are triple the estimate given. Work complete, bill submitted, claim made.....here we go. All the costs associated with quantifying the claim, litigation (most times the insurance carrier is sued), etc. etc. will eventually tap on the reserves that keep the insurance system stable. Drain the reserve from fraudulent claims and costs, then premium increases happen to rebuild the reserve necessary to protect legitimate exposures.
This year again, the Florida Legislature completed their session in Tallahassee without successfully addressing this problem. There was a House approved bill that never got approved by the Senate. A Senate version went to committee, but again nothing.
Homeowners need to make this issue relevant to their Representatives. Like any issue that needs changing, there needs to be a strong political will to get issues addressed. There was none this year. If AOB reform is not a major priority in your Representatives world, and it remains always on the back shelf with the other 3 million issues that are raised each year, it won't change.
When you get your renewal notice in the mail this year, certainly call your agent with those questions. Then please call your State Representatives and ask them the same questions. Ask them about how AOB is impacting the premium costs. Tell them about trying to adjust to increasing insurance costs. Tell them to watch out for their renewal, because they might be getting an increase too.