How Increasing AOB Claims in Florida Impact Property and Casualty Insurance Carriers

How Increasing AOB Claims in Florida Impact Property and Casualty Insurance Carriers
Many homeowners in Florida are experiencing hikes in homeowner’s insurance rates. In this scenario, hurricanes are not the primary driver of rate increases. Instead, contractors in Florida are responsible for increasing the cost of insurance by unnecessarily driving up repair costs.
How are individuals and firms in Florida driving up insurance claims?
We’ve talked about the danger of homeowners completing an Assignment of Benefits (AOB) form to give individuals and firms complete control over the insurance claim. Unfortunately, many firms that are hired to complete repairs choose to excessively over bill insurance carriers for their work. This common practice is one of the reasons why insurance carriers are facing challenges with profitability.

To demonstrate the crisis that insurers in Florida are facing, AOB water claims have increased by 50 percent since 2011. While the typical water damage claim is $7,000, the average AOB claim is more than three times this amount.

The danger of signing an Assignment of Benefits (AOB) form
Many homeowners aren’t aware of the danger of signing an AOB form. Upon selecting a firm to complete the repair, the firm presents the AOB form to the homeowner to sign with little to no explanation. What homeowners don’t realize is that they’re indirectly playing a role in this fraud. Also, because the repair firm is inflating the cost of the claim, the homeowner suffers by having to pay more and more for property insurance.

The challenge for many insurance carriers is that there is often a disconnect between the insurance provider and the insured. Because the insurers don’t always have the opportunity to get face time with insureds, they aren’t able to educate them about the insurance risk associated with signing an AOB to allow repair firms to run with insurance claims.

How Insurance Risk Services helps insurance carriers to mitigate risk
Two key ways that our team at Insurance Risk Services can add a lot of value to our insurance carrier clients is by helping to establish relationships with insureds and educating them about insurance risk. When our team is engaged to conduct property inspections, we represent the insurance carrier. Therefore, in the insured’s’ eyes, we are the face of the insurance carrier. Conducting property inspections allows us to have valuable face-to-face interactions with insureds. Not only does this time allow us to identify new opportunities for insurance carriers, but also gives us a chance to educate property owners about ways to mitigate insurance risk, such as not signing an AOB form to allow a repair firm or individual to drive up an insurance claim.

Please contact us at Insurance Risk Services to learn more about how we can add value to your relationship with insureds and minimize your risk of encountering inflated claims.

We’re delighted to announce that Insurance Risk Services will rebrand to Davies in the near future.

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