Assignment of benefit (AOB) claims rising for Florida P&C insurers

Litigated claims related to the assignment of benefits (AOB) have increased in Florida for property and casualty (P&C) insurers, according to the latest data from CaseGlide.

While overall newly litigated claims dropped by around 7% month-on-month in December for Florida’s largest P&C insurers, where the remaining claims are emanating may present more of a concern to reinsurance market interests and ILS funds.

Assignment of benefit (AOB) has caused a significant amount of claims to flow to reinsurance and insurance-linked securities (ILS) markets in recent years, so the industry watches this area of legal action closely in the state of Florida.

Encouragingly though, December’s overall figure for newly litigated claims in Florida represents a 49% decrease from July’s high of 6,663 new litigated claims, CaseGlide explained.

11 of the 17 major Florida P&C insurers CaseGlide tracks registered a month-over-month decrease in new litigated claims for December.

Three of these Floridian insurers registered a decrease of greater than 20% month-over-month, and three had decreases between 10% and 19%, however one experienced an increase of 28%, four had increases between 1% and 5% and another showed no change month-over-month.

“The December 2021 results are following a normal pattern of trailing off as the calendar year ends,” explained Wesley Todd, CEO of CaseGlide. “The 49% decrease from the July high of 6,663 is most likely tied to the SB76 Bill going into effect, and we expect to see levels normalize as we move into 2022.”

But Todd also highlighted that, “One important note for year-end is that we’re seeing increased levels of AOB cases across the insurers, with 10 insurers registering greater than 30% of their newly litigated cases as AOBs.”

AOB cases as a percentage of total new litigated cases in Florida during the month of December moved higher to 33%, which CaseGlide said is the highest percentage registered in any month in 2021.

In fact, CaseGlide’s data shows that the AOB percentage of litigated property insurance claims in Florida has increased steadily from the low 17% to 20% figures registered in the first six months of 2021.

What’s driving this could be weather related, with water typically one driver of AOB. But it is also perhaps the contractor industry finding new ways to gain custom, even as legislation had hoped to reduce the AOB crisis in Florida.

CaseGlide noted that the top 10 AOB contractors in Florida continue to represent 30% of all AOB-related new litigated claims, with the top contractor responsible for 6%.

These better funded and resourced contractors are likely able to navigate the legal environment to continue pushing forward AOB claims, so this is something reinsurance and ILS interests would do well to watch through 2022 in advance of the hurricane season, as any Florida storms and losses could see a resurgent wave of AOB cases, it would seem.

CaseGlide explained that the geographic distribution of new litigated claims is mostly unchanged, with Miami-Dade County representing 24% of new litigated cases, Broward County next at 16%, Palm Beach County at 7%, Orange County at 7% and Hillsborough County at 7%.