Insurance organisations are calling for a crackdown on property insurance fraud instigated by contractors in Florida, which in recent years has been seen as one of the drivers of heavy litigation related claims inflation and ballooning losses that fell to the reinsurance industry.
Florida’s Insurance Consumer Advocate (ICA) Tasha Carter and the American Property Casualty Insurance Association (APCIA) announced a joint effort to educate Floridians and prevent them from falling victim to contractor fraud and abuse, especially after a disaster.
“Illegitimate contractors’ deception and deliberate schemes have a far-reaching impact on Floridians and the insurance market. Fraud drives up costs and leaves consumers to cover the shortage. It is a privilege to partner with APCIA to educate Florida’s consumers on how to identify and avoid fraud. Fraudsters are strategic but, together with APCIA, we are a strong force fighting to combat fraud,” explained Tasha Carter, Florida’s Insurance Consumer Advocate.
Door-to-door and high-pressure tactics are called out as reasons for escalating contractor fraud, and of course the assignment of benefits (AOB) issue, where a contractor can take over an insurance claim and use whatever means necessary to inflate its costs has been a major issue for the insurance and reinsurance market.
“Insurers want to protect their customers against fraudsters looking to prey on disaster victims, which is why we are proud to work with Florida’s Insurance Consumer Advocate to raise awareness and provide helpful resources to fight against contractor fraud,” added Logan McFaddin, vice president of state government relations for APCIA. “The best way to fight fraud is to be informed and prepared. Before hurricane season gets busy, homeowners should create a list of licensed, reputable contractors in their area who they can call if their home is damaged.”
The Coalition Against Insurance Fraud says that approximately $308.6 billion is lost annually to insurance fraud.
“Insurance fraud tactics and schemes result in insurance companies paying higher negotiated settlements or paying additional costs to litigate these claims, which further burdens consumers in the form of increased insurance rates, lack of availability, and reduced coverage,” the APCIA said.
“Florida’s property insurance market is already experiencing significant turmoil due to excessive legal system abuse and fraud, so the more we can crack down on bad actors and prevent fraud from happening, the more we can help stabilize the market for consumers long-term,” McFaddin added.
Of course, education and a push to make people aware of these fraudulent tactics will help, but it won’t reduce the ballooning costs coming out of Florida property insurance claims.
Only a crackdown on litigation, through improved legislative efforts and new laws, is likely to really hold-back the Florida property insurance claims inflation tide.
But it is positive the issue is increasingly being recognised.