Originally Published in The Daytona Beach News-Journal, April 6, 2017

The state needs to get this right.

Until Hurricane Matthew raked the Atlantic coast last October, Florida had been spared major storm damage since the 2004 and 2005 hurricane seasons devastated homes and businesses — and the state’s property insurance industry. That historically long respite was supposed to give insurers opportunity to regain solid financial footing, which should result in lower premiums for consumers.

Unfortunately, those potential savings have been eroded by an increase in what is known as “assignment of benefit” abuse. “Assignment of benefits” agreements or “AOBs,” is the practice in which property owners sign away the task of negotiating with insurance adjusters and collecting payment to the contractors who are doing the repairs. In theory, it appeals to homeowners who can get work done immediately to fix roofs or water damage without having to go through the often lengthy insurance claims process. But in practice it has led to some unscrupulous contractors and attorneys to inflate claims and perform unauthorized upgrades, which they then sue the insurance companies for payment. Insurers often settle these bogus claims to avoid costly court battles, and the price can include paying attorney fees as well.

According to William Large of the Florida Justice Reform Institute, a subsidiary of the Florida Chamber of Commerce, from 2014 to 2015 AOB litigation increased 10.7 percent, and then 21 percent from 2015 to 2016. Last year, Ormond Beach-based Security First, one of the largest property insurance companies in the state, looked at water-damage claims it handled in 2015. While only 15 percent had AOBs, those claims cost an average of twice as much as normal water-damage claims.