State Rep. Bob Rommel/photo courtesy of the Florida House of Representatives

With the sponsor saying the bill targets “bad actors,” the House passed a controversial bill that would revamp the insurance practice known as assignment of benefits.

The 96-20 vote came on an issue that the insurance industry and business groups have made a top priority as they contend changes are needed to hold down insurance premiums. But the House and Senate have not been able to agree on the issue in past years and still need to reach a compromise before the annual legislative session ends May 3.

House Speaker Jose Oliva, R-Miami Lakes, told reporters after the vote that assignment of benefits is “part of a negotiation” between the House and the Senate, but he added “we feel strongly that we have a good bill.”

Known almost universally in the Capitol as AOB, assignment of benefits is a decades-old practice in which policyholders sign over claims to contractors, who then pursue payment from insurance companies for work. The controversy emerged largely because of residential water-damage claims, with insurers arguing that AOB has become riddled with fraud and litigation, driving up premiums.

But plaintiffs attorneys and many home-repair firms have objected to legislative attempts to revamp the process, contending that the proposals would tilt the system too far toward the insurance industry. They argue that assignment of benefits helps ensure claims are paid properly.

The House bill (HB 7065), sponsored by Civil Justice Chairman Bob Rommel, R-Naples, would make a series of changes, including restricting attorney fees in AOB cases and allowing insurers to sell policies that would not be subject to assignment of benefits. Rommel has repeatedly argued in committees and on the House floor that he is trying to address “bad actors” and that homeowners should be able to choose potentially lower-cost policies that do not allow assignment of benefits.

“This bill allows the consumers to make the choice that's best for them, period,” he said Thursday. “This bill stops the abuse that is going on.”

State Insurance Commissioner David Altmaier issued a statement that praised the House for passing the bill and focused on the attempt to limit attorney fees. Altmaier said Florida's current attorney-fee system “incentivizes abusive litigation in our insurance market. As a result, Florida remains unique as we are one of the only states currently battling a cottage industry that profits off the systemic abuse of AOBs.”

But the Restoration Association of Florida, a group that has fought the bill, issued a statement saying the House's decision “to pass dangerous AOB reforms will have negative implications for homeowners and small businesses throughout the state.”

“We call on Florida's legislative leaders to do the right thing and support measures that protect their constituents, and not the insurance industry, who already have a significant advantage over homeowners and small businesses,” Amanda Prater, a spokeswoman for the group, said in the statement.

Critics of the House and Senate bills have repeatedly questioned whether the changes would result in reduced insurance premiums for homeowners.

Barry Gilway, president and chief executive officer of the state-backed Citizens Property Insurance Corp., said Thursday the House bill would lead to reductions this year for some Citizens customers and eventually lower rates for other policyholders.

“While not providing immediate premium reductions to all Citizens policyholders, the legislation would go a long way toward stabilizing rates and shortening the time it takes for Citizens to provide rate reductions to its policyholders,” Gilway said in a statement.

Jim Saunders  reports for the News Service of Florida. NSF staff writer Christine Sexton contributed to this report.