Proposed legislation in Florida that would bar auto glass repairers from offering incentives to customers has received an endorsement from the American Property Casualty Insurance Association (APCIA).
House Bill 323, sponsored by Rep. Richard Stark (D.-Weston), would prevent auto glass shops from offering customers incentives such as gift cards, rebates, coupons, or cash in order to get more business.
The bill was passed by the House Insurance & Banking Subcommittee, and has been referred to the House Civil Justice Subcommittee and Commerce Committee.
The glass repair issue is intertwined with another insurance challenge in Florida – assignment of benefits (AOB) lawsuits. In Florida (as in other markets), insurance policyholders can sign claims over to contractors, who then seek payment from insurers, often by filing lawsuits.
The Florida Department of Financial Services noted a large increase in auto glass lawsuits in 2012, when the number of lawsuits rose from 478 to 1,389. In 2017, there were 25,664 such lawsuits. The number of lawsuits began dropping last year as shops and insurers crafted pricing agreements.
“We applaud the House Insurance & Banking Subcommittee for advancing this good public policy. We believe the number of lawsuits are being under reported,” said APCIA regional manager Logan McFaddin. “We still have a long way to go toward fixing the Florida system and protecting consumers. Thousands of cases are still being filed, which is evidence AOB abuse is a real problem that must be addressed.
“These numbers tell us there are too many Florida drivers susceptible to the bad practices happening within some auto glass repair shops,” McFaddin continued. “And, this AOB abuse must stop. APCIA encourages Florida lawmakers to pass meaningful reforms this session that will safeguard Florida drivers and the insurance benefits they rely on during a critical situation.”
While AOB is common practice in the insurance industry, insurers characterize the spike in lawsuits in Florida as an example of runaway litigation. According to the Insurance Information Institute: “The state’s legal environment has encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conduct unnecessary or unnecessarily expensive work, then file tens of thousands of lawsuits against insurance companies that deny or dispute the claims. This mini-industry has cost consumers billions of dollars as they are forced to pay higher premiums to cover needless repairs and excessive legal fees.”
In Florida, state law allows for one-way attorney’s fees. If the plaintiff wins the AOB suit, the court determines a “reasonable sum” the insurer has to pay to compensate the plaintiff’s attorneys. If the insurer wins, the plaintiff does not have to pay attorney’s fees. Insurers also believe that the current system allows for too many inflated claims, which lead to bad faith or breach of contract lawsuits when the claims are denied. Insurers also claim there have been instances of fraud, where consumers are given an incentive for glass repairs that never actually occur.
Plaintiff’s attorneys often bill legal fees far in excess of the original repair claim when they file an AOB lawsuit.
During the House Insurance & Banking Committee hearing, lawmakers cited instances of auto glass companies approaching people in parking lots and offering them cash or gift cards to repair seemingly non-existent windshield damage.
Auto glass shops, however, say that these incentives are necessary in order to compete with large companies like Safelight.