FILE - Hurricane Michael Florida

Candace Phillips sifts through what was her third-floor bedroom while returning to her damaged home in Mexico Beach, Fla., Sunday, Oct. 14, 2018, in the aftermath of Hurricane Michael.

About 12 percent of claims, or 18,211, filed in the wake of Category 5 Hurricane Michael, which hammered the Panhandle last October causing more than $6.5 billion in insured losses, remain open, Florida Insurance Commissioner David Altmaier told the Senate Banking & Insurance Committee Tuesday.

That’s the bad news. The good news, he said, is the state’s Office of Insurance Regulation (OIR) has not received many complaints from policyholders, an indication most are “satisfied” with attempts by insurers to resolve outstanding claims.

Altmaier said about half the 18,211 insurance claims are likely reopened claims, where ratepayers received “actual cash value” that their insurance company issued a payment for, but then reopened the claim when the ultimate repair bill exceeded the payout they had received.

The Senate Banking & Insurance Committee was among a slate of panels that met Tuesday in pre-session primers that will continue through the week and intermittently over the next three months before the 2020 session begins on Jan. 14.

Altmaier occupied the committee’s entire agenda with Hurricane Michael updates and an assessment of how the Legislature’s 2019 adoption of House Bill 7065, a long-awaited, long-debated, assignment-of-benefits (AOB) reform bill, is panning out.

The answer: It’s too soon to answer any questions about how the AOB reform law, which went into effect on July 1, will affect rates for the vast majority of insurers and their policyholders.

For about 67,000 – including nearly 44,000 residential policyholders – covered by Citizen’s, however, the new law will pay early dividends in reducing rates this year below what they paid in 2018.

Most of Citizen’s other 435,000 residential policyholders will see lower rate increases, from a tentatively planned 8.2 percent hike to an average of about 3.5 percent.

AOB agreements allow property insurance policy holders to sign away, or assign, benefits in insurance policies. The law allows policyholders to trade those benefits in exchange for “upfront work” in an emergency.

The controversial component of Florida’s AOB statute addressed by HB 7065 was its “one-way” attorney fee provision, which required insurers to pay legal costs even when they win in court. Critics contended the one-way fee clause “incentivized” attorneys to file AOB lawsuits as a “can’t lose” business practice.

According to the OIR, AOB-related lawsuits drove rate hikes of up to 36 percent for many of Florida’s 6.2 million property insurance policyholders over the last half-decade.

According to a December 2018 Insurance Information Institute report, there were about 1,300 AOB lawsuits statewide in 2000, more than 79,000 in 2013 and nearly 135,000 by early November 2018, a 70 percent increase in just five years.

HB 7065, however, removed the litigative incentive from the state’s “one-way fee” provision by only allowing policyholders – not attorneys or third-party contractors – to collect the one-way attorney fee in an AOB agreement.

Under the new law, insurance companies can legally sell AOB-free policies. Carriers can offer three tiers of policies – those allowing policyholders to assign their benefits; those restricting assignments; and those blocking an assignment whatsoever.

Attorney fees under the new law are awarded on a sliding scale to the winning party in a lawsuit, depending on the size of awards as compared to pre-lawsuit settlement offers.

Adopting HB 7065 ended seven years of failed attempts to reform the state’s AOB statute. The House had passed AOB-reform measures three years in a row, but none made it onto the Senate floor.