Wisconsin lawmakers are weighing new restrictions on assignment of benefit (AOB) agreements for residential property losses and contractor practices tied to post-loss insurance claims.
Assembly Bill 473, introduced on Oct. 2, would prohibit contractors from soliciting work by advertising or offering to pay any portion of a homeowner's insurance deductible. It would also bar contractors from representing or negotiating on behalf of policyholders in claims related to exterior damage, including roof repairs and replacements.
The proposal introduces a number of new requirements for AOBs involving residential property claims. Contractors entering such agreements would need to include an itemized description of the planned work, along with the associated materials, labor and fees. Under the bill, contractors could seek payment only from the insurance carrier, and only until all benefits under the policy are exhausted.
According to a report from BestWire, violations of the new rules could carry significant penalties, with the state's insurance commissioner authorized to impose fines of up to $10,000 per infraction.
The Wisconsin Insurance Alliance (WIA) has voiced support for the bill, describing it as a measure that strengthens consumer protection and reduces opportunities for fraud.
Andrew Franken, president of the WIA, said the legislation would close regulatory gaps and curb abusive practices, particularly by out-of-state contractors who travel to Wisconsin after major weather events. He added that while an outright ban on AOBs would be ideal, AB 473 mirrors policies elsewhere that have proven effective in controlling insurance costs and protecting homeowners.
Several US states have taken similar steps in recent years. In June, Oklahoma enacted a law effectively banning AOBs for auto, residential, and commercial property insurance, declaring such agreements void and unenforceable, according to the report.
The issue comes amid continued scrutiny over AOB-related litigation and claims inflation in the property market, which insurers say contribute to rising loss costs and premium pressures.
If passed, AB 473 could lead to reduced claims disputes and lower legal expenses for insurers, improving overall market stability. However, contractors may face tighter operational limits and new compliance burdens that could slow post-storm repairs. The measure may also prompt insurers to revisit pricing models and claims handling processes as they adjust to a potentially lower-risk environment and more transparent contractor practices.
According to BestLink data, Wisconsin’s five largest homeowners' multiperil insurers in 2024 were American Family Insurance Group (22.02%), State Farm Group (17.05%), Erie Insurance Group (5.84%), Auto-Owners Insurance Group (5.64%), and Acuity Mutual Insurance Co. (4.87%).
