The Office of General Counsel has issued the following informal opinion on May 24, 2000 representing the position of the new York State Insurance Department.
Independent Adjuster Licensing
Must an insurer become licensed as an independent adjuster if its examiners are merely reviewing claims, assigning them to counsel and preparing internal reports?
Must an insurer become licensed as an independent adjuster in order to adjust claims on behalf of affiliated insurers?
No, it is unnecessary for an insurer to become licensed as an independent adjuster if its examiners are merely reviewing claims, assigning them to counsel and preparing internal reports.
Yes, an insurer must become licensed as an independent adjuster in order to adjust claims on behalf of affiliated insurers.
Insurance company A employs examiners who evaluate claims, gather information, prepare reports, manage the litigation process and participate in settlement agreements. A has inquired whether its examiners would have to become licensed as independent adjusters. A has also inquired whether an insurer must become licensed as an independent adjuster in order to adjust claims on behalf of affiliated insurers.
A describes its examiners duties as follows. When a lawsuit/claim is received, an examiners assistant inputs the information into a database and sets up a file. An examiner then reviews the lawsuit, selects defense counsel, prepares a report about the claim for internal and reinsurer use (if applicable) and sets reserves. The examiners reports are essentially summaries of the adjusting work outsourced to attorneys. Copies of the examiners reports are provided to involved reinsurers as a claims update. Reserves are set based upon information provided by the adjusting attorneys and examiners do not engage in communications with claimants or investigate claims in any manner.
N.Y. Insurance Law Section 2101 (g) (1) (A), (D) (McKinney 1985 and Supp. 2000) provides:
The term "independent adjuster" means any person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts in this state on behalf of an insurer in the work of investigating and adjusting claims arising under insurance contracts issued by such insurer and who performs such duties required by such insurer as are incidental to such claims and also includes any person who for compensation or anything of value investigates and adjusts claims on behalf of any independent adjuster, except that such term shall not include:
any officer, director or regular salaried employee of an authorized insurer, or any manager thereof, individual or corporate, or the manager, agent or general agent of any department thereof, individual or corporate, or attorney in fact of any reciprocal insurer or Lloyds underwriter, or marine underwriting office, unless acting as an auto body repair estimator as defined in subsection (j) of this section;
* * * * *
(D) any licensed attorney at law of this state.
Ministerial and clerical activities, such as the review of lawsuits, selection of defense counsel and preparation of reports for internal use, constitute the kind of activities that examiners may perform on behalf of affiliated insurers without being licensed as independent adjusters.
For further information you may contact Attorney Sally Geisel at the Departments New York Office.