The Office of General Counsel issued the following informal opinion on June 29, 2001, representing the position of the New York State Insurance Department.
Re: Independent Adjusting Claims for Pet Insurance
Is an independent adjusters license required when a third party administrator (TPA) engages in the processing of pet insurance claims?
It depends upon whether the duties performed by the TPA are discretionary or merely ministerial.
A Company is a TPA that engages in the processing of life and health claims for group benefit plans. It would like to process pet insurance claims and "would like to do so under this same TPA authority."
The inquirer believes that the Company would not need an independent adjusters license to process pet claims, and states the following:
The processing of pet insurance claims is analogous to the processing of life or health claims, which the TPA is currently authorized to do. The processing of a pet insurance claim does not involve the determination of the loss or damage to property or the negotiation of the value of a property claim for loss or damage that is typical of a P & C claims adjuster. Rather, the TPA simply undertakes the paying of claims in adherence to the insurers contract. Discretionary decisions outside of the contract are referred to the insurer. The statutes and regulations dealing with exams, licensing and continuing education obligations pertaining to a P & C claims adjuster would serve no purpose with respect to a TPA claims processor engaged in the review and payment of pet insurance claims, nor does it appear that these regulatory requirements were intended to apply to a TPA claims processor.
Since the role of the TPA will be limited to the same activity in which it engages as a TPA for employer groups medical benefit plans, we request that you find that its authority as a TPA is acceptable in order for it to engage in this activity as well . . . .
While there is no licensing or registration requirement for TPAs, specific activities of a TPA may come within the licensing requirements of the Insurance Law. Thus, the inquirers assumption that a TPA is not required to obtain a license to process life and health claims is incorrect. Rather, licensing will depend upon the actual activities performed by the TPA.
N.Y. Ins. Law § 2102(a)(1) (McKinney 2000) provides that no person, firm, association or corporation may act as an insurance adjuster in this state without a license. In addition, N.Y. Ins. Law § 2108(a)(3) (McKinney 2000) requires that no adjuster shall act on the behalf of an insurer or on behalf of an insured unless he or she is licensed as an independent adjuster. N.Y. Ins. Law § 2101(g)(1) (McKinney 2000) defines an independent adjuster as:
[A]ny 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 . . .
In making a determination as to whether or not the proposed activity constitutes investigating and adjusting claims pursuant to section 2101(g)(1), an adjusters license is required where the individual or firm exercises discretionary authority in investigating and adjusting claims, rather than merely performing ministerial functions. Prior Department opinions have concluded that reviewing and processing claims, authorizing payments, issuing and signing checks, handling inquiries from insureds, evaluating the merits of a loss and making recommendations to the insurer are all discretionary acts, while data processing is a ministerial act.
Based upon the facts provided, we cannot determine whether the Company is investigating and adjusting claims or merely performing ministerial functions. We asked that more information be provided.
For further information, you may contact Senior Attorney Meredith S. Kaufer at the New York City Office.