New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on August 15, 2002, representing the position of the New York State Insurance Department.

Re: Licensing Requirements For Common Carrier Self-Insurer

Question Presented:

Is an independent or public adjuster’s license required when a common carrier acts as a self-insurer and administers claims asserted against itself involving claims for no-fault benefits, third-party personal injury liability claims, and third-party property liability insurance?

Conclusion:

No. An independent or public adjuster’s license is not required when a common carrier acts as a self-insurer and administers claims asserted against it involving claims for no-fault benefits, third-party personal injury liability claims, and third-party property liability insurance. We do not offer an opinion regarding other licenses that may be required by other state and federal laws.

Facts:

An interstate common carrier bus company (the "company") would like to administer claims asserted against the company for no-fault benefits, third-party personal injury liability claims, and third-party property liability insurance. The company is incorporated outside of New York, and has its principal place of business outside of New York. The company is self-insured, and has excess insurance; however, the excess insurance does not provide insurance coverage when the company is required to provide New York no-fault benefits.

The company has designated a wholly owned subsidiary (the "subsidiary company") as the third-party administrator for claims asserted against the company. We assume that the subsidiary company does not adjust on behalf of the excess insurer. The subsidiary company is staffed by employees of the bus company. These employees will solely handle claims asserted against the company from an office located outside of New York. The employees’ duties with respect to no-fault would include the following:

[T]he processing of applications for benefits (NF-2s); requesting additional verification, coordinating IMEs and peer reviews; the assignment of claims to New York attorneys to conduct examinations under oath, arbitrations, and healthcare provider litigation; and the payment or denial of benefits pursuant to the applicable laws and regulations of New York State.

With respect to personal injury litigation against the company, it is anticipated that the employees’ activities would encompass the review of lawsuits and the selection of defense counsel and preparation of reports for internal use.

In addition:

[T]here are no ‘first party’ property damage claims involved as [the company] obviously does not have insureds, in the traditional sense. There may be third party claims submitted to XYZ resulting from two vehicle motor-vehicle accidents by the owners of the other vehicles or subrogation claims by the insurance carriers for the other vehicles. Occasionally, [the subsidiary company] may seek reimbursement for damage sustained to the company’s buses against the owner/insurer of the offending vehicle.

The subsidiary company does not receive any fees or anything else of value from the company. However, this seems unlikely since the subsidiary company would need to make payments for operating costs and expenses.

Analysis:

The Insurance Department does not issue a third-party administrator license. Thus, for any person or entity acting as a third-party administrator in New York, we look to the functions and activities of that person or entity, in determining whether an adjuster’s license (or other type of license) is required.

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) states that: "No adjuster shall act on behalf of an insurer unless licensed as an independent adjuster, and no adjuster shall act on behalf of an insured unless licensed as a public 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. . .

Here, the subsidiary company works on behalf of the bus company, not an insurer. A self-insurer, such as a company who self-insures for its liability exposure including no-fault obligations, is not an insurer. Since the subsidiary company is not adjusting on behalf of an insurer, an independent adjuster’s license is not required. Similarly, the company need not be licensed as a public adjuster, which adjusts claims on behalf of an insured, since there is no insured involved.

Accordingly, it is not necessary to determine whether or not the proposed activity constitutes investigating and adjusting claims pursuant to section 2101(g)(1), since an adjuster’s license is not required for a self-insurer.

The foregoing discussion is limited to the application of the Insurance Law only. We do not offer an opinion regarding other licenses that may be required by other state and federal laws.

For further information, you may contact Senior Attorney Meredith S. Kaufer at the New York City Office.