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 September 19, 2002, representing the position of the New York State Insurance Department.

Re: Public Adjusters’ Compensation Agreement

Question Presented:

Does N.Y. Comp. Codes R. & Regs. tit. 11, Part 25 (1995) (Regulation 10) require a public adjuster to provide an insurer with a copy of the public adjuster’s compensation agreement with the insured?

Conclusion:

No. Regulation 10 does not require a public adjuster to provide an insurer with a copy of the public adjuster’s compensation agreement with the insured, unless the insured requests that the insurer’s check be issued to the public adjuster and the insured or the public adjuster as payee.

Facts:

A public adjuster licensed in New York asserts that both an insurer and independent adjuster, who represents the insurer, have refused to work with the public adjuster until he/she provides them with a copy of the adjuster’s compensation agreement with the insured.

It is the public adjuster’s position that Regulation 10 does not require this. However, the adjuster does realize that if he/she chooses to have the proceeds check issued directly to him/her, then the adjuster must submit the compensation agreement to the insurer with a payment directive signed by the insured.

Analysis:

N.Y. Comp. Codes R. & Regs. tit. 11, Part 25 (1995) (Regulation 10) sets forth regulations governing public adjusters.

N.Y. Comp. Codes R. & Regs. tit. 11, § 25.12, entitled "Payment of losses" provides:

When a claim is settled where the insured is represented by a public adjuster, upon the request of the insured, the insurer’s check may be made payable to both the public adjuster and the insured or to the public adjuster named as a payee, but not in excess of the amount of the public adjuster’s fee, as indicated in the written compensation agreement signed by the insured and filed with the insurer. The balance of the proceeds shall be made payable to the insured or loss payee, or both, whichever is appropriate. (emphasis added)

In situations where a request is made from an insured to pay monies directly to an adjuster, the regulation requires that the percentage of the adjuster’s compensation be included in the compensation agreement that is filed with the insurer. Without this information, the insurer has no way of knowing whether the adjuster’s fee demand is consistent with the agreement the adjuster originally made with the insured in the compensation agreement.

Section 25.6, entitled "Compensation agreement" addresses the compensation agreement and the requirements for such agreement. Nowhere in this section or in Part 25 does it state that a public adjuster is required to provide his or her compensation agreement to another party such as the insurer or an independent adjuster unless, as stated in Section 25.12, "upon the request of the insured, the insurer’s check may be made payable to both the public adjuster and the insured or to the public adjuster named as a payee." When this occurs, a copy of the compensation agreement must be filed with the insurer.

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


1 N.Y. Comp. Codes R. & Regs. tit. 11 § 25.6(a) states that: "A public adjuster may be compensated by an insured for or on account of services rendered to such insured by the public adjuster solely as provided for by a written compensation agreement obtained by the public adjuster which shall consist of substantively the same information and statements contained in Form 1 in section 25.13(a) of this Part."