The Office of General Counsel issued the following informal opinion on November 27, 2002, representing the position of the New York State Insurance Department.
Re: Licensing Requirements for Independent Adjusters Located Outside of New York.
1. Must an independent adjuster that is licensed as such in Georgia and operating from its Georgia office be licensed as an independent adjuster in New York to adjust automobile and general liability claims in New York on behalf of authorized and unauthorized insurers?
2. Must this entity be licensed as an independent adjuster in New York to adjust automobile and general liability claims in New York on behalf of self-insurers?
1. Yes. An independent adjuster that is licensed as such in Georgia and operating from its Georgia office must be licensed as an independent adjuster in New York to adjust automobile and general liability claims in New York on behalf of authorized and unauthorized insurers, regardless of the location of its office.
2. No. This entity does not have to be licensed as an independent adjuster in New York to adjust the automobile and general liability claims in New York on behalf of self-insurers.
ABC Co. is an independent adjuster that is licensed as such in Atlanta, Georgia. It handles automobile and general liability claims out of its office located in Georgia. Although most of its claims originate in the southeastern United States, ABC Co. has recently expanded nationwide including into the northeast.
While ABC Co. principally operates as an independent adjuster, it also has a third party administration ("TPA") division that handles automobile and general liability claims nationwide. As ABC Co. continues to expand its TPA operations, it is mindful of the need to comply with state licensing rules.
ABC Co.s TPA division typically handles two types of claims. The bulk of its business involves automobile and general liability claims generated within a self-insured retention program that are handled by ABC Co. on behalf of a self-insured entity. Under certain circumstances, generally when the exposure is significant enough, ABC Co. also becomes involved in the excess layer of coverage and handle claims directly for the insurer. We assume that this means that the self-insured entity insures its own automobile and general liability claims up to a certain dollar amount and obtains insurance for any excess claims.
Alternatively, ABC Co. has some programs where it handles claims on behalf of insurers. These are generally specialty programs for reinsurance or unauthorized insurers.
At the outset it should be noted that there is no licensing or registration requirement for TPAs as such under the New York Insurance Law. However, any person or entity, including a TPA, that performs functions that require licensing as an independent adjuster must be so licensed.
N.Y. Ins. Law § 2102(a)(1) (McKinney 2000) provides, in pertinent part, that:
(a)(1) No person, firm, association or corporation shall act as an . . . insurance adjuster in this state without having authority to do so by virtue of a licensed issued and in force pursuant to the provisions of this chapter.
N.Y. Ins. Law § 2101(g)(1) (McKinney 2000) defines the term "independent adjuster", in pertinent part, as follows:
(g)(1) [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 . . . (emphasis supplied)
Although the statute lists exemptions from this licensing requirement, none of them are applicable to this inquiry.
The Department has interpreted the word "insurer" to include both authorized and unauthorized insurers. Thus, in the present case, if ABC Co. investigates and adjusts claims in New York on behalf of authorized or unauthorized insurers, it would have to become licensed as an independent adjuster in New York. The fact that ABC Co. would be operating from its office in Georgia is not dispositive, since adjusting in New York would include communications to New York by mail, telephone, the internet, etc. Please note that the relevant factor is not the New York residency of the claimant, but the adjusters contact with New York.
Moreover, both ABC Co. and its individual adjusters must be licensed as independent adjusters to perform the activities described. For further information, the inquirer was directed to access the Departments web site located at http://www.ins.state.ny.us or to contact our licensing bureau at (518) 474-6630.
Additionally, N.Y. Ins. Law § 1214 (McKinney 2000) prohibits any person from adjusting losses for a foreign insurance corporation, which has not executed and filed a written appointment of the superintendent as its true and lawful attorney, upon whom all lawful processes in any proceeding against it may be served. All authorized foreign insurers have so appointed the Superintendent. ABC Co. may adjust claims on behalf of an unauthorized insurer only if the insurer has filed such a written appointment with the Department.
In regard to the second question posed, the Department has previously opined that settling automobile and general liability claims on behalf of a self-insurer does not fall within the definition of independent adjuster. This is because if an entity bears its own risk of loss without purchasing insurance, it is not considered "insurance" as that term is defined in section 1101(a) of the Insurance Law. Thus, ABC Co. would not have to be licensed as an independent adjuster in connection with the claims of those entities. However, in regard to the excess claims ABC Co. must be so licensed.
This opinion is limited to an interpretation of the New York Insurance Law and we offer no opinion regarding whether ABC Co. would have to be licensed in regard to such claims in connection with any other law of this state.
For further information you may contact Senior Attorney Pascale Joasil at the New York City Office.