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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

This Office of General Counsel issued the following information on February 5, 2004 representing the position of the New York State Insurance Department.

RE: Independent Adjuster License

Question Presented:

Is an independent adjuster’s license required for a licensed insurer to adjust life and accident and health insurance claims for another licensed insurer?

Conclusion:

A licensed insurer must be licensed as an independent adjuster to adjust the claims of another licensed insurer. Accordingly, an authorized insurer may become licensed as an independent adjuster (accident and health) to adjust the ceding insurer’s health insurance claims. Because there is no independent adjuster (life) license, a life insurer may not employ another party, including another licensed insurer, to adjust its life insurance claims. N.Y. Ins. Law §§ 2101(g)(1), as amended by Chapter 692 of the Laws of 2003, 2102(a)(1) (McKinney 2000), 2108(a)(3) (McKinney Supp. 2004), N.Y. Comp. Codes R. & Regs. tit. 11, §§ 26.1-26.6 (2000) (Reg. 25). However, a review of an insurer’s proposed activities should be reviewed to ascertain whether it does, in fact, constitute claims adjusting. See Office of General Counsel Opinion dated April 23, 2003 (copy enclosed).

Facts:

A licensed foreign insurer has entered into an indemnity reinsurance agreement with a licensed domestic insurer.1 There will be an assumption of certain life and health business pursuant to the agreement. The agreement also provides for the temporary administration of the reinsured policies issued by the ceding company. This includes an adjustment of the ceding company’s life and accident policies. The adjustment of claims was taken into account when the parties arrived at the purchase price ("the ceding commission").

Analysis:

N.Y. Ins. Law § 2101(g)(1), as amended by Chapter 692 of the Laws of 2003, defines an independent adjuster as:

(1) 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:

(A) 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 of Lloyds underwriter, or marine underwriting office, unless acting as an auto body repair estimator as defined in subsection (j) of this section;

(B) officer, director or regular salaried employee of an authorized health insurer or health maintenance organization, or any manager thereof, individual or corporate, when the claim to be adjusted is submitted for payment under a health benefit plan that is issued or administered by another health insurer or health maintenance organization within the same holding company system as the authorized insurer or health maintenance organization adjusting the claim;

(C) any officer, director or regular salaried employee of an article fifteen holding company or controlled person providing administrative services within that holding company, or any manager thereof, individual or corporate, when the claim to be adjusted is submitted for payment under a health benefit plan that is issued or administered by a health insurer or health maintenance organization within that same holding company system. The exception in this subparagraph and subparagraph (B) of this paragraph shall also extend to any company administering claims on behalf of an entity described in subparagraph (B) of this paragraph or this subparagraph when that claims administration is pursuant to a written contract with an insurer or health maintenance organization;

(D) any adjustment bureau or association owned and maintained by insurers to adjust or investigate losses, or any regular salaried employee or manager thereof who devotes substantially all of his time to the business of such bureau or association, unless acting as an auto body repair estimator as defined in subsection (j) of this section;

(E) any licensed agent of an authorized insurer who adjusts losses for such insurer solely under policies issued through his or its agency, provided the agent receives no compensation for such services in excess of fifty dollars per loss adjusted;

(F) any licensed attorney at law of this state;

(G) any average adjuster or adjuster of maritime losses;

(H) any agent or other representative of an insurer authorized to issue life and annuity contracts, provided he receives no compensation for such services.

None of the licensing exemptions outlined in subparagraphs (A)-(H) of N.Y. Ins. Law § 2101(g)(1), cited above, are applicable to the facts presented.

N.Y. Ins. Law § 2102(a)(1) (McKinney 2000) prohibits any person, firm, association or corporation from acting as an insurance agent, insurance broker, reinsurance intermediary or insurance adjuster in New York without the appropriate license. In addition, N.Y. Ins. Law § 2108(a)(3) (McKinney Supp. 2004) requires that no adjuster shall act on behalf of an insurer unless licensed as an independent adjuster. In accordance with this grant of authority the Superintendent has by regulation prescribed the types of independent adjusters’ licenses that may be issued. N.Y. Comp. Codes R. & Regs. tit. 11, § 26.1-26.6 (2000) (Reg. 25). Section 26.4 of Regulation 25 lists the types of independent adjuster licenses that may be obtained. In accordance therewith, the insurer may become licensed as an independent adjuster (accident and health) to adjust the ceding insurer’ s health insurance claims.

There is no provision authorizing the investigation and adjustment of claims arising under life insurance policies. Thus, the adjustment of life insurance claims in this state for another insurer is impermissible. However, the insured’s proposed activities should be reviewed to ascertain whether, in fact, these activities constitute claims adjusting. If they do not, a license is not required. See Office of General Counsel opinion dated April 23, 2003.

For further information you may contact Supervisory Attorney Joan Siegel at the New York City Office.


1  In a conversation with this Department’s Life Bureau you were advised that certain Department approvals will be required during the course of the described transactions.