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

The Office of General Counsel issued the following informal opinion on June 17, 2004, representing the position of the New York State Insurance Department.

RE: Adjuster Licensing Between Affiliate Insurers

Question Presented:

May the employees of an insurer, who receive salaries to adjust claims on behalf of the insurer, adjust claims on behalf of affiliated insurance companies that are wholly owned subsidiaries of the insurer without obtaining independent adjuster licenses?

Conclusion:

The employees of an insurer, who receive salaries to adjust claims on behalf of the insurer, must obtain independent adjuster licenses in order to adjust claims on behalf of another insurance company, even if the other insurance company is an affiliated insurance company.

Facts:

An insurance company is an authorized New York insurer. The claims staff of the insurer is comprised of salaried employees who adjust claims within New York for the insurer and the insurer’s wholly owned subsidiaries.

Analysis:

N.Y. Ins. Law § 2101(g)(1)(2003 N.Y. Laws 692) defines "independent adjuster" as:

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 or investigating and adjusting of claims arising under the 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) any 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 or Lloyds underwriter, or marine underwriting office unless acting as an autobody repair estimator as defined in subsection (j) of this section.

(B) any 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[.]

N.Y. Ins. Law § 2108(a)(3)(McKinney 2000 & Supp. 2004) states that no adjuster shall act on behalf of an insurer unless licensed as an independent adjuster.

In order to come within the licensing exception contained in N.Y. Ins. Law § 2101(g)(1)(A), the individual must not only receive a salary from the authorized insurer for whom he or she is adjusting claims, but must also be a regular employee who is receiving a salary for the adjusting function he or she performs. (See Office of General Counsel Opinion dated June 26, 2001.) This is so even if the adjustment activities are on behalf of affiliates. Since at least 1950, the New York State Insurance Department has taken the position that the licensing exception for an authorized insurer articulated in N.Y. Ins. Law § 2101(g)(1)(A) only applies to the adjustment of a claim that is the obligation of such authorized insurer. The New York State Insurance Department has consistently stated that the affiliated nature of companies does not alter adjuster-licensing requirements. (See Office of General Counsel Opinion dated May 5, 2000.)

N.Y. Ins. Law § 2101(g)(1)(B) was recently amended to provide an additional exception from the definition of adjuster. Under the amendment, an independent adjuster’s license is not required when regular salaried employees of an authorized health insurer or health maintenance organization adjust claims 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.

Based upon information obtained from the New York State Department web site, the insurer here is not an authorized health insurer or health maintenance organization. Therefore, the employees of the insurer who receive salaries to adjust claims do not come under the exception afforded under N.Y. Ins. Law § 2101(g)(1)(B) and must obtain independent adjuster’s licenses to adjust claims for affiliated insurance companies.

For further information you may contact Special Counsel Athan Shinas at the New York City Office.