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

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on May 20, 2005, representing the position of the New York State Insurance Department.

RE: Intra-Organization Claims Adjusting License Requirement

Question Presented:

Does an employee of an insurer need a license to adjust for another insurer if both insurers are subsidiaries owned by a single holding company?

Conclusion:

Yes, except with respect to accident and health insurance claims, an independent adjuster license is required when an employee of one insurer adjusts claims for another insurer, even if the two insurers are owned by the same holding company.

Facts:

The inquirer’s client is a holding company that is not an insurer, but owns two subsidiary companies that are both insurers. The client wants to use adjusters employed by one insurer to adjust claims for the other insurer. The claims adjusting does not involve accident or health insurance. The inquirer feels that since the insurers are under a common ownership, the employees of one insurer will not need an independent license to adjust claims for the other insurer.

Analysis:

N.Y. Ins. Law § 2101(g) (McKinney 2000) states in pertinent part:

(g) In this article, "adjuster" means any "independent adjuster" or "public adjuster" as defined below:

(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) any officer, director or regular salaried employee of an authorized insurer or entity licensed pursuant to article forty-four of the public health law providing comprehensive health service plans (as used in this paragraph, a "health maintenance organization"), or any manager thereof, individual or corporate, or attorney in fact of any reciprocal insurer or Lloyds underwriter, or marine underwriting office, unless acting as an auto body repair estimator as defined in subsection (j) of this section.

(B) any officer, director or regular salaried employee of an insurer authorized to write accident and health insurance, a corporation licensed under article forty-three of this chapter (collectively, as used in this paragraph, a "health insurer") or a health maintenance organization, or any manager thereof, individual or corporate, when the claim to be adjusted is issued or administered by another health insurer or health maintenance organization within the same holding company system as the health insurer or health maintenance organization adjusting the claim;

(C) any officer, director or regular salaried employee of an article fifteen holding company or a controlled person within such holding company system 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…

N.Y. Ins. Law § 2108(a)(3) (McKinney 2000) requires that a person be licensed as an independent adjuster to act on behalf of an insurer. This license is required even when an employee of one subsidiary insurer adjusts claims for another subsidiary insurer within the same holding company system, except with respect to accident and health insurance claims. Whether the two subsidiaries are wholly owned by one holding company is immaterial. Insurance Department, Opinions of General Counsel, Number 02-04-12.

Therefore, an independent adjuster license is required for employees of one insurer to adjust claims of another insurer, except with respect to accident and health claims.

For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.