New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
ONE COMMERCE PLAZA
ALBANY, NEW YORK 12257

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on August 1, 2005 representing the position of the New York State Insurance Department.

RE: Third Party Administrator and Adjuster’s License

Question Presented:

1) Does a Third Party Administrator with a license to adjust in New York require a separate license for its office located outside New York State?

2) Must the employees of a Third Party Administrator engaged in adjusting activity be licensed as adjusters?

Conclusion:

1) Provided that the out-of-state office is a part of the same entity that is licensed as an independent adjuster in New York, no separate license is needed as the license covers the entity itself rather than a particular office of the entity. However, if the out-of-state office is a separate entity the out-of-state office would require its own license.

2) Employees of a Third Party Administrator regardless of their location who are engaged in adjusting activity in New York that involves discretionary authority and not purely ministerial acts must be licensed as independent adjusters. Conducting adjusting activities with a person in New York by e-mail, telephone, or mail would constitute doing business in New York, regardless of whether the claimant was a New York resident.

Facts:

The inquirer represents a Third Party Administrator (TPA) that adjusts claims in New York State for an insurer. The TPA is incorporated in Delaware and has offices in New York State and Pennsylvania. The offices are not separate entities. The employees in the Pennsylvania office sometimes do adjusting work in New York State.

Analysis:

The New York State Insurance Law does not specifically define “third party administrator” and does not regulate activities of TPAs as such. However, any person or entity that engages in activities in New York that would require licensing (e.g., acting as an adjuster) must obtain the appropriate license from the New York Insurance Department. Within the meaning of N.Y. Ins. Law § 2102 (McKinney Supp. 2005) conducting adjusting activities with a person in New York by e-mail, telephone, or mail would constitute doing business in New York, regardless of whether the claimant was a New York resident.

N.Y. Ins. Law § 2101(g)(1) (McKinney Supp. 2005) defines independent adjuster to mean:

…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, ...

N.Y. Ins. Law § 2102 (McKinney Supp. 2005) provides that: “No person, firm, association or corporation shall act as an insurance producer or insurance adjuster in this state without having authority to do so by virtue of a license issued and in force pursuant to the provisions of this chapter.”

N.Y. Ins. Law § 2108(c)(1) (McKinney Supp. 2005) provides in relevant part, as follows:

(c)(1) The superintendent may issue an independent adjuster’s license or a public adjuster’s license to any person, firm, association or corporation, hereinafter designated as licensee, . . .

Licenses that are issued by the superintendent to a firm, association or corporation are issued to the entity in its entirety. Thus, according to the facts the inquirer have presented, the New York Office and the Pennsylvania office are part of the same entity, the license applies to both offices. Therefore, the Pennsylvania office does not require a separate license.

However, since individuals are encompassed within the definition in N.Y. Ins. Law § 2101(g), any individual in the TPA’s office, whether located in New York or outside of New York, engaging in adjusting activity in New York that involves discretionary authority and not purely ministerial acts would need his or her own independent adjuster’s license.

For further information you may contact Assistant Counsel Brenda M. Gibbs at the Albany Office.