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 June 30, 2006, representing the position of the New York State Insurance Department.

Re: Insurers and Their Employees That Adjust Workers' Compensation Claims for Affiliated Insurers.

Questions Presented:

1. Is an insurance company that adjusts workers' compensation claims for an affiliate in the same holding company system required to be licensed as an independent adjuster under the New York Insurance Law?

2. What are the requirements for an entity or individual to become licensed as an independent adjuster under the New York Insurance Law?

3. Are there continuing education requirements to maintain an independent adjuster's license?

Conclusions:

1. Yes. An insurance company and its employees that adjust workers' compensation claims for an affiliated insurance company in the same holding company system are required to be licensed as independent adjusters under the New York Insurance Law.

2. N.Y. Ins. Law § 2108 (McKinney 2006) sets forth in detail the requirements for becoming licensed as an independent adjuster in New York, which includes taking a written examination, submitting an application and paying the requisite fees.

3. Yes. Section 2108 requires licensees to complete fifteen credit hours of instruction during each full biennial licensing period.1

Facts:

The inquirer states that there are situations where one company owns a number of insurance companies and will designate one of the insurance companies to adjust the claims of all of the insurance companies in the holding company system. The inquirer would like to know whether, in those situations, the insurance company that is adjusting the claims of all of the other insurance companies is required to become licensed as an independent adjuster under the New York Insurance Law.

Analysis:

N.Y. Ins. Law § 2102(a)(1)(McKinney 2006) provides, in pertinent part, that:

(a)(1) 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 § 2101(g)(1)(McKinney 2006) 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, 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 the manager, agent or general agent of any department thereof, individual or corporate, or attorney in fact of any reciprocal insurer or Lloyd's 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;

(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.

The licensing exemption contained in Section 2101(g)(1)(A) applies only to the adjustment of a claim that is the obligation of that particular authorized insurer. Thus, the exemption is not applicable to a situation where an employee of one insurer adjusts claims of another insurer within the same group of companies (i.e., an affiliate or subsidiary company). The associated nature of the companies is immaterial to the requirement for a license. Thus, an insurer and its employees that adjust workers' compensation claims on behalf of affiliated insurers in the same holding company system must be licensed as independent adjusters.

Sections 2101(g)(1)(B) and 2101(g)(1)(C) apply to the adjustment of health insurance claims and would, therefore, not apply to this inquiry, which involves workers' compensation insurance. In addition, none of the other exemptions apply to this inquiry based upon the facts provided.

N.Y. Ins. Law § 2108 (McKinney 2006) sets forth in detail the requirements for becoming licensed as an independent adjuster in New York, including taking a written examination, submitting an application and paying the requisite fees. If an entity, rather than an individual is involved, the entity and each of its employees that adjust claims must become licensed as independent adjusters. Section 2108 also requires licensees to complete fifteen credit hours of instruction during each full biennial licensing period. The inquirer was directed to contact the Department's Licensing Bureau at (518)473-3207 for further information regarding licensing as an independent adjuster.

For further information you may contact Associate Attorney Pascale Jean-Baptiste at the New York City Office.

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1 See Opinion No. 07-04-15, dated April 25, 2007, which revises this conclusion.