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

David A. Paterson
Governor

Eric R. Dinallo
Superintendent

OGC Op. No. 08-07-24

The Office of General Counsel issued the following opinion on July 29, 2008, representing the position of the New York State Insurance Department.

Re: Independent Adjuster License

Question Presented:

Must Company A and its employees become licensed as independent adjusters to provide the claims processing services described in your inquiry?

Conclusion:

No. Company A and its employees do not need to become licensed as independent adjusters to provide the claims processing services described in your inquiry.

Facts:

An attorney inquired as to whether his client, to whom he referred as “Company A,” must obtain an adjuster’s license in order to conduct the claims processing work that was described in his letters dated April 23, 2008 and July 2, 2008, and during a telephone conversation on June 11, 2008. The following is a description of the claims processing work that the inquirer reported Company A plans to provide:

Company A’s employees will process health care claims at service centers located outside the United States for U.S. domestic insurers and health plan administrators (“Insurers”). Company A’s employees will manually process claims that cannot be auto-adjudicated through an Insurer’s own computerized system. Auto-adjudication occurs when an Insurer’s computerized system receives an electronic claims filing directly from a claimant that the system recognizes as a complete and accurate filing.

In the inquirer’s July 2, 2008 letter, he provided specific examples of the work Company A’s employees are expected to conduct, which were described as follows:

Analysis:

Relevant to the inquiry is N.Y. Ins. Law § 2101(g)(1) (McKinney 2006), which defines an independent adjuster as follows:

. . . 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[.]

Insurance Law § 2102(a)(1) requires a person, firm, association or corporation who acts as an insurance adjuster to be licensed.

In determining the meaning of “investigating and adjusting claims” within the meaning of Insurance Law § 2101(g)(1), the Insurance Department considers whether the duties performed in the course of claim handling require the exercise of insurer-conferred discretionary authority, or whether they are strictly ministerial tasks. The Department has opined that discretionary acts that require licensing include claims review and processing; payment authorization; check signing and issuance; loss evaluation; responding to claimant inquiries; and making recommendations to the insurer. However, tasks such as data entry and processing are considered ministerial in nature. See Office of General Counsel Opinions dated 8/2/2006, 1/20/2006, 4/23/2003, 6/29/2001, 4/17/2001, and 12/31/1996.

The Department considers the acts that were reported to be contemplated by Company A as ministerial in nature. Company A and its employees do not negotiate with the insureds, make recommendations, or engage in any other discretionary acts. Thus, to the extent that Company A and its employees perform only the services described in the April 23, 2008 and July 2, 2008 letters, neither Company A nor its employees need to be licensed as independent adjusters.

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.