The Office of General Counsel issued the following informal opinion on March 3, 2000, representing the position of the New York State Insurance Department.
Insurer Adjusting Claims on Behalf of Another Insurer
Question Presented:
1. Is an independent adjuster license required when a salaried employee of an authorized insurer adjusts claims on behalf of other insurers?
2. Is an independent adjuster license required when a salaried employee of an authorized insurer adjusts claims for other insurers that are within the same holding company system?
Conclusions:
1. Yes, an independent adjuster license is required when a salaried employee of one authorized insurer adjusts claims on behalf of other insurers.
2. Yes, an independent adjuster license is required when a salaried employee of an authorized insurer adjusts claims for other insurers that are within the same holding company system.
Facts:
An insurance company requested clarification regarding the definition of independent adjusters, in addition to clarification regarding licensure requirements for insurers who are under the same holding company system. There were no details regarding the facts surrounding the inquiries.
Analysis:
N.Y. Ins. Law Section 2101(g)(McKinney 1985 & Supp. 1999-2000) 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 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 of Lloyds underwriter, or marine underwriting office, unless acting as an auto body repair estimator as defined in subsection (j) of this section; . . ." Id.
Since at least 1950, this Department has taken the position that the licensing exemption for an authorized insurer, as stated above, only applies to the adjustment of a claim which is the obligation of that particular authorized insurer. (Op. Ltrs. 9/19/50; 11/29/61; 11/6/94, copies enclosed). The exception applies to the insurers own business, and there is no legislative history to suggest that the exception was intended to allow an insurer to engage in the business of independent adjusting. Moreover, the fact that the adjuster is a salaried employee of an authorized insurer is irrelevant when adjusting claims for other insurers, and does not negate the requirement for the issuance of the appropriate license as an independent adjuster. Thus, the exception is not applicable to situations where employees of one insurance company adjust claims on behalf of another insurance company.
Furthermore, an independent adjuster license is required when an employee of one insurer adjusts claims for other insurers within the same group of companies. The associated nature of the companies is immaterial to the requirement for a license (Op. Ltr. 4/28/97, copy enclosed).
N.Y. Ins. Law Section 2101(g)(1)(B)(McKinney 1985 & Supp. 1999-2000) provides an exemption to the requirement for an independent adjuster license for "any adjustment bureau or association owned or maintained by insurers to adjust or investigate losses. . . ." This section expressly gives an exception to two or more insurers that jointly adjust losses by owning or maintaining an adjustment bureau or association, which does not have to be licensed. However, this section does not apply to your inquiry.
Therefore, the exceptions to the requirement of N.Y. Ins. Law Section 2101(g)(McKinney 1985 & Supp. 1999-2000) are not applicable with regard to your inquiries, and thus, an independent adjuster license is necessary in both of your situations as expressed in your letter of January 16, 2000.
For further information you may contact Attorney Meredith S. Katz at the New York City Office.