The Office of General Counsel issued the following informal opinion on August 16, 2002, representing the position of the New York State Insurance Department.
Re: Independent Adjusters
Questions Presented:
1. If employees of a business that is owned by an authorized insurer adjust insurance claims in New York for that insurer, must the business, which is not located in New York, and its employees be licensed as independent adjusters?
2. Would the business described above in question one be considered an adjustment bureau?
3. If the business described in question one above met the requirements of an adjustment bureau, may it and its employees adjust insurance claims for an insurer other than the insurer that owns it without being licensed as independent adjusters?
Conclusions:
1. The business and its employees, who adjust claims, whether by mail, telephone or other means of communication, must be licensed as independent adjusters if the employees of such business adjust claims with an insured or other claimant located in New York.
2. To fall within the exemption from an independent adjuster's license provided by N.Y. Ins. Law § 2101 (g)(1)(B) (McKinney 2000), the adjustment bureau or association must be owned by two or more insurers.
3. Even if the business, and its employees who adjust insurance claims, described in question one above, met the requirements of an adjustment bureau or association, such business and its employees, pursuant to N.Y. Ins. Law § 2102 (a)(1) (McKinney 2000) and N.Y. Ins. Law § 2108 (a) (McKinney 2000), would have to be licensed as independent adjusters to adjust claims for an insurer that had no ownership interest in the adjustment bureau or association. As the business, and its employees who adjust insurance claims, described in question one above, fail to meet the requirements of an adjustment bureau or association, such business and its employees would have to be licensed as independent adjusters to adjust claims for any insurer.
Facts:
The inquirer presented the following fact pattern. ABC is a licensed New York State Property and Casualty Insurance Company. ABC owns XYZ, Third-Party Administrator, Inc. (hereinafter, XYZ), a company not located in New York. XYZ adjusts insurance claims for ABC. Additionally, XYZ is considering adjusting insurance claims for DEF, which has no ownership interest in XYZ.
Analysis:
In New York State, there are no statutorily defined "Third-Party Administrators," (hereinafter, "TPA"), and there is no licensing of these entities as such. To determine what licensing is required, there needs to be an analysis of the persons or entitys activities. The inquirer stated that the "TPA" adjusts insurance claims for a property/casualty insurance company that owns the "TPA."
N.Y. Ins. Law § 2102 (a)(1) (McKinney 2000) states in the relevant part that "[n]o person, firm, association or corporation shall act as an . . . 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 (a) (McKinney 2000) states in the relevant part:
(1) [a]djusters shall be licensed as independent adjusters . . .
. . . .
(3) No adjuster shall act on behalf of an insurer unless licensed as an independent adjuster, . . .
(4) No insurer, agent or other representative of an insurer shall pay any fees or other compensation to any person, firm, association or corporation for acting as an independent adjuster except to a licensed independent adjuster or to a person excepted from the licensing requirement pursuant to subsection (g) of section two thousand one hundred one of this article.
. . . .
N.Y. Ins. Law § 2101 (g) (McKinney 2000) states in the relevant part:
. . . .
(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:
. . . .
(B) 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, . . .
. . . .
The Department has consistently held that the exception provided by N.Y. Ins. Law § 2101 (g)(1)(B) (McKinney 2000) to the licensing requirements of N.Y. Ins. Law § 2108 (a) (McKinney 2000) and N.Y. Ins. Law § 2102 (a)(1) (McKinney 2000), requires that the adjustment bureau or association be owned by two or more insurers. In this case, only one insurer, ABC, owns XYZ, the public adjuster firm; therefore, XYZ cannot take advantage of the exception provided by N.Y. Ins. Law § 2101 (g)(1)(B) (McKinney 2000). Thus, XYZ, and each of XYZ's employees who adjusts claims, must be licensed as an independent adjuster pursuant to N.Y. Ins. Law § 2108 (a) (McKinney 2000) and N.Y. Ins. Law
§ 2102 (a)(1) (McKinney 2000).
The firm XYZ, and its employees, must be licensed as independent adjusters to adjust claims in this state for any insurer, including ABC and/or DEF. The fact that XYZ is located outside of New York State is inconsequential if XYZ is adjusting claims, whether by mail, telephone or other means of communication, and the insured or other claimant is in New York.
For further information you may contact Senior Attorney Susan A. Dess at the New York City Office.