The Office of General Counsel issued the following opinion on July 18, 2003, representing the position of the New York State Insurance Department.

Re: Adjusting claims for a self-insurer

Question Presented

Is an independent adjuster’s license required for an entity that adjusts claims that are within the limits of the self-insured retention program of a commercial property management corporation which acts as a self-insurer for property/general liability claims arising out its ownership and/or management of properties?

Conclusion

No. An independent adjuster’s license is not required for an entity to adjust property/general liability claims that are within the limits of the self-insured retention program of a commercial property management corporation which acts as a self-insurer for property/general liability claims arising out of its ownership and/or management of properties. We offer no opinion regarding other licenses that may be required by other State and Federal Laws.

Facts

The inquirer’s client, headquartered outside New York, is a large regional mall owner that develops, owns, operates, and/or manages shopping malls in forty-one states, including one location in New York.

ABC is an independent contractor serving as third party property/casualty claims administrator to its client's self-insured retention insurance program. On behalf of the inquirer’s client, ABC manages, adjusts, and negotiates the settlement of property/general liability claims that occur on the inquirer’s client’s mall properties throughout the United States and which fall within the inquirer’s client’s large stop loss limitation/self-insured retention program.

ABC doe not adjust claims under a policy of insurance, as all monies used to pay claims are secured directly from the client. ABC does not manage property/general liability claims that fall outside the inquirer’s client's self-insured retention limit. ABC does not manage workers" compensation claims or health insurance claims.

The inquirer states that ABC does not adjust claims under a policy of insurance. Although it represents the interests of its client, the inquirer states that it does not operate as an independent adjuster, as it does not represent the interests of an insurance company.

ABC manages general liability claims that occur on its client's mall properties. It does not provide notice to or work on behalf of an insurance company. Claims are paid directly from the client's own proceeds. ABC does not have other clients and does not intend to market for other clients.

ABC's client's self-insured retention limit is quite large and most claims on mall property are easily settled within the client's self-insured retention limit and without notice to or involvement from the client's insurance excess carrier. Those claims that fall outside the self-insured retention limit are turned over to the client's insurance carrier for management, including the adjustment of claims.

Analysis

The Insurance Department does not issue a third-party administrator license. Thus, for any person or entity acting as a third-party administrator in New York, the Department reviews the functions and activities of that person or entity, in determining whether an adjuster’s license (or other type of license) is required.

N.Y. Ins. Law § 2102(a)(1) (McKinney 2000) provides that no person, firm, association or corporation may act as an insurance adjuster in this state without a license. In addition, N.Y. Ins. Law § 2108(a)(3) (McKinney 2000) states that: "No adjuster shall act on behalf of an insurer unless licensed as an independent adjuster, and no adjuster shall act on behalf of an insured unless licensed as a public adjuster."

N.Y. Ins. Law § 2101(g)(1) (McKinney 2000) defines an independent adjuster as:

[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. . .

Here, ABC works on behalf of its client, not an insurer. A self-insurer, such as the inquirer’s client, who self-insures for its liability exposure, is not an insurer. Since ABC is not adjusting on behalf of an insurer, an independent adjuster’s license is not required. Similarly, the company need not be licensed as a public adjuster, which adjusts certain claims on behalf of an insured, since there is no insured involved.

The foregoing discussion is limited to the application of the Insurance Law only. We do not offer an opinion regarding other licenses that may be required by other state and federal laws.

For further information one may contact Associate Attorney Sam Wachtel at the New York City Office.