OGC Opinion No. 06-04-06

The Office of General Counsel issued the following opinion on April 5, 2006, representing the position of the New York State Insurance Department.

Re: Attorney Exception to Independent Adjuster License

Question Presented:

In order for a company to be licensed as an independent adjuster, does an attorney duly licensed to practice in New York and named as the company's sub-licensee need to be licensed as an independent adjuster, which includes taking and passing a personal written examination?

Conclusion:

Yes, in order for a company to be licensed as an independent adjuster, an attorney duly licensed to practice in New York and named as the company's sub-licensee does need to be licensed as an independent adjuster, which includes taking and passing a personal written examination under Section 2108(f)(1).

Facts:

The inquirer states that he is a licensed attorney and that his company recently submitted an application for an independent adjuster's license to the Department naming him as the sub-licensee. The Department returned the application on the grounds that, as an attorney, he must also pass a personal written examination given by the superintendent. The inquirer was under the impression that attorneys were exempt from the licensing requirements for independent adjusters, including taking and passing the written examination. However, the Licensing Bureau of the Department informed him that as an attorney he was not exempt from licensing requirements for independent adjusters because he is named as a sub-licensee on the application.

Analysis:

The New York Insurance law recognizes two broad classifications of insurance adjusters: independent adjusters and public adjusters. In general, independent adjusters are individuals or corporations that, on behalf of an insurer, investigate or adjust claims arising under the insurance policies of that insurer. Public adjusters, by contrast, act for the insured to settle certain types of claims relating to the insured's property.

With respect to licensing, the law exempts certain individuals from having to obtain an insurance adjuster's license by excluding them from either or both of the definitions of "independent adjuster" or "public adjuster."

Attorneys are excluded from the definition of "independent adjuster."1 N.Y. Ins. Law § 2101(g) (McKinney Supp. 2006) states in relevant part:

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:…

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(F) any licensed attorney at law of this state.

Thus, a licensed attorney may adjust claims on behalf of an insurer without obtaining an independent adjuster's license.2 Further, this Department has opined that if an attorney acts exclusively as an independent adjuster at a company, an independent adjuster's license would not be necessary. Opinion of General Counsel No. 03-04-07 (April 2, 2003).

However, in this case, the attorney is named as a company's sub-licensee, and in order for the company to be licensed as an independent adjuster, the attorney needs to be licensed as an independent adjuster.

N.Y. Ins. Law § 2108(c) (McKinney Supp. 2006) states in pertinent part:

(2) A license issued to a corporation may name as sub-licensees only the officers and directors of such corporation, and a license issued to a firm or association may name as sub-licensees only the individual members of such firm or association. Each sub-licensee named as such in the license issued to a firm, association or corporation must be qualified to obtain a license as an independent adjuster or as a public adjuster, as the case may be, and for each such sub-licensee a fee must be paid at the times and at the rate hereinafter specified. Each such sub-licensee shall be authorized, pursuant to such license, to act as an independent adjuster or as a public adjuster, as the case may be, only on behalf of the licensee.

Each sub-licensee named as such in the license issued to a firm, association or corporation must be qualified to obtain a license as an independent adjuster. This includes the licensing requirement that an applicant take and pass a personal written examination under N.Y. Ins. Law § 2108(f)(1) (McKinney Supp. 2006).

Even though attorneys are exempt from having to obtain an independent adjuster license, in his capacity as sub-licensee for the company, the attorney must obtain an independent adjuster license.

For further information you may contact Senior Attorney Elizabeth Barrett at the New York City Office.


1 In contrast, the definition of "public adjuster" states in relevant part under N.Y. Ins. Law § 2101(g) (McKinney Supp. 2006):

(2) "Public adjuster" means any person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts or aids in any manner on behalf of an insured in negotiating for, or effecting, the settlement of a claim or claims for loss or damage to property of the insured in this state caused by, or resulting from, any of the risks as enumerated in paragraphs four, five, six, seven, eight, nine and ten and subparagraphs (B) and (C) of paragraph twenty of subsection (a) of section one thousand one hundred thirteen of this chapter, not including loss or damage to persons under subparagraph (B) of paragraph twenty of subsection (a) of such section or who, or which, advertises for, or solicits employment as an adjuster of such claims, and shall also include any person who, for money, commission or any other thing of value, solicits, investigates, or adjusts such claims on behalf of any such public adjuster, except that such term shall not include:

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(B) any licensed attorney at law of this state who acts or aids in adjusting insurance claims as an incident to the practice of his profession and who does not advertise himself as a public adjuster

2 However, a licensed attorney may adjust claims arising from the enumerated provisions where doing so is incident to the practice of law. If the attorney wishes to act as a public adjuster outside of the attorney's legal practice, the attorney must obtain a public adjuster's license. See Opinion of General Counsel No. 03-04-07 (April 2, 2003), see also Opinion of General Counsel (March 28, 1966), and Opinion of General Counsel (May 6, 1966), which both interpreted N.Y. Ins. Law § 123(7), the predecessor section to the current N.Y. Ins. Law § 2101(g) (McKinney Supp. 2006).