OGC Op. No. 06-06-09
The Office of General Counsel issued the following opinion on June 20, 2006, representing the position of the New York State Insurance Department.
Re: Interpretation of Regulation 64
Does N.Y. Comp. Codes R. & Regs. tit. 11, Part 216 (2003) (Regulation 64) apply where an auto body shop refuses to grant access to "appraisers" because the shops have had problems with the appraisers?
N.Y. Comp. Codes R. & Regs. tit. 11, Part 216 (2003) (Regulation 64) addresses unfair claims settlement practices and claim cost control measures of insurers doing business in New York.
The question is general in nature.
The inquirer asked whether N.Y. Comp. Codes R. & Regs. tit. 11, §§ 216.0 216.12 (2003) (Regulation 64) applies to an auto body shop that denies access to "appraisers" who seek access to the body shop to examine, on behalf of an insurer, an insureds vehicle. The inquirer explains that the body shops are denying access to certain appraisers that they claim to have problems with. As a preliminary matter, the term "appraiser" is not defined in the Insurance Law. However, if the appraisers in question are officers, directors or regular salaried employees of an authorized insurer or any adjustment bureau or association owned and maintained by insurers, they would need to become licensed as independent adjusters, pursuant to N.Y. Ins. Law § 2108 (McKinney 2006). Further, if the duties that would be performed by the so-called appraisers include "investigating" and "adjusting" of claims, such appraisers would also need to become licensed as independent adjusters pursuant to N.Y. Ins. Law § 2108 (McKinney 2006). We assume, for the purposes of this response, that the "appraisers" in question are not engaging in any activities that would require licensing as adjusters.
In terms of the inquirers question concerning the application of Regulation 64 to auto body shops, the preamble to Regulation 64, which is contained in N.Y. Comp. Codes R. & Regs. tit. 11, § 216.0(a), provides, in pertinent part, as follows:
(a) Section 2601 of the Insurance Law prohibits insurers doing business in this State from engaging in unfair claims settlement practices and provides that, if any insurer performs any of the acts or practices proscribed by that section without just cause and with such frequency as to indicate a general business practice, then those acts shall constitute unfair claims settlement practices. This Part contains claim practice rules which insurers must apply to the processing of all first- and third-party claims arising under policies subject to this Part. In addition, specific rules are provided for the processing of first-party motor vehicle physical damage claims and third-party property damage claims arising under motor vehicle liability insurance contracts. (emphasis added).
Regulation 64 and Article 26 of the Insurance Law address the claim settlement practices of insurers, not auto body shops. The matter the inquirer raised about the practice of the auto body shops, which are licensed pursuant to N.Y. Veh. & Traf. Law § 398-d(1) (McKinney 2005), is not within the purview of the Insurance Department. To the extent, however, that auto body shops have been experiencing problems with certain "appraisers" or independent adjusters that are representing insurers, the Department would like more information concerning the nature of the alleged problems. We request that information concerning this matter be submitted to our Consumer Services Bureau.
For further information please contact Associate Attorney D. Monica Marsh at the New York City Office.