OGC Opinion No. 06-12-22

The Office of General Counsel issued the following opinion on December 29, 2006, representing the position of the New York State Insurance Department.

Re: ERISA and Licensing of Independent Adjusters

Question Presented:

Are independent adjusters who adjust claims on behalf of plans that are governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C.A. § 1002(1) (West 1999), required to comply with the licensing requirements of the New York Insurance Law?

Conclusion:

Independent adjusters who adjust claims on behalf of ERISA plans are required to comply with the licensing requirements of the New York Insurance Law.

Facts:

The inquiry is general in nature.

Analysis:

As a preliminary matter, this opinion assumes that the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C.A. § 1002(1) (West 1999) plans that the inquirer asks about are established by employers. In accordance with ERISA, the provision of health benefits to employees falls within the definition of an employee welfare benefit plan. Generally, these employee benefit plans provided by employers are exempt from requirements in the Insurance Law, pursuant to 29 U.S.C.A. § 1144(b)(1)(B) (West 1999).1

N.Y. Ins. Law § 2101(g)(1) (McKinney 2006) defines an independent adjuster as follows:

(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....

N.Y. Ins. Law § 2102(a)(1) (McKinney 2006) provides 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)(3) (McKinney 2006) states that "[n]o adjuster shall act on behalf of an insurer unless licensed as an independent adjuster...."

Plans that provide health benefits to employees are considered to be doing an insurance business in New York pursuant to N.Y. Ins. Law § 1101 (McKinney 2006), as they confer a benefit of pecuniary value to the employees (accident and health benefits) that is dependent upon the happening of a fortuitous event. Although such ERISA plans are exempt from New York licensing requirements, that exemption does not create a similar exemption for a person or entity that adjusts claims on their behalf. Consequently, a person or entity that adjusts claims on behalf of an insurer in New York, including an exempt insurer under ERISA, must obtain an independent adjuster license.

For further information you may contact Associate Attorney D. Monica Marsh at the New York City Office.

1 There is an exception from this exemption for Multiple Employer Welfare Arrangements (MEWAs). See 29 U.S.C.A. § 1144(b)(6) (West 1999).