OGC Opinion No. 07-03-01

The Office of General Counsel issued the following opinion on March 5, 2007, representing the position of the New York State Insurance Department.

Re: Independent Adjuster’s Duty to Protect Policyholders

Question Presented:

Does the Insurance Law, or the regulations promulgated thereunder, impose a duty on independent adjusters to protect the interest of the policyholders of the insurer for which they adjust claims?


Yes. Independent adjusters, who act on behalf of insurers, have the same duty to act appropriately and responsibly in adjusting claims as the insurer itself.


The question is general in nature, without reference to specific facts.


Although the inquiry asks about the duty of a third party administrator, the New York Insurance Law does not define the term “third party administrator,” and does not regulate activities of TPAs. However, any person or entity, including a third party administrator, that adjusts claims in New York must be licensed as an independent adjuster or a public adjuster.

The inquirer states that the adjusting under the circumstances presented would be done on behalf of an insurer. Therefore, such person or entity would be acting as an independent adjuster, which is defined in Insurance Law § 2101(g)(1) (McKinney 2007) as:

…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....

Insurance Law § 2102 (McKinney 2007) is also relevant to this inquiry. It provides that: “[n]o person, firm, association or corporation shall act as an insurance producer or 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.” Further, Insurance Law § 2108(c)(1) (McKinney 2007) provides in relevant part as follows:

(c)(1) The superintendent may issue an independent adjuster’s license or a public adjuster’s license to any person, firm, association or corporation, hereinafter designated as licensee. . ..

Thus, an independent adjuster must be licensed to adjust insurance claims in New York. Likewise, individuals or employees of an independent adjuster who engage in adjusting activities in New York must similarly be licensed to engage in such activities.

An independent adjuster, as the representative of the insurer, has the same duty to act appropriately and responsibly in adjusting claims as does the insurer itself. Failure by an independent adjuster to act appropriately may lead to a determination by the Department that, among other things, the adjuster has demonstrated untrustworthiness, and may result in the suspension or revocation of that adjuster’s license pursuant to Insurance Law § 2110(a)(4)(C) (McKinney 2006).

Insurers, as well as the independent adjusters that act on their behalf, must also comply with Insurance Law § 2601 (McKinney 2006), and N.Y. Comp. Codes R. & Regs. tit. 11, Pt. 216 (2003) (Regulation 64), which, among other things, set forth prohibited claims settlement practices, and outline applicable claims practice rules. Specifically, Section 216.0(e)(5) provides that “[e]very insurer shall distribute copies of this regulation to every person directly responsible for the supervision, handling and settlement of claims subject to this regulation, and every insurer shall satisfy itself that all such personnel are thoroughly conversant with, and are complying with, this regulation.”

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