OGC Opinion No. 07-10-09

The Office of General Counsel issued the following opinion on October 23, 2007, representing the position of the New York State Insurance Department.

RE: Employees Acting as Adjusters without a License

Question Presented:

Are employees of ABC Company of India (“ABC Co”) and/or ABC Co itself, contracted by the XYZ Life Insurance Company (“XYZ Life”) to process life insurance claims in New York, required to be licensed as independent adjusters?


As a general matter, the processing of life insurance claims, unlike other types of insurance claims, requires little discretionary authority on the part of the person or entity handling such claims. Nevertheless, there are situations that involve actual life insurance adjusting, and therefore, the activities performed by the employees of ABC Co may constitute the actions of independent adjusters, which would require a license. Presently, there is no life insurance independent adjuster license, therefore, only employees or agents of the insurer, subject to exceptions, may adjust such claims. Without further information regarding ABC Co’s activities here, the Insurance Department cannot further opine on the matter.


The inquirer reports that his/her company, XYZ Life, has a contractual relationship with ABC Co, which is located, for purposes of the present inquiry, in India. Pursuant to that agreement, ABC Co’s employees make payments and process claims arising out of group life insurance policies issued in New York or that involve New York residents.


N.Y. Ins. Law § 2102(a)(1) (McKinney 2006) prohibits any person, firm, association or corporation from acting as an insurance agent, insurance broker, reinsurance intermediary or insurance adjuster in New York without the appropriate license. In addition, Insurance Law § 2108(a)(3) requires that no adjuster shall act on behalf of an insurer unless licensed as an independent adjuster.

Insurance Law § 2101(g) defines the activities and role of an adjuster. The provision, which is relevant to your inquiry, reads in pertinent part 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....(Emphasis added.)

In determining what constitutes “investigating and adjusting of claims” under Insurance Law § 2101, the Department considers whether the duties performed in the handling of a claim require the exercise of discretionary authority conferred by the insurer, as opposed to the performance of strictly ministerial tasks. Therefore, tasks such as data entry and data processing are generally considered ministerial in nature, and do not require licensing, because they are not discretionary acts that are performed by the person or entity handling the “investigating and adjusting of claims.”

Here, ABC Co will handle life insurance claims on behalf of XYZ Life. As a general matter, life insurance claims, unlike other insurance claims, require little discretionary authority on the part of the person handling the claims. However, there are instances where significant discretionary authority is involved in adjusting such claims. In order to make a proper determination here, the Department would need more specific information about the activities of the employees in question with regard to their “processing claims” functions.

Furthermore, the Superintendent has by regulation prescribed the types of independent adjusters’ licenses that may be issued. Specifically, N.Y. Comp. Codes R. & Regs. tit. 11, § 26.3 (Regulation 25) (2006) sets forth the types of licenses as follows:

(a) fire
(b) inland marine
(c) aviation
(d) automobile
(e) motor vehicle and workers’ compensation health service charges
(f) automobile damage or theft appraisals
(g) casualty
(h) fidelity and surety
(i) accident and health
(j) general

Currently, there is no provision in the regulation that allows for a life insurance independent adjuster license.

Consequently, because certain tasks to be performed by ABC Co may constitute life insurance claim adjusting, only employees of XYZ Life, or its agents, subject to the exceptions as specified in Insurance Law § 2101 (g)(1)(A) and (1)(E)1, may adjust those losses.

Without further information and specificity regarding ABC Co’s activities here, the Department cannot opine further on the matter presented. Therefore, XYZ Life should promptly provide to the Department a statement detailing the specific activities in which ABC Co’s employees are expected to engage, pursuant to the aforementioned contractual agreement. In addition, XYZ Life should set forth its rationale and legal analysis as to why such activities would not involve insurance adjusting. To the extent that the activities of ABC Co’s employees currently include investigating and adjusting life insurance claims, XYZ Life should direct ABC Co and its employees to cease all such activities immediately.

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

1 The exceptions set forth in Insurance Law § 2101 (g)(1)(A) include: “…any officer, director or regular salaried employee of an authorized insurer or entity licensed pursuant to article forty-four of the public health law…or any manager, agent or general agent of any department thereof….” Furthermore, Insurance Law § 2101 (g)(1)(E) provides an exception with regard to “any licensed agent of an authorized insurer who adjusts losses for such insurer….”