The Office of General Counsel issued the following opinion on September 6, 2005, representing the position of the New York State Insurance Department.

Re: Independent Insurance Adjusters Licenses.

Question Presented:

May employees of an authorized insurer in New York act as independent adjusters for an unaffiliated eligible excess line insurer under a service contract agreement between the two insurers?

Conclusion:

The employees of an authorized insurer in New York must obtain independent adjusters licenses in order to adjust claims on behalf of another insurer, whether affiliated or not, except when the claim to be adjusted is submitted for payment under a health benefit plan that is issued or administered by another health insurer or health maintenance organization within the same holding company system as the authorized insurer adjusting the claim.

Facts Presented:

No facts were presented for this inquiry.

Analysis:

N.Y. Ins. Law § 2101(g)(1)(2003 N.Y. Laws 692) defines "independent adjuster" 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 or investigating and adjusting of claims arising under the 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:

(A) any officer, director or regular salaried employee of an authorized insurer, or any manager thereof, individual or corporate, or the manager, agent or general agent of any department thereof, individual or corporate, or attorney in fact of any reciprocal insurer or Lloyds underwriter, or marine underwriting office unless acting as an autobody repair estimator as defined in subsection (j) of this section.

(B) any officer, director or regular salaried employee of an authorized health insurer or health maintenance organization, or any manager thereof, individual or corporate, when the claim to be adjusted is submitted for payment under a health benefit plan that is issued or administered by another health insurer or health maintenance organization within the same holding company system as the an authorized insurer or health maintenance organization adjusting the claim[.]

N.Y. Ins. Law § 2108(a)(3)(McKinney 2000 & Supp. 2004) states that no adjuster shall act on behalf of an insurer unless licensed as an independent adjuster.

In order to come within the licensing exception contained in N.Y. Ins. Law § 2101(g)(1)(A), the individual must be a regular salaried employee of the authorized insurer for whom he or she is adjusting claims. The New York State Insurance Department has taken the position that the licensing exception for an authorized insurer articulated in N.Y. Ins. Law § 2101(g)(1)(A) only applies to the adjustment of a claim that is the obligation of such an authorized insurer.

N.Y. Ins. Law § 2101(g)(1)(B) was recently amended to provide an additional exception from the definition of adjuster. Under the amendment, an independent adjuster’s license is not required when regular salaried employees of an authorized health insurer or health maintenance organization adjust claims submitted for payment under a health benefit plan that is issued or administered by another health insurer or health maintenance organization within the same holding company system as the authorized insurer or health maintenance organization. However, since the inquiry pertains to unaffiliated insurers, this exception would not apply. It is also noted that except for limited circumstances specified in N.Y. Ins. Law § 2105(h), health insurance policies may not be placed in the excess lines market.

Therefore, the employees of an authorized insurer in New York must obtain independent adjusters licenses in order to adjust claims on behalf of another insurer, whether affiliated or not, except when the claim to be adjusted is submitted for payment under a health benefit plan that is issued or administered by another health insurer or health maintenance organization within the same holding company system as the authorized insurer adjusting the claim.

For further information you may contact Special Attorney Athan Shinas at the Albany Office.