November 24, 1993

SUBJECT: INSURANCE

Circular Letter No. 17 (1993)

TO: ALL PUBLIC ADJUSTERS AND INSURANCE COMPANIES WRITING PROPERTY AND CASUALTY INSURANCE COVERAGE

RE: PAYMENTS & LOSS PROCEDURES UNDER REGULATION 10

The purpose of this letter is to clarify the methods of payment permitted by Regulation 10(11NYCRR25). It has come to this Department's attention that some public adjusters are incorporating directions of payment, as described in Section 25.12 of the Regulation, in the compensation agreement.

In addition, we have been advised that some insurance companies routinely include the name of the public adjuster on the settlement check without any direction from the insured.

Regulation 10 (11 NYCRR25.12) states, with regard to payment of losses, the following:

"when a claim is settled where the insured is represented by a public adjuster, upon the request of the insured, the insurer's check may be made payable to both the public adjuster and the insured, or to the public adjuster named as a payee but not in excess of the amount of the public adjuster's fee as indicated in the written compensation agreement signed by the insured and filed with the insurer. The balance of the proceeds shall be made payable to the insured or the loss payee, or both, whichever is appropriate."

The only time that an insured can request that any insurer's check be made payable to both the insured and the public adjuster, or to the public adjuster not in excess of the agreed upon fee, is at the time of settlement. Any such statement in the compensation agreement, or in a separate document, executed prior to the time of settlement, is not permitted under the Regulation.

All public adjusters and insurance companies should be aware that a compensation agreement entered into at the time of the claim shall not deviate from the form prescribed in paragraph 25.13.

Please acknowledge receipt of this letter to:

Mr. J. William McClintock

Principal Insurance Examiner

New York State Insurance Department

New York, NY 10013

Very truly yours,

[SIGNATURE]

Salvatore R. Curiale

Superintendent of Insurance

SC/es