The Office of General Counsel issued the following informal opinion on May 16, 2001, representing the position of the New York State Insurance Department.

Re: No Conflict of Interest with Independent Adjustment Subsidiary

Question Presented:

Would a violation of the Insurance Law occur where officers of a mutual property and casualty company also own an adjusting and appraising company, and hire that adjusting and appraising company to do independent adjusting work for the mutual property and casualty company?


No violation of the Insurance Law would occur.


No specific facts relating to this inquiry were given.


N.Y. Insurance Law § 2101(g)(1) (McKinney 2000) defines independent adjuster as:

[A]ny 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 . . .

An independent adjuster is ordinarily the agent of the insurer that has retained it. Nothing in the Insurance Law precludes a properly licensed independent adjuster from being hired to adjust claims by a mutual property and casualty company whose officers own the independent adjusting company. In fact, an insurer may adjust its own losses, or own a subsidiary that would adjust its parent company’s losses without violating the Insurance Law.

However, while the law does not prohibit such a relationship, and while there is no inherent conflict of interest so long as the parties are not acting improperly, transactions between the parties have to be conducted in a fair and equitable manner.

For further information, you may contact Senior Attorney Meredith S. Kaufer at the New York City Office.