The Office of General Counsel issued the following opinion on January 18, 2005, representing the position of the New York State Insurance Department.

Re: Exemption from license as independent adjuster for adjustment bureau

Question Presented

Does N.Y. Ins. Law § 2101(g)(1)(D) (McKinney Supp. 2005) exempt an adjustment bureau from the requirement of an independent adjuster’s license where the adjustment bureau provides adjusting services to its owners: two authorized insurers who are minority shareholders and an unauthorized insurer who is the principal shareholder?


N.Y. Ins. Law § 2101(g)(1)(D) exempts an adjustment bureau from the requirement of an independent adjuster’s license when it is owned by two or more insurers, if the insurers have substantial ownership in said bureau, and it provides adjusting services only to the insurers that own it.


Two property/casualty insurers, Insurer A and Insurer B, are indirectly owned by a common parent corporation ("Parent") through a U.S. holding company. Both Insurer A and Insurer B are authorized to do an insurance business in New York and are domiciled in New York. Parent is an alien insurer not authorized to do business in New York. Affiliates of Parent ("Affiliates") are also alien insurers not authorized to do business in New York. Parent, Affiliates, Insurer A and Insurer B jointly own a stock subsidiary ("XYZ") that provides adjusting services. The percentages of ownership of each company are not indicated, but the Parent is the principal shareholder of XYZ. XYZ is a New York domiciled corporation. XYZ does not provide services to any unaffiliated insurer or unaffiliated person. The claims services provided by XYZ to Insurer A and Insurer B include activities that would otherwise require its licensing as an independent adjuster under the Insurance Law.


N.Y. Ins. Law § 2102(a)(1) (McKinney Supp. 2005), among other things, prohibits any person, firm, association or corporation from acting as an insurance adjuster in New York without the appropriate license. In addition, N.Y. Ins. Law § 2108(a)(3) (McKinney Supp. 2005) requires that no adjuster shall act on behalf of an insurer or on behalf of an insured unless licensed as an adjuster.

N.Y. Ins. Law § 2101(g)(1)(D) states in relevant part:

(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, except that such term shall not include: . . .

(2) any adjustment bureau or association owned and maintained by insurers to adjust or investigate losses, or any regular salaried employee or manager thereof who devotes substantially all of his time to the business of such bureau or association. . .

The Department has consistently held that the exemption provided by N.Y. Ins. Law § 2101(g)(1)(D) to the licensing requirements of N.Y. Ins. Law §§ 2102(a)(1) and 2108(a) requires that an adjustment bureau or association be owned by two or more insurers. Such entity may adjust only the claims of the owner insurers and may not adjust the claims of non-owner insurers. However, the insurer must have a substantial ownership interest in the bureau and cannot be a mere token owner. In the present fact pattern, Parent, Affiliates, Insurer A and Insurer B, constitute two or more insurers and they all have an ownership interest in XYZ, but you have not indicated the extent of such ownership so we cannot determine whether their interests would be substantial.

It should also be noted that, with respect to claims of any unauthorized insurer, N.Y. Ins. Law § 1214 (McKinney 2000) provides as follows:

No person acting for himself or for others shall solicit or procure, or aid in soliciting or procuring, policies or certificates of insurance from, or adjust losses or in any manner aid the transaction of any business for, any foreign insurance corporation which has not executed and filed in the superintendent’s office a written appointment of the superintendent as its true and lawful attorney in and for this state, upon whom all lawful processes in any proceeding against it may be served.

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.