The Office of General Counsel issued the following informal opinion on May 4, 2005, representing the position of the New York State Insurance Department.

Re: Public adjusters and conflicts of interest

Question Presented:

1. Does the Insurance Law permit a licensed public adjuster to be employed as a firefighter or fire department employee?

2. May a firefighter who is not licensed as a public adjuster under NY Insurance Law distribute business cards and solicit clients for a licensed public adjuster?

Conclusion:

1. Nothing in the Insurance Law or regulation would per se prohibit a licensed public adjuster from also being employed as a firefighter or fire department employee. However, the adjuster must take care not to act in an untrustworthy manner.

2. An individual who is not licensed as a public adjuster and who solicits claims on behalf of any public adjuster for money, commission or any other thing of value would be acting as an adjuster without a license in violation of N.Y. Ins. Law § 2102 (McKinney Supp. 2005) . A licensed adjuster is prohibited by sect. 25.3(b) of 11 NYCRR 25 (Regulation 10) from providing any compensation to an unlicensed person for procuring or assisting the procuring of adjusting business for the adjuster. Furthermore, a licensed adjuster who allows an unlicensed person to act as an adjuster on his or her behalf by soliciting adjustment business or otherwise could be found by the Superintendent to be acting in an untrustworthy manner pursuant to N.Y. Ins. Law § 2110 (McKinney Supp. 2005).

Facts:

The inquirer states that principals and/or employees of several adjusting firms in the inquirer’s area are full-time employees of the fire departments for the cities of Schenectady and Albany. The inquirer also states that he is aware of arrangements between public adjusters in such area and paid and volunteer firemen in which such firemen hand out business cards and solicit fire victims.

Analysis:

N.Y. Ins. Law § 2102 (McKinney Supp. 2005), provides, in relevant part, as follows:

 (a) (1) No person, firm, association or corporation shall act as an insurance producer or insurance adjuster in this state without having authority to do so by virtue of a license issued and in force pursuant to the provisions of this chapter.

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N.Y. Ins. Law § 2101(g)(2) (McKinney Supp. 2005), provides in relevant part, as follows:

(g) In this article, "adjuster" means any "independent adjuster" or "public adjuster" as defined below:

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(2) "Public adjuster" means any person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts or aids in any manner on behalf of an insured in negotiating for, or effecting, the settlement of a claim or claims for loss or damage to property of the insured in this state caused by, or resulting from, any of the risks as enumerated in paragraphs four, five, six, seven, eight, nine and ten and subparagraphs (B) and (C) of paragraph twenty of subsection (a) of section one thousand one hundred thirteen of this chapter, not including loss or damage to persons under subparagraph (B) of paragraph twenty of subsection (a) of such section or who, or which, advertises for, or solicits employment as an adjuster of such claims, and shall also include any person who, for money, commission or any other thing of value, solicits, investigates, or adjusts such claims on behalf of any such public adjuster. . . (emphasis added)

Sect. 25.3 of 11 NYCRR 25 (Regulation 10) provides, in relevant part as follows:

(a) No person licensed to act as a public adjuster, or named as a sublicensee in any public adjuster’s license shall, between the hours of 6 p.m. and 8 a.m., directly or indirectly, solicit the adjustment of a loss from an insured or from any broker or other person, whether by personal interview, by telephone or by any other method, nor shall accept any order, commission or contract for the adjustment of any loss which is within the scope of section 2108 of the Insurance Law, nor shall permit his or its agent, representative or employee to do so.

(b) No such licensee or sublicense shall divide any fee or give any fee, commission or other compensation to any person, firm or corporation for procuring, or assisting in procuring, the adjustment of any such loss for any such licensee or sublicense, unless the person, firm or corporation to whom such fee, commission or other compensation is given or paid had at the time when the loss occurred:

(1) a public adjuster’s license issued and in force pursuant to section 123 of the Insurance Law [now section 2108]; or

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Nothing in the Insurance Law or regulation would per se prohibit a licensed public adjuster from also being employed as a firefighter or fire department employee. However, the adjuster must take care not to act in an untrustworthy manner.

Although, we will not speculate on all the possible actions for which such an adjuster could be found untrustworthy pursuant to N.Y. Ins. Law § 2110 (McKinney Supp. 2005), we will point out some non-inclusive examples. For instance, if a firefighter/adjuster used any information which is protected by law or department policy in a manner not consistent with such law or policy, in course of acting as a public adjuster, such conduct could reflect negatively on the adjuster’s trustworthiness.

We also recommend that any firefighter who is also licensed as a public adjuster review the municipal code of ethics, if any, for the particular municipality1 and his or her department’s policies. A firefighter who is found by a municipality or fire department to have engaged in a violation of a municipal code of ethics or fire department policy, respectively, could be found by the Superintendent to be acting in an untrustworthy manner pursuant to N.Y. Ins. Law § 2110 (McKinney Supp. 2005).

In addition, a public adjuster who solicits business or accepts adjustment business between the hours of 6 p.m. and 8 a.m. or allows another to do so on his or her behalf, would be in violation of 11 NYCRR § 25.3(a).

Finally, an individual who is not licensed as a public adjuster and who solicits claims on behalf of any public adjuster for money, commission or any other thing of value is acting as an adjuster without a license in violation of N.Y. Ins. Law § 2102 (McKinney Supp. 2005). A licensed adjuster is prohibited by 11 NYCRR § 25.3(b) from providing any compensation to an unlicensed person for procuring or assisting the procuring of adjusting business for the adjuster. Furthermore, a licensed adjuster who allows an unlicensed person to act as an adjuster on his or her behalf by soliciting adjustment business or otherwise could be found by the Superintendent to be acting in an untrustworthy manner pursuant to N.Y. Ins. Law § 2110 (McKinney Supp. 2005).

This opinion is limited to an interpretation of the Insurance Law and we are not offering any opinion with respect to any other law.

For further information please contact Assistant Counsel Brenda M. Gibbs at the Albany Office.

1   N.Y. Gen. Mun. Law § 806 (McKinney 1999) provides, in relevant part, that '[t]he governing body of each county, city, town, village and school district shall and the governing body of any other municipality may be local law, ordinance or resolution adopt a code of ethics setting forth for the guidance of its officers and employees the standards of conduct reasonably expected of them.'