OGC Opinion No. 06-08-04

The Office of General Counsel issued the following opinion on August 2, 2006, representing the position of the New York State Insurance Department.

Re: Independent Adjuster Licensing

Question Presented:

Does Company ABC ("ABC"), a medical review company, perform services or functions that require licensing under the New York Insurance Law?


Based upon the information provided, ABC and its employees may be required to be licensed as insurance adjusters to engage in such activities. However, without a more detailed description of the activities and services that ABC undertakes and performs, a definitive answer cannot be provided.


The inquirer states that ABC is a medical review company that reviews medical claims for auto and workers’ compensation. ABC provides the following services:

ABC verifies that the supplied medical documentation supports the ICD-9 and CPT-4 codes that are billed on the medical claim. If not supported, ABC recommends denial of service.

ABC applies auto and workers' compensation fee schedules and their rules to medical claims.

ABC validates the relationship of a medical visit, per the submitted documentation, to an auto or workers' compensation claim. If no relationship is found, ABC recommends denial of service.

The inquirer further summarizes that ABC contracts with insurance companies, from whom ABC receives bills or medical claims. Next, ABC makes a determination as to the validity and/or accuracy of a bill in relation to other medical documentation, and then presents its findings and recommendations to the insurance company. The inquirer asserts that these are merely recommendations.


Pursuant to N.Y. Ins. Law § 2102(a)(1) (McKinney 2006), "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."

N.Y. Ins. Law § 2108(a) states:

(1) Adjusters shall be licensed as independent adjusters or as public adjusters.

(2) The superintendent may prescribe the types of independent adjusters" licenses according to the kind or kinds of insurance claims which the licensee is to be authorized to investigate and adjust.

(3) No adjuster shall act on behalf of an insurer unless licensed as an independent adjuster, and no adjuster shall act on behalf of an insured unless licensed as a public adjuster.

(4) No insurer, agent or other representative of an insurer shall pay any fees or other compensation to any person, firm, association or corporation for acting as an independent adjuster except to a licensed independent adjuster or to a person excepted from the licensing requirement pursuant to subsection (g) of section two thousand one hundred one of this article.

N.Y. Ins. Law § 2101(g) states:

(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...

None of the exceptions to the definition are relevant to this discussion.

In determining what constitutes "investigating and adjusting of claims" under section 2101, the Department considers whether the duties performed in the handling of a claim require the exercise of discretionary authority conferred by the insurer, as opposed to the performance of strictly ministerial tasks. As expressed in prior opinions, available on the Department's website at http://www.ins.state.ny.us/regclinx.htm, discretionary acts include: reviewing and processing claims; authorizing payments; issuing and signing checks (after making the unilateral determination to issue such checks); handling inquiries from insureds; evaluating the merits of a loss; and making recommendations to the insurer. Tasks such as data processing, on the other hand, are considered ministerial in nature.

Prior opinions have addressed activities similar to those services ABC performs and found such activities to constitute discretionary acts. For example, a company that reviews health care claims to compare providers’ charges with schedules of usual and customary charges, negotiates charges with such providers, and recommends to insurers that excessive charges be repriced, was not acting in a merely clerical or ministerial manner. See, Office of General Counsel Opinion No. 05-04-08. In another opinion, the Department concluded that tasks such as reviewing CPT codes to determine accuracy, negotiating with providers to use a specific code resulting in a difference in the amount of the bill, and negotiating rates with out-of-network providers on behalf of its clients, falls within the scope of activities constituting claims adjustment, even though the company did not have the authority to make coverage determinations or pay any claims. See, Office of General Counsel Opinion No. 02-09-15.

Additionally, if the adjuster is a business entity, then the business entity and each of its employees adjusting claims must become separately licensed as independent adjusters. N.Y. Ins. Law § 2108(c) (McKinney 2006) states in pertinent part:

(2) A license issued to a corporation may name as sub-licensees only the officers and directors of such corporation, and a license issued to a firm or association may name as sub-licensees only the individual members of such firm or association. Each sub-licensee named as such in the license issued to a firm, association or corporation must be qualified to obtain a license as an independent adjuster or as a public adjuster, as the case may be, and for each such sub-licensee a fee must be paid at the times and at the rate hereinafter specified. Each such sub-licensee shall be authorized, pursuant to such license, to act as an independent adjuster or as a public adjuster, as the case may be, only on behalf of the licensee.

Only officers and directors of the corporation may be named as sub-licensees. Employees that are not officers or directors may adjust claims, provided such employees individually obtain independent adjusters' licenses and are supervised by a sub-licensee.

Based upon the general, and vague, description of the activities performed, it appears that ABC may perform activities and services that would require both ABC and the employees engaged in such activities to become licensed as independent adjusters. However, without a more detailed description of ABC's services, we cannot provide a more definitive response.

This opinion is limited to a discussion of licensing requirements under New York's Insurance Law and does not express any opinion as to obligations arising under any other law or regulation.

For further information you may contact Principal Attorney Paul A. Zuckerman, at the New York City Office.