2014 -- S 2788

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LC004226

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO INSURANCE -- CLAIMS ADJUSTERS

     Introduced By: Senators Bates, and Picard

     Date Introduced: March 25, 2014

     Referred To: Senate Commerce

     (Business Regulation)

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 27-10-1, 27-10-2, 27-10-3, 27-10-5, 27-10-6, 27-10-7, 27-10-8,

27-10-11, 27-10-12 and 27-10-13 of the General Laws in Chapter 27-10 entitled "Claim

Adjusters" are hereby amended to read as follows:

     27-10-1. Applicability Purpose and scope. -- The provisions of this chapter shall apply

to insurance claim adjusters. For the purposes of this chapter "insurance claim adjusters" means

any person, who or which:

      (1) Engages for compensation in negotiating adjustments of insurance claims on behalf

of an insurance company, other than life and accident and health insurance claims, under any

policies of insurance or who advertises or holds himself or herself out as engaging in that activity

or who solicits that activity;

      (2) Is known or holds himself, herself, or itself out as a "public adjuster". A public

adjuster is any person who, for compensation or any other thing of value on behalf of the insured:

      (i) Acts or aids, solely in relation to first party claims arising under insurance contracts,

other than automobile, life, accident and health, that insure the real or personal property of the

insured, on behalf of an insured in negotiating for, or effecting the settlement of, a claim for loss

or damage covered by an insurance contract;

      (ii) Advertises for employment as a public adjuster of insurance claims or solicits

business or represents himself or herself to the public as a public adjuster of first party insurance

claims for losses or damages arising out of policies of insurance that insure real or personal

property;

      (iii) Directly or indirectly solicits business, investigates or adjusts losses, or advises an

insured about first party claims for losses or damages arising out of policies of insurance that

insure real or personal property for another person engaged in the business of adjusting losses or

damages covered by an insurance policy, for the insured; or

      (3) Advertises or solicits business as an adjuster, or holds himself or herself out to the

public as engaging in adjusting as a business. This chapter governs the qualifications and

procedures for the licensing of: (1) Public adjusters; and (2) Company adjusters; and (3)

Independent adjusters. It specifies the duties of and restrictions on public, company and

independent adjusters. The restrictions on public adjusters include limiting their licensure to

assisting insureds in first-party claims.

     27-10-2. Persons exempt. -- The provisions of this chapter shall not apply to the

following:

      (1) An attorney at law admitted to practice in this state, acting in the usual course of his

or her profession professional capacity as an attorney;

      (2) Either an insurance producer of a domestic insurance company or an insurance

producer duly licensed by the insurance commissioner, when the insurance producer adjusts, or

assists in the adjustment of, claims arising only under policies of insurance or fidelity or surety

bonds negotiated, solicited, or effected by him or her or by the insurance producer, whether the

insurance producer is a person, partnership, or corporation, for which he or she acts; or

      (3) Any employee or agent of a company, or an insurance producer licensed by the

commissioner, who acts in the settlement of claims of two thousand five hundred dollars ($2,500)

or less A person who negotiates or settles claims arising under a life or health insurance policy or

an annuity contract.

     (4) A person employed only for the purpose of obtaining facts surrounding a loss or

furnishing technical assistance to a licensed adjuster, including photographers, estimators, private

investigators, engineers and handwriting experts;

     (5) An individual who is employed to investigate suspected fraudulent insurance claims

but who does not adjust losses or determine claims payments;

     (6) A person who solely performs executive, administrative, managerial or clerical duties

or any combination thereof and who does not investigate, negotiate or settle claims with

policyholders, claimants or their legal representative;

     (7) A licensed health care provider or its employee who provides managed care services

as long as the services do not include the determination of compensability;

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     (8) A managed care organization or any of its employees or an employee of any

organization providing managed care services so long as the services do not include the

determination of compensability;

     (9) A person who settles only reinsurance or subrogation claims;

     (10) A person who investigates, negotiates, or settles life, accident and health, annuity, or

disability insurance claims;

     (11) An individual employee, under a self-insured arrangement, who adjusts claims on

behalf of their employer;

     (12) A person authorized to adjust workers' compensation or disability claims under the

authority of a third party administrator (TPA) license pursuant to chapter 20.7 of title 27.

     27-10-3. Issuance of license. -- (a) The insurance commissioner may, upon the payment

of a license fee of one hundred twenty dollars ($120) plus an application fee established by the

commissioner, issue to any person a license to act as either an insurance claims a: (1) Public

adjuster; (2) Company adjuster; or (3) Independent adjuster once that person satisfies the

reasonable requirements for the issuance of the license, as established by the commissioner. files

an application in a format prescribed by the department and declares under penalty of suspension,

revocation or refusal of the license that the statements made in the application are true, correct

and complete to the best of the individual's knowledge and belief. Before approving the

application, the department shall find that the individual:

     (1) Is at least eighteen (18) years of age;

     (2) Is eligible to designate this state as his or her home state;

     (3) Is trustworthy, reliable and of good reputation, evidence of which shall be determined

by the department;

     (4) Has not committed any act that is a ground for probation, suspension, revocation or

refusal of a professional license as set forth in§ 27-10-12;

     (5) Has successfully passed the examination for the line(s) of authority for which the

person has applied;

     (6) Has paid a fee of one hundred and fifty dollars ($150).

      (b) A Rhode Island resident business entity acting as an insurance adjuster may elect to

obtain an insurance adjusters license. Application shall be made using the uniform business entity

application. Prior to approving the application, the insurance commissioner shall find both of the

following:

      (1) The business entity has paid the appropriate fees.

      (2) The business entity has designated a licensed adjuster responsible for the business

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entity's compliance with the insurance laws and rules of this state.

     (c) The department may require any documents reasonably necessary to verify the

information contained in the application.

     27-10-5. Application for license -- Accompanying papers License. -- An application

by a person applying for the first time for a license to act as an insurance claim adjuster, shall be

on a form furnished by the insurance commissioner and provide all of the information required by

the insurance commissioner for licensing. (a) Unless denied licensure, persons who have met the

requirements of § 27-10-3 shall be issued either a public, company, or independent adjuster

license. A company or independent adjuster may qualify for a license in one or more of the

following lines of authority:

     (1) Property and casualty; or

     (2) Workers Compensation; or

     (3) Crop. An individual may not hold both a public adjuster and a company or

independent adjuster license at the same time.

     (b) An adjuster license shall remain in effect unless probated, suspended, revoked or

refused as long a biennial application for renewal and fee set forth in § 27-10-3(a)(6) is paid and

all other requirements for license renewal are met by the due date, otherwise the license expires.

     (c) An adjuster whose license expires may, within twelve (12) months of the renewal

date, be reissued an adjuster license upon receipt of the renewal request, as prescribed by the

department. However, a penalty in the amount of fifty dollars ($50.00) in addition to the renewal

fee shall be required to reissue the expired license.

     (d) An adjuster who is unable to comply with license renewal procedures and

requirements due to military service, long-term medical disability or some other extenuating

circumstance may request a waiver of same and a waiver of any examination requirement, fine or

other sanction imposed for failure to comply with renewal procedures.

     (e) An adjuster shall be subject to chapters 9.1 and 29 of title 27 of the Rhode Island

general laws.

     (f) The adjuster shall inform the department by any means acceptable of any change in

resident or business address(es) for the home state or in legal name, within thirty (30) days of the

change.

     (g) In order to assist in the performance of the department's duties, the department may

contract with non-governmental entities, including the NAIC, its affiliates or subsidiaries, to

perform any ministerial functions, including the collection of fees and data, related to licensing

that the insurance commissioner may deem appropriate.

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     27-10-6. Minimum percentage of licensed adjusters – Examination. -- Any person

who desires to act as an insurance claim adjuster or who is employed by an insurance company

doing business in the state of Rhode Island and desires to act within the state as an insurance

adjuster shall make a written application to the insurance commissioner for a license to engage in

this type of business. All insurance claims adjusters and those employed by insurance companies

in the state of Rhode Island as of January 1, 1976, who hold current and valid licenses including

all persons engaged in the business of public adjusting as of June 12, 1985 shall automatically

qualify for a license to handle the various lines of business for which they are qualified. Insurance

claim adjusters who have less than one year's experience adjusting claims shall be classified as

trainees and it will be necessary for them to obtain a license to adjust claims in the state of Rhode

Island in accordance with the provisions of this section. No insurance company shall have more

than twenty-five percent (25%) of its insurance claim adjusters in a trainee classification where

that adjusting force consists of at least ten (10) people; this shall not apply to company training

programs to qualify personnel in other jurisdictions. A minimum of seventy-five percent (75%) of

the insurance claim adjusters in any claims office shall be licensed insurance claim adjusters in

the state of Rhode Island. (a) The commissioner department shall subject the applicant to a

written examination as to his or her competency to act as an insurance claim adjuster. These

examinations shall be conducted at the discretion of the commissioner, but in no event less than

quarterly The examination shall test the knowledge of the individual concerning the duties and

responsibilities of an adjuster and the insurance laws and regulations of this state.

     (b) The department may make arrangements, including contracting with an outside

testing service, for administering examinations and collecting a nonrefundable fee for the

examination.

     (c) Each individual applying for an examination shall remit a non-refundable fee as

prescribed by the department.

     (d) An individual who fails to appear for the examination as scheduled or fails to pass the

examination shall reapply for an examination and remit all required fees and forms before being

rescheduled for another examination.

     (e) The department may accept successful completion of an examination administered by

a federal entity in substitute for a state examination for the crop line of authority for

company/independent adjusters.

     27-10-7. Term of license -- Renewal -- Suspension or revocation. Exemptions from

examination. -- The insurance commissioner shall promulgate rules and regulations mandating

the term of licensure for any claim adjuster license. No license shall remain in force for a period

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in excess of four (4) years. Nothing in this section shall be construed to limit the authority of the

insurance commissioner to sooner suspend or revoke any claim adjuster license. Any action for

suspension or revocation of any claim adjuster license shall be in accordance with the

Administrative Procedures Act, chapter 35 of title 42, upon proof that the license was obtained by

fraud or misrepresentation, or that the interests of the insurer or the interests of the public are not

properly served under the license, or for cause. No claim adjuster license shall be issued by the

commissioner to a person whose license has been suspended or revoked within three (3) years

from the date of that revocation or suspension. Each license shall be renewed upon payment of a

fee assessed at an annual rate of sixty dollars ($60.00). The fee for the total term of licensure shall

be payable at the time of renewal. An individual who applies for an adjuster license in this state

who was previously licensed as an adjuster in another state based on an adjuster examination

shall not be required to complete the examination. This exemption is only available if the person

is currently licensed in that state, or if the application is received within twelve (12) months of the

cancellation of the applicant's previous license and if the prior state issues a certification that, at

the time of cancellation, the applicant was in good standing in that state or the state's database

records or records maintained by the NAIC, its affiliates, or subsidiaries, indicate that the adjuster

is or was licensed in good standing.

     (b) A person licensed as an adjuster in another state based on an adjuster examination

who moves to this state shall make application within ninety (90) days of establishing legal

residence to become a resident licensee. No examination shall be required of that person to obtain

an adjuster license.

     27-10-8. Emergency licenses. -- (a) Notwithstanding any of the provisions of this

chapter, In the event of a declared catastrophe an insurer shall notify the department via an

application for temporary emergency licensure, commissioner may permit an experienced

adjuster to of each individual, not already licensed in the state where the catastrophe has been

declared that will act as an emergency company or independent adjuster in this state without a

Rhode Island license if: on behalf of the insurer.

      (1) The adjuster is either a licensed adjuster in another state which requires a license or

regularly adjusts in another state where such licensing is not required and works for an insurance

company authorized to do business in Rhode Island;

      (2) He or she is engaged in emergency insurance adjustment work during the period of

emergency only, as determined by the commissioner.

      (b) The experienced adjuster may work in this state either for an employer who is an

adjuster licensed by this state, or for a regular employer of one or more adjusters licensed by this

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state, or for an insurance company authorized to do business in this state; provided, that the

employer or insurer shall furnish to the commissioner a notice in writing or electronically

promptly after the beginning of any emergency insurance adjustment work. The adjuster may

adjust claims from within or outside the state.

      Emergency licenses permitted under this section shall not exceed one hundred twenty

(120) days, unless extended by the commissioner.

      (c) As used in this section, "emergency insurance adjustment work" includes, but is not

limited to:

      (1) Adjustment of a single loss or losses arising out of an event or catastrophe common

to all of those losses; or

      (2) Adjustment of losses in any area declared to be a state of disaster by the governor of

the state of Rhode Island or by the president of the United States under applicable federal law.

     (b) A person who is otherwise qualified to adjust claims, but not already licensed in this

state where the catastrophe has been declared, may act as an emergency company or independent

adjuster and adjust claims, if, within five (5) days of deployment to adjust claims arising from the

declared catastrophe, the insurer notifies the department by providing the following information

in a format prescribed by the insurance commissioner:

     (1) Name of the individual;

     (2) Social security number of individual;

     (3) Name of insurer the company or independent adjuster will represent;

     (4) Effective date of the contract between the insurer and company or independent

adjuster, if applicable;

     (5) Catastrophe or loss control number;

     (6) Catastrophe event name; and

     (7) Other information the department deems necessary.

     (c) An emergency company or independent adjuster's license shall remain in force for a

period not to exceed ninety (90) days, unless extended by the department.

     (d) Any person licensed as an emergency company or independent adjuster must comply

with all laws of this state in the same manner as if he or she had been issued a company or

independent adjuster and both he or she and the insurer for whom the adjuster is working are

responsible in the same manner as they would be if the adjuster was a fully licensed adjuster.

     (e) There is no fee payable to the state for the licensing of the emergency adjuster.

However, in order to assist in the performance of the department's duties, the department may

contract with non-governmental entities, including the NAIC, its affiliates or subsidiaries, to

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perform any ministerial functions related to licensing that the department may deem appropriate

and the applicant is responsible for the fee associated with these services as determined by the

department.

     (f) Public adjusters are not eligible for licensing under this section.

     27-10-11. Penalty for violations. -- Any person who acts as an insurance claim adjuster,

other than for life and accident and health insurance, without holding a current valid license as

provided in this chapter, or shall act in any manner in the negotiation of any insurance claim

agreement in violation of any provision of this chapter, shall be punished by a an order to cease

and desist such practices and fine or other penalty in accordance with the standards of § 42-14-16.

of not more than five hundred dollars ($500) or by imprisonment for not more than three (3)

months, or both, for each offense. In addition, the insurance commissioner shall be empowered to

revoke or suspend any license issued under this chapter for the violation of this chapter, as

provided in section 27-10-7.

     27-10-12. Enforcement License denial, non-renewal, or revocation. -- The insurance

commissioner shall enforce the provisions of this chapter and shall have the authority to

promulgate all reasonable rules and regulations necessary to effect and to enforce the purposes

and provisions of this chapter. The insurance commissioner may place on probation, suspend,

revoke or refuse to issue or renew a adjuster's license or may levy a civil penalty in accordance

with § 42-14-16 or any combination of actions, for any one or more of the following causes:

     (1) Providing incorrect, misleading, incomplete, or materially untrue information in the

license application;

     (2) Violating any insurance laws, or violating any regulation, subpoena, or order of the

insurance commissioner or of another state's insurance commissioner;

     (3) Obtaining or attempting to obtain a license through misrepresentation or fraud;

     (4) Improperly withholding, misappropriating, or converting any monies or properties

received in the course of doing insurance business;

     (5) Intentionally misrepresenting the terms of an actual or proposed insurance contract or

application for insurance;

     (6) Having been convicted of a felony;

     (7) Having admitted or been found to have committed any insurance unfair trade practice

or insurance fraud;

     (8) Using fraudulent, coercive or dishonest practices; or demonstrating incompetence,

untrustworthiness or financial irresponsibility in the conduct of business in this state or

elsewhere;

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     (9) Having an insurance license, or its equivalent, denied, suspended, or revoked in any

other state, province, district or territory;

     (10) Forging another's name to an application for insurance or to any document related to

an insurance transaction;

     (11) Cheating, including improperly using notes or any other reference material, to

complete an examination for an insurance license;

     (12) Knowingly accepting insurance business from an individual who is not licensed but

who is required to be licensed by the department;

     (13) Failing to comply with an administrative or court order imposing a child support

obligation; or

     (14) Failing to pay state income tax or comply with any administrative or court order

directing payment of state income tax.

     (b) In the event that the action by the department is to deny an application for or not

renew a license, the department shall notify the applicant or licensee and advise, in writing, the

applicant or licensee of the reason for the non-renewal or denial of the applicant's or licensee's

license. The applicant or licensee may make written demand upon the department within ten (10)

days for a hearing before the department to determine the reasonableness of the insurance

commissioner's action. The hearing shall be held pursuant to the Administrative Procedures Act,

chapter 35 of title 42.

     (c) The license of a business entity may be suspended, revoked or refused if the

department finds, after hearing, that an individual licensee's violation was known or should have

been known by one or more of the partners, officers or managers acting on behalf of the business

entity and the violation was neither reported to the department nor corrective action taken.

     (d) In addition to or in lieu of any applicable denial, suspension or revocation of a license,

a person may, after hearing, be subject to a civil fine according to § 42-14-16.

     (e) The department shall retain the authority to enforce the provisions of and impose any

penalty or remedy authorized by this chapter and § 42-14-16 against any person who is under

investigation for or charged with a violation of this chapter or title even if the person's license has

been surrendered or has lapsed by operation of law.

     27-10-13. Rules and regulations. -- The insurance commissioner shall have the authority

to promulgate all reasonable rules and regulations necessary to effect and to enforce the purposes

and provisions of this chapter. Included within this authority is the power to set standards for

public adjuster fees, the terms of the contract between a public adjuster and a consumer and

requirements for escrow accounts held by public adjusters for funds held on behalf of others.

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     SECTION 2. Chapter 27-10 of the General Laws entitled "Claim Adjusters" is hereby

amended by adding thereto the following section:

     27-10-1.1. Definitions. -- (a) "Adjuster" means an individual licensed as either a public,

company or independent adjuster.

     (b) "Catastrophic disaster" according to the Federal Response Plan, means an event that

results in large numbers of deaths and injuries; causes extensive damage or destruction of

facilities that provide and sustain human needs; produces an overwhelming demand on state and

local response resources and mechanisms; causes a severe long-term effect on general economic

activity; and severely affects state, local and private sector capabilities to begin and sustain

response activities. A catastrophic disaster shall be declared by the President of the United States

or the governor of the state or district in which the disaster occurred.

     (c) "Company adjuster" means a person who:

     (1) Is an individual who contracts for compensation with insurers or self-insurers as an

employee;

     (2) Investigates, negotiates or settles property, casualty or workers' compensation claims

for insurers or for self-insurers as an employee.

     (d) "Department" means the insurance division of the department of business regulation.

     (e) "Home state" means the District of Columbia and any state or territory of the United

States in which the adjuster's principal place of residence or principal place of business is located.

If neither the state in which the public adjuster maintains the principal place of residence nor the

state in which the adjuster maintains the principal place of business has a substantially similar law

governing adjusters, the adjuster may declare another state in which it becomes licensed and acts

as a public adjuster to be the "home state".

     (f) "Independent adjuster" means a person who:

     (1) Is an individual who contracts for compensation with insurers or self-insurers as an

independent contractor;

     (2) Investigates, negotiates or settles property, casualty or workers' compensation claims

for insurers or for self-insurers as an independent contractor.

     (g) "Insurance commissioner" means the director of the department of business regulation

or his or her designee.

     (h) "NAIC" means the National Association of Insurance Commissioners.

     (i) "Public adjuster" means any person who, for compensation or any other thing of value

on behalf of the insured:

     (1) Acts or aids, solely in relation to first-party claims arising under insurance contracts

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that insure the real or personal property of the insured, other than automobile, on behalf of an

insured in negotiating for, or effecting the settlement of, a claim for loss or damage covered by an

insurance contract;

     (2) Advertises for employment as a public adjuster of insurance claims or solicits

business, or represents himself or herself to the public as a public adjuster of first-party insurance

claims for losses or damages arising out of policies of insurance that insure real or personal

property; or

     (3) Directly or indirectly solicits business, investigates or adjusts losses, or advises an

insured about first-party claims for losses or damages arising out of policies of insurance that

insure real or personal property for another person engaged in the business of adjusting losses or

damages covered by an insurance policy, for the insured.

     (j) "Uniform individual application" means the current version of the National

Association of Insurance Commissioners (NAIC) Uniform Individual Application for resident

and nonresident individuals.

     27-10-1.2. License required. -- (a) A person shall not act or hold himself out as a public,

company, or independent adjuster in this state unless the person is licensed in accordance with

this chapter.

     (b) A person licensed as a public adjuster shall not misrepresent to a claimant that he or

she is an adjuster representing an insurer in any capacity, including acting as an employee of the

insurer or acting as an independent adjuster.

     27-10-7.1. Nonresident license reciprocity. – (a) Unless denied licensure, a nonresident

person shall receive a nonresident adjuster license if:

     (1) The person is currently licensed as a resident adjuster and in good standing in his or

her home state;

     (2) The person has submitted the proper request for licensure, and has paid the fees

required by § 27-10-3(a)(6);

     (3) The person has submitted or transmitted to the department the appropriate completed

application for licensure for the equivalent type of license and lines of authority; and

     (4) The person's home state awards non-resident adjuster licenses to residents of this state

on the same basis.

     (b) The insurance commissioner may verify the adjuster's licensing status through the

database maintained by the NAIC, its affiliates, or subsidiaries.

     (c) As a condition to continuation of an adjuster license issued under this section, the

licensee shall maintain a resident adjuster license in his or her home state. The non-resident

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adjuster license issued under this section shall terminate and be surrendered immediately if the

home state adjuster license terminates for any reason, unless the adjuster has been issued a license

as a resident adjuster in his or her new home state. Notification to the state or states where non-

resident license is issued must be made as soon as possible, yet no later than thirty (30) days of

change in new state resident license. Licensee shall include new and old address in the

notification to the department. A new state resident license is required for non-resident licenses to

remain valid. The new state resident license must have reciprocity with the licensing non-resident

state(s) for the non-resident license not to terminate.

     SECTION 3. This act shall take effect on January 1, 2015.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- CLAIMS ADJUSTERS

***

     This act would provide for separate licenses for public, company and independent

adjusters and would implement national standards for those licenses.

     This act would take effect on January 1, 2015.

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