Requires public adjusters to work for the benefit of insureds and requires disclosure of conflicts of interest

Summary of provisions

Section 1: Amends Insurance Law section 2108 to add a new subsection (s). This new subsection places on the public adjuster an affirmative duty to act on behalf of and in the best interests of the insured when settling or negotiating an insurance claim for such insured.

This new subsection prohibits a public adjuster from receiving any compensation, either directly or indirectly, in consideration of the referral or recommendation to an insured that such insured use another individual or firm to perform services, work or repairs relating to any insurance claim settled or negotiated by such public adjuster. Provided however, that such public adjuster may receive such compensation, if such arrangement is clearly disclosed to the insured and acknowledged by such insured in a signed writing.

In addition, every public adjuster shall not receive any additional fee or compensation, either directly or indirectly, other than what was stated in the compensation agreement as it relates to the kinds of compensation that a public adjuster may receive with regard to referrals or performing services, work or repairs by companies owned by such adjuster, or his or her spouse or close blood relatives. Under this provision, an adjuster or his close family may not receive any form of compensation, from any individual or entity in which such adjuster recommends or suggests to an insured for the performance of services, work or repairs related to an insurance claim that such adjuster is involved with, unless the public adjuster discloses that relationship to the insured in a writing that is signed by the insured. The blood relationships covered under this bill are of blood or affinity to the second degree of consanguinity, (i.e. cousins or more distantly related family members).

Section 2: Amends Insurance Law section 2110 (a) to authorize the Super- intendent to suspend or revoke the license of a public adjuster for failing to act in the best interests of the insured or for failing to

disclose any conflict of interest that such public adjuster may have as provided for under this bill.

Justification

Under current statutory law, there is not a strict conflict of interest standard incorporated in the law to ensure that public adjusters act in the best interests of their insured in which they are negotiating an insurance claim. Further, under current law, some unscrupulous public adjusters are acting in their own best finan- cial interests and not in the best interest of their clients by refer- ring such clients to businesses that they have a direct or indirect financial stake in (or which are owned by their close family relatives) to perform services, work or repairs related to an insurance claim.

This has lead to a blurring of the lines where certain public adjusters are acting in their own best financial interests and not in the best interest of the individuals who have retained them to obtain the best offer possible to settle an insurance claim. Further, as these improper transactions occur, the Department maintains that they may not be completely able to curtail this activity or suspend or revoke the licenses of those public adjusters that are not acting in their insured's best interest. This bill establishes a heightened standard of conduct for public adjusters and clearly authorizes the Department to suspend or revoke a license of a public adjuster that violates such trust.

Legislative history

This bill is similar to S. 3771-A which passed the NYS Senate in June 2013.

Fiscal implications

None.

Effective date

January 1st of the year next succeeding the date upon which this bill shall have become a law.