Relates to continuing education for licensed persons and qualifications for independent adjusters

*Prohibiting an adjuster from receiving anything of value in exchange for a referral of a potential client;

*Prohibiting any public or independent adjuster from having a controlling interest in any construction, salvage or building appraisal firm; and

*Allowing and setting the conditions under which the Insurance Superintendent may revoke, suspend or refuse to renew the license of public or independent adjusters.

Summary of provisions

Section 1 adds a new § 2616 to the Insurance Law, to prohibit an insurer from requiring repairs to be completed by any particular entity or individual and from suggesting or recommending a particular entity or individual unless specifically asked by the insured, in which case the insurer would have to disclose any controlling or business interest that it has in any entity or individual that it recommends or suggests.

Sections 2 and 3 amend various subsections of § 2108 of the Insurance Law, to require that independent adjusters participate in continuing education.

Section 4 amends subsection (a) of § 2110 of the Insurance Law and allows the superintendent of the Insurance Department to refuse to renew, revoke, or suspend the license of any insurance agent, insurance broker, reinsurance intermediary, insurance consultant or adjuster that has violated any law regarding his or her professional capacity, for a duration the superintendent deems appropriate. The superintendent can also suspend or refuse to renew a license for a duration that he or she determines adequate to discipline a violation of this section.

Section 5 amends paragraph 2 of subsection (c) of § 2132 of the insurance law to indicate that during the same calendar year biennial licensing period, independent adjusters may use accumulated continuing education credits to meet the requirements of similar classes of licenses. In doing so, independent adjusters are provided the same benefit as public adjusters.

Justification

In the past decade, fraud committed by a small number of unscrupulous public and independent adjusters has placed a black cloud over much of the insurance industry. The actions of these few have caused undue harm to both policy holders and adjusters who operate under the highest professional standards. Most of those accused of committing

fraud have pled guilty, received fines and or jail time. To date, many of them retain their New York State licenses.

This legislation will help the adjusting industry rid itself of "bad apples" by imposing continuing education requirements and imposing revocation and suspension guidelines for public and independent adjusters alike.

The bill will also prevent conflicts of interest that may arise when an insurer or adjuster has controlling interest in a construction firm. For example, an insurance company may consult a sister construction firm in which it has controlling interest -- to adjust housing repair claims.

In return for the free adjustment, the construction firm may receive the contract for the repairs or other construction. A conflict of interest arises when the construction company receives such a contract and inflates the estimate, resulting in higher premiums to policy holders. This practice causes a public interest to be violated due to the lack of objectivity.

The bill helps avoid such conflicts in three ways. First, it prevents insurers from requiring repairs be made by a particular construction firm. If recommendations are made that repairs be done by a particular firm, the insurer must disclose to the insured whether the insurer has a controlling interest in such firm. Second, it prohibits public and independent adjusters from paying or giving gifts to people or companies in exchange for potential client referral. Third, it prohibits public or independent adjusters from having any controlling interest in a construction, salvage or appraisal firm.

Legislative history

2016: New Senate Bill/A.3212, Referred to Insurance on 1/6/2016. 2015: A.3212 (Weprin); Referred to Insurance on 1/22/2015 2014: A.908-A/S.5183-A(Martins); A.908- Died on Third Reading Rules Ca1.47 on 6/9/2014; S.5183-A was amended and recomitt to Insurance on 5/23/14. 2013: A.908 advanced to third reading cal.294; S.5183 (Martins) referred to Insurance. 2012: A.3729-A/S.7802 (Robach); Passed the Assembly 2011: A.3729 Referred to Insurance 2009-2010: A.7088 (Carozza) Referred to Insurance 2007-2008: A.6472 (Carozza) Referred to Insurance 2005-2006: A.6798 (Carozza)/S.1997 (Balboni) Referred to Insurance in both houses. 2004: A.6915-A/S.4752-B Amended and Recommit to Insurance in the Assembly; S.4752-B (Balboni) Passed the Senate. 2003: A.6915 Referred to Insurance 2002: A.6009-A (Carozza)/S.2067 (Balboni) Amended and Recommit to Insurance in both houses. 2001: A.6009/S.2067 (Balboni) Referred to Insurance. 2000: S.6592 (Balboni) Referred to Insurance

Fiscal implications

None to the state.

Effective date

This act shall take effect on the first of January next succeeding the date on which it shall have become a law.