Requires public adjusters to work for the benefit of insureds and requires disclosure of conflicts of interest.
Ayes (62): Adams, Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Felder, Flanagan, Fuschillo, Gallivan, Gianaris, Gipson, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Hoylman, Kennedy, Klein, Krueger, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Sanders, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Tkaczyk, Valesky, Young, Zeldin
Excused (1): Sampson
TITLE OF BILL: An act to amend the insurance law, in relation to public adjusters and payment of property/casualty claims
PURPOSE: The purpose of this bill is to clearly establish conflict of interest standards, in statute, so that public adjusters have an affirmative duty to act on behalf of and in the best interests of the insured who have retained such adjuster when settling or negotiating an insurance claim for such insured. In addition, such adjuster or their close family relatives, cannot have a financial interest in any business that he or she recommends to an insured for the performance of services, work or repairs associated with the insurance claim that is being negotiated, unless such financial interest is clearly disclosed and acknowledged by the insured in writing.
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 Superintendent 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 financial interests and not in the best interest of their clients by referring 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.
STATE OF NEW YORK ________________________________________________________________________ 5775 2013-2014 Regular Sessions IN SENATE June 14, 2013 ___________Introduced by Sens. KLEIN, MARTINS -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, in relation to public adjusters and payment of property/casualty claims THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 2108 of the insurance law is amended by adding a new subsection (s) to read as follows: (S) (1) EVERY PUBLIC ADJUSTER SHALL HAVE AN AFFIRMATIVE DUTY TO ACT ON BEHALF AND IN THE BEST INTERESTS OF THE INSURED WHEN NEGOTIATING FOR OR EFFECTING THE SETTLEMENT OF AN INSURANCE CLAIM FOR THE INSURED OR OTHER- WISE ACTING AS A PUBLIC ADJUSTER. (2) (A) NO PUBLIC ADJUSTER SHALL RECEIVE ANY COMPENSATION, EITHER DIRECTLY OR INDIRECTLY, FOR A REFERRAL OF THE INSURED TO AN INDIVIDUAL OR ENTITY FOR SERVICES, WORK OR REPAIRS, RELATING TO ANY INSURANCE CLAIM FOR WHICH THE PUBLIC ADJUSTER REPRESENTS THE INSURED OR HAS NEGOTIATED OR EFFECTED A SETTLEMENT, UNLESS THE COMPENSATION IS PROMINENTLY AND CLEARLY DISCLOSED TO THE INSURED IN THE WRITTEN MEMORANDUM DESCRIBED IN SUBSECTION (P) OF THIS SECTION. ANY SUCH COMPENSATION RECEIVED SHALL BE DEEMED TO BE COMPENSATION FROM THE INSURED AND, IN COMBINATION WITH ANY OTHER COMPENSATION RECEIVED FROM THE INSURED, SHALL NOT EXCEED THE MAXI- MUM AMOUNT THAT THE ADJUSTER MAY CHARGE IN ACCORDANCE WITH THE REGU- LATIONS REQUIRED PURSUANT TO SUBSECTION (P) OF THIS SECTION. (B) NO PUBLIC ADJUSTER WHO HAS A FINANCIAL OR OWNERSHIP INTEREST IN THE INDIVIDUAL OR ENTITY THAT PERFORMS THE SERVICES, WORK, OR REPAIRS, SHALL REFER THE INSURED TO THE INDIVIDUAL OR ENTITY UNLESS THE FINANCIAL OR OWNERSHIP INTEREST IS PROMINENTLY AND CLEARLY DISCLOSED TO THE INSURED IN THE WRITTEN MEMORANDUM DESCRIBED IN SUBSECTION (P) OF THIS SECTION. IF A PUBLIC ADJUSTER REFERS AN INSURED TO AN INDIVIDUAL WHO IS RELATED TO THE INDIVIDUAL BY BLOOD OR AFFINITY TO THE SECOND DEGREE OF CONSANGUINITY, OR TO AN ENTITY OWNED OR CONTROLLED BY SUCH AN INDIVID-EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08964-06-3 S. 5775 2
UAL, FOR SERVICES, WORK, OR REPAIRS, RELATING TO ANY INSURANCE CLAIM FOR WHICH THE PUBLIC ADJUSTER REPRESENTS THE INSURED OR HAS NEGOTIATED OR EFFECTED A SETTLEMENT, THEN THE PUBLIC ADJUSTER SHALL DISCLOSE THE RELATIONSHIP TO THE INSURED IN THE WRITTEN MEMORANDUM DESCRIBED IN SUBSECTION (P) OF THIS SECTION. S 2. Paragraphs 15 and 16 of subsection (a) of section 2110 of the insurance law are renumbered paragraphs 16 and 17 and a new paragraph 15 is added to read as follows: (15) WHILE ACTING AS A PUBLIC ADJUSTER, THE LICENSEE HAS FAILED TO ACT ON BEHALF AND IN THE BEST INTERESTS OF THE INSURED WHEN NEGOTIATING FOR OR EFFECTING THE SETTLEMENT OF AN INSURANCE CLAIM FOR SUCH INSURED OR OTHERWISE ACTING AS A PUBLIC ADJUSTER, OR HAS FAILED TO MAKE THE DISCLO- SURES REQUIRED BY PARAGRAPH TWO OF SUBSECTION (S) OF SECTION TWO THOU- SAND ONE HUNDRED EIGHT OF THIS ARTICLE; S 3. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law.