FULFILLING THE COVERAGE YOU SELL

 Consistent coverage interpretations and claim

resolutions will promote consumer confidence

at both ends of the insurance transaction

 It’s taken awhile, but regulations governing the conduct

of public insurance adjusters … are becoming as rigorous

and pervasive as those regulating agents and brokers

By Joseph S. Harrington, CPCU

It’s taken awhile, but regulations governing the conduct of public insurance adjusters, who represent policyholders in claim settlements, are becoming as rigorous and pervasive as those regulating agents and brokers.

While recent reforms in public adjusting benefit carriers most directly, few producers will mourn the removal of unscrupulous actors who distort the claims process and often leave their clients disappointed and embittered toward insurance in general.

Whatever is lost in advocacy for insureds will likely be compensated for by more consistent and efficient interpretations of coverage and resolution of claims, thus creating more confidence among insurance providers and buyers.

Recent activity

Only about two-thirds of the states had licensing requirements for public adjusters back in 2005, when the National Association of Insurance Commissioners (NAIC) adopted its first model law establishing standards for public adjuster licensing. In 2023, all but four states require public adjusters to be licensed.

Enacting laws, of course, does not eliminate lawbreaking, but the absence of laws creates opportunities for individuals to engage in unethical behavior. This year has seen an unusual flurry of activity among several states addressing perceived abuses in public adjusting.

Five states—Florida, Georgia, Illinois, Indiana, and Kentucky—have enacted laws addressing one or more of these issues related to public adjusting:

• Contractual obligations of a public adjuster in regards to a client (Kentucky even requires public adjuster contracts to be filed with the insurance department for approval);
• Prohibitions on adjuster participation in repair or restoration activities, and on financial interests in firms that could benefit from claim settlements;
• Requirements that public adjusters provide insurers with timely notice of claims and cooperate with insurer efforts to investigate claims and communicate with insureds;
• Restrictions on public adjusters contracting with other parties without the policyholder’s consent; and
• Caps or restrictions on the amount public adjusters can charge for their services.

The trend of legislation is not universally anti-adjuster, as Texas and Louisiana this year both approved measures prohibiting carriers from issuing policies that would prohibit insureds from using public adjusters.

If there is a trend, it’s to establish that the professionals aiding consumers at the time of a claim operate under equivalent standards of professionalism as those who sell the coverage in the first place.

The author

Joseph S. Harrington, CPCU, is an independent business writer specializing in property and casualty insurance coverages and operations. For 21 years, Joe was the communications director for the American Association of Insurance Services (AAIS), a P-C advisory organization. Prior to that, Joe worked in journalism and as a reporter and editor in financial services.