BILL NUMBER: S5322
SPONSOR: BAILEY
 
TITLE OF BILL:
An act to amend the insurance law, in relation to claims for loss or
damage to real property, continuing education for licensed persons and
qualifications for independent adjusters
 
PURPOSE:
This bill intends to curb the potential for fraud and abuse by unscrupu-
lous public or independent insurance adjusters. It does so by:
*Requiring continuing education for public and independent insurance
adjusters;
*Prohibiting an adjuster from receiving anything of value in exchange
for a referral of a potential client;
*Allowing and setting the conditions under which the Insurance Super-
intendent may revoke, suspend or refuse or renew the license of public
or independent adjusters.
 
SUMMARY OF PROVISIONS:
Section 1 adds a new section 2617 to the Insurance law, to prohibit an
insurer from requiring repairs to be completed by any particular entity
or individual. Further this section provides that when an insurer,
third-party administrator, independent adjuster, or public adjuster
suggests or recommends repairs be made by a particular entity or indi-
vidual, 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 amends 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 15 2132 of the insur-
ance law to indicate that during the same calendar year biennial licens-
ing period, independent adjusters may use accumulated continuing educa-
tion 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 the
insurance industry. The actions of these few have caused undue harm to
both policy holders and adjusters who operate under the highest profes-
sional 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 revo-
cation 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 violates the public interest.
The bill helps avoid such conflicts in three ways. First, it prevents
insurers from requiring that repairs are made by a particular
construction firm. If the insurer does recommend that repairs are done
by a particular firm, it must disclose to the insured whether it has a
controlling interest in such firm. Second, it prohibits public and inde-
pendent adjusters from paying or giving gifts to people or companies in
exchange for potential client referrals. Third, it prohibits public or
independent adjusters from having any controlling interest in a
construction, salvage, or appraisal firm.
 
LEGISLATIVE HISTORY:
2023-24: S9862 - Referred to Rules
 
FISCAL IMPLICATIONS:
None.
 
EFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.

Statutes affected:
S5322: 2108 insurance law, 2108(f) insurance law, 2108(r) insurance law, 2110 insurance law, 2110(a) insurance law, 2132 insurance law, 2132(c) insurance law