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NCOIL committee adopts public adjuster standards model act

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Insurance | Legal
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The National Council of Insurance Legislators (NCOIL) Property & Casualty Insurance Committee has adopted an act that provides states with a template for making changes to public adjuster licensing code and other professional standards.

The NCOIL Public Adjuster Professional Standards Reform Model prohibits public adjusters from providing services to a policyholder until a written contract has been agreed to on a form already approved by the insured’s home state insurance commissioner.

A public insurance adjuster is defined in the model act as anyone who “acts on behalf of an insured in the adjusting of a claim or claims for loss or damage under any policy of insurance covering real or personal property; on behalf of any other public insurance adjuster, investigates, settles, or adjusts or advises or assists an insured with a claim or claims for loss or damage under any policy of insurance covering real or personal property; or a person who advertises, solicits business, or holds himself or herself out to the public as an adjuster of claims for loss or damage under any policy of insurance covering real or personal property.”

The act also requires public adjusters to:

    • Provide policyholders with written notice of their rights;
    • Abide by conflict of interest provisions laid out in the act;
    • Handle claim settlement funds received on behalf of a policyholder in a fiduciary capacity;
    • Limit fees that are charged;
    • Provide policyholders with a disclosure that describes the claim process and the difference between staff, independent, and public adjusters; and
    • Provide policyholders with written notice of their rights.

States that adopt the model act would prohibit public adjusters from filing a complaint with an insurance commissioner on behalf of a policyholder who alleges an unfair claim settlement practice unless they’ve given written consent to do so.

Under the act, public adjusters can charge a reasonable fee that does not exceed 15% of the total insurance recovery for non-catastrophic claims and 10% for catastrophic claims, inclusive of all compensation they’re paid on a claim.

The act is sponsored by state Rep. Michael Meredith (KY-District 19), Rep. Matt Lehman (IN-District 79), and Del. Steve Westfall (WV-District 12).

“The Committee came out of the gate hot in 2024 and I was glad to see us both get a model across the finish line and have a productive discussion on an important issue before we meet again in Nashville,” said Committee Chair Rep. Forrest Bennett (OK-District 92), in a news release.

The model act will be on the NCOIL Executive Committee’s consent agenda for final ratification during the NCOIL Spring Meeting in Nashville, Tennessee from April 11-14.

“I was proud to bring to NCOIL what we learned working on these issues in Kentucky,” said Meredith, in the release. “This model goes a long way in providing consumers protection, and I really encourage legislators to be proactive in implementing these standards in their states.”

The NAIC is also considering proposed changes to its Public Adjusters Licensing Model Act, which is another template used by state legislators for bills, that would eliminate the assignment of benefits (AOB) from customers to repairers. It would prohibit repair facilities from acting as public adjusters for their customers in negotiating claims with insurers.

Comments submitted on the proposal include opposition from the Automotive Education & Policy Institute (AEPI) and the Society of Collision Repair Specialists (SCRS).

Erica Eversman, NAIC consumer liaison and AEPI founder, said the revisions taken exactly as they are now would be detrimental to consumers and repairers. It would leave two choices for safe and proper repairs to be carried out: shops going out of business because they won’t be able to charge what they need to follow OEM repair procedures correctly and still stay in business, or consumers will have to foot the bill.

The revisions would also benefit insurers because it would take away two avenues consumers have to dispute what their insurance company says it will cover — prohibition of AOB and limiting the chances of a public adjuster taking a claim because of the amount they’re allowed to charge not being enough, according to Eversman.

SCRS noted in its written comments that collision repair facility employees are often put in a position to debate and, what some may consider, negotiate repairs and repair costs meaning the proposed model act language could potentially open them up to allegations of fraudulent insurance acts according to how public adjuster tasks would be defined.

SCRS Executive Director Aaron Schulenburg wrote, “If the consumer has been fully disclosed in writing the various roles a repair representative may serve in their capacity of advocating for the consumer’s interest, as the party most familiar with the technical repair demands, it seems to intentionally disadvantage the consumer to remove their repairer as a potential public adjuster.”

The model draft and all written comments can be found here.

NAIC previously told RDN a meeting would be held in mid-December to discuss the initial draft and comments, but it was postponed. It’s tentatively scheduled for March.


Featured image credit: Tippapatt/iStock

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