Who is an Insurance Adjuster?
October 21, 2010
Who is an insurance adjuster? Simple. The definition of an insurance adjuster is not unlike the definition of an attorney or a doctor. It is someone who has the education, knowledge experience and approval from the appropriate governing authority to participate in the profession of -insurance adjusting (or law for attorneys or medicine for doctors).
For purposes of this discussion, we are going to restrict our definition of insurance adjuster to states such as Arizona which have clearly defined statutes and laws involving the definition of insurance adjuster. Accordingly, these states will be the "appropriate governing authority"'.
Arizona's law is clear: Arizona Revised Statutes 20-321.01 states as follows:
A. A person shall not act as or claim to be an adjuster unless the person is licensed under this article.
B. To obtain a license as an adjuster a person shall apply to the director for the license and use the forms prescribed and provided by the director. The director shall issue the license to qualified persons on payment of the license fee prescribed in section 20-167.
C. To be licensed as an adjuster the applicant shall meet all of the following qualifications:
1. Be a person who is at least eighteen years of age.
2. Be a resident of this state, or a resident of another state that allows residents of this state to act as adjusters in the other state.
3. Take and pass an examination that is given by or under the supervision of the director and that reasonably tests the applicant's knowledge of insurance and legal responsibilities as an adjuster.
For anyone, including an employee of an insurance company acting as a claim representative to claim the title of insurance adjuster without the appropriate education, knowledge, experience and having passed an examination to obtain State approval to act as an adjuster is arrogance and might even be considered consumer fraud.
I have no quarrel with an employee of an insurance company working in the adjustment of claims understanding that some such persons may not be competent. Arizona Revised Statutes 20.321 tells us the definition of adjuster:
20-321. Definition of adjuster; exception
A. In this article, unless the context otherwise requires, "adjuster" means any person who for compensation, fee or commission either:
1. Adjusts, investigates or negotiates settlement of claims arising under insurance contracts on behalf of either the insurer or the insured.
2. Holds oneself out to perform a service listed in paragraph 1 of this subsection.
B. For the purposes of this article, an adjuster does not include:
1. A licensed attorney-at-law who is qualified to practice law in this state.
2. A salaried employee of an insurer or of a managing general agent.
3. A licensed insurance producer who adjusts or assists in adjustment of losses arising under policies procured through the insurance producer.
4. An employee of a political subdivision who adjusts or assists in the adjustment of losses arising under policies covering the political subdivision or persons indemnified by the political subdivision.
5. An independent contractor retained by a licensed adjuster or a person listed in paragraphs 1 through 4 of this subsection for the sole purpose of providing technical assistance in connection with a claim. An independent contractor may include photographers, estimators, engineers, private detectives or handwriting experts.
C. For the purposes of subsection B, "salaried employee" means an employee whose compensation is not contingent on the outcome of a claim determination.
D. A firm or corporation, whether or not organized under the laws of this state, may be licensed as an adjuster if each individual who is to exercise the license powers is qualified for an individual license as an adjuster.
Note that an employee of an insurance company who has not met the appropriate requirements and passed an examination is NOT an adjuster.
Suppose the employee of the insurer works on or adjusts claims. OK. Nurses can work with patients. They just cannot call themselves doctors. Paralegals can work on legal cases, they just cannot call themselves attorneys. Insurance companies (albeit not all -- there are some very offending ones) know this. State Farm employees, for instance, are claim representatives, not adjusters even though they do adjuster work. Some of their claim representatives are, in fact, licensed. The ones who are not licensed do not steal titles they are not entitled to. It is unfortunate that not all insurance companies adhere to this practice.
I presented a complaint to the Department of Insurance on a person who worked for an insurer who stole the use of the adjuster title and the Department agreed with me that this cannot be done. On another case with a major insurance company, when this issue came up the offending claim representative told me to "take it up with his management" which refused to do anything. For heaven's sake, the least they could do was reprint his business cards. This is most disconcerting, especially in light of Arizona Law 44-1522 where such deception is notably against the law:
44-1522 . Unlawful practices; intended interpretation of provisions
A. The act, use or employment by any person of any deception, deceptive act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice.
The public must be able to know that someone claiming to be an adjuster is in fact licensed, has passed a test as applicable and has knowledge of appropriate Arizona laws and insurance adjusting practices. The public must not be misled. The law exists for a reason.