SENATE BILL NO. 1397
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S1397aa.....................................by COMMERCE AND HUMAN RESOURCES
PUBLIC ADJUSTER LICENSING ACT - Adds to existing law relating to insurance
to enact the "Public Adjuster Licensing Act"; to provide the purpose; to
define terms; to require a license for a person to be a public adjuster; to
provide for license application; to provide for exams; to provide for
nonresident license reciprocity; to provide for bond or letter of credit;
to provide for continuing education; to provide for contracts between the
public adjuster and the insured; to provide for records; and to provide for
standards of conduct.
02/08 Senate intro - 1st rdg - to printing
02/11 Rpt prt - to Com/HuRes
02/18 Rpt out - rec d/p - to 2nd rdg
To 14th Ord
02/19 Rpt out amen - to engros
02/20 Rpt engros - 1st rdg - to 2nd rdg as amen
02/21 2nd rdg - to 3rd rdg as amen
02/25 3rd rdg as amen - PASSED - 33-0-2
AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
Cameron, Corder, Darrington, Davis, Fulcher, Geddes, Goedde, Hammond,
Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge,
Malepeai(Sagness), McGee, McKague, McKenzie, Pearce, Richardson,
Schroeder, Siddoway, Stegner, Stennett, Werk
NAYS -- None
Absent and excused -- Coiner, Gannon
Floor Sponsor - Goedde
Title apvd - to House
02/26 House intro - 1st rdg - to Bus
03/06 Rpt out - rec d/p - to 2nd rdg
03/07 2nd rdg - to 3rd rdg
03/12 3rd rdg - PASSED - 64-4-2
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon,
Chavez, Chew, Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart,
Henbest, Henderson, Jaquet, Killen, King, Kren, Labrador, Lake,
LeFavour, Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle,
Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ringo,
Roberts, Rusche, Sayler, Schaefer, Shepherd(02), Shirley, Shively,
Smith(30), Smith(24), Snodgrass, Stevenson, Thomas, Trail, Vander
Woude, Wills, Wood(27), Mr. Speaker
NAYS -- Harwood, Shepherd(08), Thayn, Wood(35)
Absent and excused -- Loertscher, Ruchti
Floor Sponsor - Snodgrass
Title apvd - to Senate
03/13 To enrol - Rpt enrol - Pres signed
03/14 Sp signed
03/17 To Governor
03/18 Governor signed
Session Law Chapter 179
Section 41-5805 effective when a state
participates in NAIC's central registry;
07/01/08 All other sections
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature Second Regular Session - 2008
IN THE SENATE
SENATE BILL NO. 1397
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO PUBLIC ADJUSTING; AMENDING TITLE 41, IDAHO CODE, BY THE ADDITION
3 OF A NEW CHAPTER 58, TITLE 41, IDAHO CODE, TO PROVIDE FOR PURPOSE AND
4 SCOPE, TO DEFINE TERMS, TO REQUIRE A LICENSE, TO PROVIDE FOR EXCEPTIONS TO
5 LICENSING, TO PROVIDE FOR APPLICATION FOR LICENSE, TO PROVIDE FOR LICENSE
6 QUALIFICATIONS, TO PROVIDE FOR EXAMINATION, TO PROVIDE FOR EXEMPTIONS FROM
7 EXAMINATION, TO PROVIDE FOR NONRESIDENT LICENSE RECIPROCITY, TO PROVIDE
8 FOR LICENSE, TO PROVIDE FOR LICENSE DENIAL, NONRENEWAL OR REVOCATION, TO
9 REQUIRE BOND OR LETTER OF CREDIT, TO REQUIRE CONTINUING EDUCATION, TO PRO-
10 VIDE LIMITATIONS OF FEES PAID BY PUBLIC ADJUSTER, TO PROVIDE FOR CONTRACTS
11 BETWEEN PUBLIC ADJUSTERS AND INSURED, TO PROVIDE FOR ESCROW OR TRUST
12 ACCOUNTS, TO PROVIDE FOR RECORD RETENTION, TO PROVIDE STANDARDS OF CONDUCT
13 OF PUBLIC ADJUSTER, TO PROVIDE FOR REPORTING OF ACTIONS, TO GRANT AUTHOR-
14 ITY TO PROMULGATE RULES AND TO PROVIDE FOR SEVERABILITY; AND TO PROVIDE
15 FOR AN EFFECTIVE DATE WITH A CONTINGENCY.
16 Be It Enacted by the Legislature of the State of Idaho:
17 SECTION 1. That Title 41, Idaho Code, be, and the same is hereby amended
18 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
19 ter 58, Title 41, Idaho Code, and to read as follows:
20 CHAPTER 58
21 PUBLIC ADJUSTER LICENSING ACT
22 41-5801. PURPOSE AND SCOPE. This chapter governs the qualifications and
23 procedures for the licensing of public adjusters. It specifies the duties of
24 and restrictions on public adjusters, which include limiting their licensure
25 to assisting insureds in first party claims.
26 41-5802. DEFINITIONS. As used in this chapter:
27 (1) "Apprentice public adjuster" means an individual who is qualified in
28 all respects as a public adjuster except as to experience, education and/or
29 training.
30 (2) "Business entity" means a corporation, association, partnership, lim-
31 ited liability company, limited liability partnership or other legal entity.
32 (3) "Catastrophic disaster," according to the federal response plan,
33 means an event that results in large numbers of deaths and injuries; causes
34 extensive damage or destruction of facilities that provide and sustain human
35 needs; produces an overwhelming demand on state and local response resources
36 and mechanisms; causes a severe long-term effect on general economic activity;
37 and severely affects state, local and private sector capabilities to begin and
38 sustain response activities. A catastrophic disaster shall be declared by the
39 president of the United States or the governor of the state or district in
40 which the disaster occurred.
41 (4) "Fingerprints" means an impression of the lines on the finger taken
2
1 for purpose of identification. The impression may be electronic or in ink con-
2 verted to electronic format.
3 (5) "Home state" means the District of Columbia or any state or territory
4 of the United States in which the public adjuster's principal place of resi-
5 dence or principal place of business is located. If neither the state in which
6 the public adjuster maintains the principal place of residence nor the state
7 in which the public adjuster maintains the principal place of business has a
8 substantially similar law governing public adjusters, the public adjuster may
9 declare another state in which it becomes licensed and acts as a public
10 adjuster to be the home state.
11 (6) "Individual" means a natural person.
12 (7) "Person" means an individual or a business entity.
13 (8) "Public adjuster" means any person who, for compensation or any other
14 thing of value on behalf of the insured:
15 (a) Acts or aids, solely in relation to first party claims arising under
16 insurance contracts that insure the real or personal property of the
17 insured, on behalf of an insured in negotiating for, or effecting the set-
18 tlement of, a claim for loss or damage covered by an insurance contract;
19 (b) Advertises for employment as a public adjuster of insurance claims or
20 solicits business or represents himself or herself to the public as a pub-
21 lic adjuster of first party insurance claims for losses or damages arising
22 out of policies of insurance that insure real or personal property; or
23 (c) Directly or indirectly solicits business, investigates or adjusts
24 losses, or advises an insured about first party claims for losses or dam-
25 ages arising out of policies of insurance that insure real or personal
26 property for another person engaged in the business of adjusting losses or
27 damages covered by an insurance policy, for the insured.
28 41-5803. LICENSE REQUIRED. (1) A person shall not act or hold himself out
29 as a public adjuster in this state unless the person is licensed as a public
30 adjuster in accordance with this chapter.
31 (2) A person licensed as a public adjuster shall not misrepresent to a
32 claimant that he or she is an adjuster representing an insurer in any capac-
33 ity, including acting as an employee of the insurer or acting as an indepen-
34 dent adjuster unless so appointed by an insurer in writing to act on the
35 insurer's behalf for that specific claim or purpose. A licensed public
36 adjuster is prohibited from charging that specific claimant a fee when
37 appointed by the insurer and the appointment is accepted by the public
38 adjuster.
39 41-5804. EXCEPTIONS TO LICENSING. Notwithstanding section 41-5803, Idaho
40 Code, a license as a public adjuster shall not be required of the following:
41 (1) An attorney admitted to practice in this state, when acting in his or
42 her professional capacity as an attorney;
43 (2) A producer licensed in Idaho who acts only on behalf of his or her
44 own insured and does not hold himself or herself out to the public as a public
45 adjuster;
46 (3) A person who negotiates or settles claims arising under a life or
47 health insurance policy or an annuity contract;
48 (4) A person employed only for the purpose of obtaining facts surrounding
49 a loss or furnishing technical assistance to a licensed public adjuster
50 including, but not limited to, photographers, estimators, private investigat-
51 ors, engineers and handwriting experts;
52 (5) A licensed health care provider, or employee of a licensed health
53 care provider, who prepares or files a health claim form on behalf of a
3
1 patient; or
2 (6) A person who settles subrogation claims between insurers.
3 41-5805. APPLICATION FOR LICENSE. (1) A person applying for a public
4 adjuster license shall make application to the department on an application
5 form prescribed by the department.
6 (2) The applicant shall declare under penalty of perjury and under pen-
7 alty of refusal, suspension or revocation of the license that the statements
8 made in the application are true, correct and complete to the best of the
9 applicant's knowledge and belief.
10 (3) In order to make a determination of license eligibility, the depart-
11 ment is authorized to require fingerprints of applicants and submit the
12 fingerprints and the fee required to perform the criminal history record
13 checks to the Idaho state police and the federal bureau of investigation (FBI)
14 for state and national criminal history record checks; the department shall
15 require a criminal history record check on each applicant in accordance with
16 this chapter. The department shall require each applicant to submit a full set
17 of fingerprints in order for the department to obtain and receive national
18 criminal history records from the FBI criminal justice information services
19 division.
20 (a) The department may contract for the collection, transmission and
21 resubmission of fingerprints required under this section. If the depart-
22 ment does so, the fee for collecting, transmitting and retaining
23 fingerprints shall be payable directly to the contractor by the person.
24 The department may agree to a reasonable fingerprinting fee to be charged
25 by the contractor.
26 (b) The department is authorized to receive criminal history record
27 information in lieu of the Idaho state police that submitted the
28 fingerprints to the FBI.
29 41-5806. LICENSE QUALIFICATIONS. (1) Before issuing a public adjuster
30 license to an applicant under this section, the department shall find that the
31 applicant:
32 (a) Is at least eighteen (18) years of age;
33 (b) Is eligible to designate this state as his or her home state or is a
34 nonresident who is eligible for a license under section 41-5809, Idaho
35 Code;
36 (c) Has successfully passed the public adjuster examination;
37 (d) Has not committed any act that is a ground for denial, suspension or
38 revocation of a license as set forth in section 41-5811, Idaho Code;
39 (e) Is trustworthy, reliable, and of good reputation, evidence of which
40 may be determined by the department;
41 (f) Is financially responsible to exercise the license and has provided
42 proof of financial responsibility as required in section 41-5812, Idaho
43 Code;
44 (g) Has paid the fees set forth by rule adopted pursuant to section
45 41-401, Idaho Code; and
46 (h) Maintains an office in the home state of residence with public access
47 by reasonable appointment and/or regular business hours. This includes a
48 designated office within a home state of residence.
49 (2) In addition to satisfying the requirements of subsection (1), when
50 applicable, a business entity shall:
51 (a) Designate a licensed individual public adjuster responsible for the
52 business entity's compliance with the insurance laws and rules of this
53 state;
4
1 (b) Designate only licensed individual public adjusters to exercise the
2 business entity's license; and
3 (c) The department may require any documents reasonably necessary to ver-
4 ify the information contained in the application.
5 41-5807. EXAMINATION. (1) An individual applying for a public adjuster
6 license under this chapter shall pass a written examination unless exempt pur-
7 suant to section 41-5808, Idaho Code. The examination shall test the knowledge
8 of the individual concerning the duties and responsibilities of a public
9 adjuster and the insurance laws and rules of this state. Examinations required
10 by this section shall be developed and conducted under rules prescribed by the
11 department.
12 (2) The department may make arrangements, including contracting with an
13 outside testing service, for administering examinations and collecting the
14 nonrefundable fee set forth by rule of the department.
15 (3) Each individual applying for an examination shall remit a nonrefund-
16 able fee as prescribed by the department in an amount set by rule of the
17 department adopted pursuant to section 41-401, Idaho Code.
18 (4) An individual who fails to appear for the examination as scheduled or
19 fails to pass the examination shall reapply for an examination and remit all
20 required fees and forms before being rescheduled for another examination.
21 41-5808. EXEMPTIONS FROM EXAMINATION. (1) An individual who applies for a
22 public adjuster license in this state who was previously licensed as a public
23 adjuster in another state based on a public adjuster examination shall not be
24 required to complete any prelicensing examination. This exemption is only
25 available if the person is currently licensed in that state or if the person
26 applies for a license in this state within ninety (90) days of cancellation of
27 the applicant's previous license and if the prior state issues a certification
28 that, at the time of cancellation, the applicant was in good standing in that
29 state or the state's producer database records or records maintained by the
30 national association of insurance commissioners (NAIC), its affiliates, or
31 subsidiaries, indicate that the public adjuster is or was licensed and in good
32 standing.
33 (2) A person licensed as a public adjuster in another state based on a
34 public adjuster examination who moves to this state shall make application
35 within ninety (90) days of establishing legal residence to become a resident
36 licensee pursuant to section 41-5805, Idaho Code. No prelicensing examination
37 shall be required of that person to obtain a public adjuster license.
38 (3) An individual who applies for a public adjuster license in this state
39 who was previously licensed as a public adjuster in this state shall not be
40 required to complete any prelicensing examination. This exemption is only
41 available if the application is received within twelve (12) months of the can-
42 cellation of the applicant's previous license in this state and if, at the
43 time of cancellation, the applicant was in good standing in this state.
44 (4) A licensed individual who moves and establishes residency in this
45 state must apply for a resident license within ninety (90) days of establish-
46 ing residency here and must relinquish his or her resident license in the
47 former home state.
48 41-5809. NONRESIDENT LICENSE RECIPROCITY. (1) Unless denied licensure
49 pursuant to sections 41-5810 or 41-5811, Idaho Code, a nonresident person
50 shall receive a nonresident public adjuster license if:
51 (a) The person is currently licensed as a resident public adjuster and in
52 good standing in his or her home state;
5
1 (b) The person has submitted the proper request for licensure, has paid
2 the fees required by rule of the department adopted pursuant to section
3 41-5806(1)(g), Idaho Code, and has provided proof of financial responsi-
4 bility as required in section 41-5812, Idaho Code;
5 (c) The person has submitted or transmitted to the department the appro-
6 priate completed application for licensure; and
7 (d) The person's home state awards nonresident public adjuster licenses
8 to residents of this state on the same basis.
9 (2) The department may verify the public adjuster's licensing status
10 through the producer database maintained by the NAIC, its affiliates, or sub-
11 sidiaries.
12 (3) As a condition to continuation of a public adjuster license issued
13 under this section, the licensee shall maintain a resident public adjuster
14 license in his or her home state. The nonresident public adjuster license
15 issued under this section shall terminate and be surrendered immediately to
16 the department if the home state public adjuster license terminates for any
17 reason, unless the public adjuster has been issued a license as a resident
18 public adjuster in his or her new home state. Notification to the state or
19 states where a nonresident license is issued must be made as soon as possible,
20 within thirty (30) days of the change in new state resident license. The
21 licensee shall include new and old addresses. A new state resident license is
22 required for nonresident licenses to remain valid. The new state resident
23 license must have reciprocity with the licensing nonresident state(s) for the
24 nonresident license not to terminate.
25 41-5810. LICENSE. (1) Unless denied licensure under this chapter, persons
26 who have met the requirements of this chapter shall be issued a public
27 adjuster license.
28 (2) A public adjuster license shall remain in effect unless revoked, ter-
29 minated or suspended as long as the request for renewal and the fee set forth
30 in the rule promulgated under section 41-5806(1)(g), Idaho Code, is paid and
31 any other requirements for license renewal are met by the due date.
32 (3) The licensee shall inform the department by any means acceptable to
33 the department of a change of address, change of legal name, or change of
34 information submitted on the application within thirty (30) days of the
35 change.
36 (4) A public adjuster who allows his or her license to lapse may, within
37 twelve (12) months from the due date of the renewal, reinstate his or her pub-
38 lic adjuster license upon the department's receipt of the request for renewal,
39 payment of a penalty in the amount of double the unpaid renewal fee and certi-
40 fication that all continuing education requirements have been met. The new
41 public adjuster license shall be effective the date the department receives
42 all of the above stated items required for reinstatement.
43 (5) A licensed public adjuster who is unable to comply with license
44 renewal procedures due to military service, a long-term medical disability or
45 some other extenuating circumstance, may request a waiver of those procedures.
46 The public adjuster may also request a waiver of any examination requirement,
47 fine or other sanction imposed for failure to comply with renewal procedures.
48 (6) The license shall contain the licensee's name, city and state of
49 business address, license number, the date of issuance, the expiration date
50 and any other information the department deems necessary.
51 (7) In order to assist in the performance of the department's duties, the
52 department may contract with nongovernmental entities, including the NAIC or
53 any affiliates or subsidiaries that the NAIC oversees, to perform any ministe-
54 rial functions, including the collection of fees and data, related to licens-
6
1 ing that the department may deem appropriate.
2 41-5811. LICENSE DENIAL, NONRENEWAL OR REVOCATION. (1) The department may
3 place on probation, suspend, revoke or refuse to issue or renew a public
4 adjuster's license or may levy a civil penalty in accordance with section
5 41-1016, Idaho Code, or any combination of actions, for any one (1) or more of
6 the following causes:
7 (a) Providing incorrect, misleading, incomplete or materially untrue
8 information in the license application;
9 (b) Violating any insurance laws, or violating any rule, regulation, sub-
10 poena or order of the department or of another state's insurance depart-
11 ment;
12 (c) Obtaining or attempting to obtain a license through misrepresentation
13 or fraud;
14 (d) Improperly withholding, misappropriating or converting any moneys or
15 properties received in the course of doing insurance business;
16 (e) Intentionally misrepresenting the terms of an actual or proposed
17 insurance contract or application for insurance;
18 (f) Having been convicted of a felony, or a misdemeanor which evidences
19 bad moral character, dishonesty, a lack of integrity and financial respon-
20 sibility, or an unfitness and inability to provide acceptable service to
21 the consuming public;
22 (g) Having admitted to or been found to have committed any insurance
23 unfair trade practice or insurance fraud;
24 (h) Using fraudulent, coercive or dishonest practices; or demonstrating
25 incompetence, untrustworthiness or financial irresponsibility in the con-
26 duct of business in this state or elsewhere;
27 (i) Having an insurance license, or its equivalent, denied, suspended or
28 revoked in any other state, province, district or territory;
29 (j) Forging another's name to an application for insurance or to any doc-
30 ument related to an insurance transaction;
31 (k) Cheating, including improperly using notes or any other reference
32 material, to complete an examination for an insurance license;
33 (l) Knowingly accepting insurance business from an individual who is not
34 licensed but who is required to be licensed by the department;
35 (m) Failing to comply with an administrative or court order imposing a
36 child support obligation, provided however, that nothing in this provision
37 shall be deemed to abrogate or modify chapter 14, title 7, Idaho Code; or
38 (n) Failing to pay state income tax or comply with any administrative or
39 court order directing payment of state income tax.
40 (2) The license of a business entity may be suspended, revoked or refused
41 if the department finds, after hearing, that an individual licensee's viola-
42 tion was known or should have been known by one (1) or more of the partners,
43 officers or managers acting on behalf of the business entity and the violation
44 was neither reported to the department nor corrective action taken.
45 (3) In addition to or in lieu of any applicable denial, suspension or
46 revocation of a license, a person may, after hearing, be subject to a civil
47 fine or administrative penalty according to section 41-1016, Idaho Code.
48 (4) The department shall retain the authority to enforce the provisions
49 of and impose any penalty or remedy authorized by this chapter and title 41,
50 Idaho Code, against any person who is under investigation for or charged with
51 a violation of this chapter or title 41, Idaho Code, even if the person's
52 license or registration has been surrendered or has lapsed by operation of
53 law.
7
1 41-5812. BOND OR LETTER OF CREDIT. Prior to issuance of a license as a
2 public adjuster and for the duration of the license, the applicant shall
3 secure evidence of financial responsibility in a format prescribed by the
4 department through a security bond or irrevocable letter of credit.
5 (1) A surety bond executed and issued by an insurer authorized to issue
6 surety bonds in this state, which bond:
7 (a) Shall be in the minimum amount of twenty thousand dollars ($20,000);
8 (b) Shall be in favor of this state and shall specifically authorize
9 recovery by the department on behalf of any person in this state who sus-
10 tained damages as the result of erroneous acts, a failure to act, convic-
11 tion of fraud, or conviction of unfair practices in his or her capacity as
12 a public adjuster; and
13 (c) Shall not be terminated unless at least thirty (30) days' prior writ-
14 ten notice will have been filed with the department and given to the
15 licensee.
16 (2) An irrevocable letter of credit issued by a qualified financial
17 institution, which letter of credit:
18 (a) Shall be in the minimum amount of twenty thousand dollars ($20,000);
19 (b) Shall be to an account within the department and subject to lawful
20 levy of execution on behalf of any person to whom the public adjuster has
21 been found to be legally liable as the result of erroneous acts, a failure
22 to act, fraudulent acts, or unfair practices in his or her capacity as a
23 public adjuster; and
24 (c) Shall not be terminated unless at least thirty (30) days' prior writ-
25 ten notice will have been filed with the department and given to the
26 licensee.
27 (3) The issuer of the evidence of financial responsibility shall notify
28 the department upon termination of the bond or letter of credit, unless other-
29 wise directed by the department.
30 (4) The department may ask for the evidence of financial responsibility
31 at any time deemed relevant.
32 (5) The authority to act as a public adjuster shall automatically termi-
33 nate if the evidence of financial responsibility terminates or becomes
34 impaired.
35 41-5813. CONTINUING EDUCATION. (1) An individual, who holds a public
36 adjuster license and who is not exempt under subsection (2) of this section,
37 shall satisfactorily complete a minimum of twenty-four (24) hours of continu-
38 ing education courses, including three (3) hours of law or ethics, reported on
39 a biennial basis in conjunction with the license renewal cycle.
40 (2) This section shall not apply to:
41 (a) Licensees not licensed for one (1) full year prior to the end of the
42 applicable continuing education biennium; or
43 (b) Licensees holding nonresident public adjuster licenses who have met
44 the continuing education requirements of their home state and whose home
45 state gives credit to residents of this state on the same basis.
46 (3) Only continuing education courses approved by the department shall be
47 used to satisfy the continuing education requirement of subsection (1) of this
48 section.
49 (4) Failure of the licensee to comply with the applicable education
50 requirement by the expiration date of the license shall be grounds for the
51 director to refuse to continue any such license. The licensee may reinstate
52 his or her license by submitting proof of all education requirements within
53 ninety (90) days from the date of expiration of the license and by submitting
54 an additional administrative penalty of one hundred dollars ($100) for a
8
1 delinquency of one (1) day to thirty (30) days, two hundred dollars ($200) for
2 a delinquency of thirty-one (31) days to sixty (60) days, and three hundred
3 dollars ($300) for a delinquency of sixty-one (61) days to ninety (90) days.
4 Following the ninetieth day from the date of nonrenewal of the license and up
5 to one (1) year from the nonrenewal date, the licensee must complete all
6 requirements for licensure including retesting, submission of a new applica-
7 tion and payment of all new licensing fees. In addition, the individual must
8 submit proof of completion of the required education requirements from the
9 licensing period in which the license was terminated. After the license has
10 been expired for one (1) year or more, the individual must reapply and retest
11 as a new applicant.
12 41-5814. PUBLIC ADJUSTER FEES. (1) A public adjuster shall not pay a com-
13 mission, service fee or other valuable consideration to a person for investi-
14 gating or settling claims in this state if that person is required to be
15 licensed under this chapter and is not so licensed.
16 (2) A person shall not accept a commission, service fee or other valuable
17 consideration for investigating or settling claims in this state if that per-
18 son is required to be licensed under this chapter and is not so licensed.
19 (3) A public adjuster may pay or assign commission, service fees or other
20 valuable consideration to persons who do not investigate or settle claims in
21 this state, unless the payment would violate section 41-1314, Idaho Code.
22 41-5815. CONTRACT BETWEEN PUBLIC ADJUSTER AND INSURED. (1) Public adjust-
23 ers shall ensure that all contracts for their services are in writing and con-
24 tain the following terms:
25 (a) Legible full name of the adjuster signing the contract, as specified
26 in department records;
27 (b) Permanent home state business address and phone number;
28 (c) Department license number;
29 (d) Title of "public adjuster contract";
30 (e) Insured's full name, street address, insurance company name and pol-
31 icy number, if known, or upon notification;
32 (f) Description of the loss and its location, if applicable;
33 (g) Description of services to be provided to the insured;
34 (h) Signatures of the public adjuster and the insured;
35 (i) Date contract was signed by the public adjuster and date the contract
36 was signed by the insured;
37 (j) Attestation language stating that the public adjuster is fully bonded
38 pursuant to state law; and
39 (k) Full salary, fee, commission, compensation or other considerations
40 the public adjuster is to receive for services.
41 (2) The contract may specify that the public adjuster shall be named as a
42 co-payee on an insurer's payment of a claim.
43 (a) If the compensation is based on a share of the insurance settlement,
44 the exact percentage shall be specified.
45 (b) Initial expenses to be reimbursed to the public adjuster from the
46 proceeds of the claim payment shall be specified by type, with dollar
47 estimates set forth in the contract and with any additional expenses first
48 approved by the insured.
49 (3) If the insurer, not later than seventy-two (72) hours after the date
50 on which the loss is reported to the insurer, either pays or commits in writ-
51 ing to pay to the insured the policy limit of the insurance policy, the public
52 adjuster shall:
53 (a) Not receive a commission consisting of a percentage of the total
9
1 amount paid by an insurer to resolve a claim;
2 (b) Inform the insured that the loss recovery amount might not be
3 increased by insurer; and
4 (c) Be entitled only to reasonable compensation from the insured for ser-
5 vices provided by the public adjuster on behalf of the insured, based on
6 the time spent on a claim and expenses incurred by the public adjuster,
7 until the claim is paid or the insured receives a written commitment to
8 pay from the insurer.
9 (4) A public adjuster shall provide the insured a written disclosure con-
10 cerning any direct or indirect financial interest that the public adjuster has
11 with any other party that is involved in any aspect of the claim, other than
12 the salary, fee, commission or other consideration established in the written
13 contract with the insured including, but not limited to, any ownership of,
14 other than as a minority stockholder, or any compensation expected to be
15 received from, any construction firm, salvage firm, building appraisal firm,
16 motor vehicle repair shop, or any other firm that provides estimates for work,
17 or that performs any work, in conjunction with damages caused by the insured
18 loss on which the public adjuster is engaged. The word "firm" shall include
19 any person.
20 (5) A public adjuster contract may not contain any contract term that:
21 (a) Allows the public adjuster's percentage fee to be collected when
22 money is due from an insurance company, but not paid, or that allows a
23 public adjuster to collect the entire fee from the first check issued by
24 an insurance company, rather than as a percentage of each check issued by
25 an insurance company;
26 (b) Requires the insured to authorize an insurance company to issue a
27 check only in the name of the public adjuster;
28 (c) Imposes collection costs or late fees; or
29 (d) Precludes a public adjuster from pursuing civil remedies.
30 (6) Prior to the signing of the contract the public adjuster shall pro-
31 vide the insured with a separate disclosure document regarding the claim proc-
32 ess that states:
33 (a) Property insurance policies obligate the insured to present a claim
34 to his or her insurance company for consideration. There are three (3)
35 types of adjusters that could be involved in that process. The definitions
36 of the three types are as follows:
37 (i) "Company adjuster" means the insurance adjusters are employees
38 of an insurance company. They represent the interest of the insurance
39 company and are paid by the insurance company. They will not charge
40 you a fee.
41 (ii) "Independent adjuster" means the insurance adjusters are hired
42 on a contract basis by an insurance company to represent the insur-
43 ance company's interest in the settlement of the claim. They are paid
44 by your insurance company. They will not charge you a fee.
45 (iii) "Public adjuster" means the insurance adjusters do not work for
46 any insurance company. They work for the insured to assist in the
47 preparation, presentation and settlement of the claim. The insured
48 hires them by signing a contract agreeing to pay them a fee or com-
49 mission based on a percentage of the settlement or other method of
50 compensation.
51 (b) The insured is not required to hire a public adjuster to help the
52 insured meet his or her obligations under the policy, but has the right to
53 do so.
54 (c) The insured has the right to initiate direct communications with the
55 insured's attorney, the insurer, the insurer's adjuster, and the insurer's
10
1 attorney, or any other person regarding the settlement of the insured's
2 claim.
3 (d) The public adjuster is not a representative or employee of the
4 insurer.
5 (e) The salary, fee, commission or other consideration is the obligation
6 of the insured, not the insurer.
7 (7) The contract shall be executed in duplicate to provide an original
8 contract to the public adjuster, and an original contract to the insured. The
9 public adjuster's original contract shall be available at all times for
10 inspection without notice by the department.
11 (8) The public adjuster shall provide the insurer a notification letter,
12 which has been signed by the insured, authorizing the public adjuster to rep-
13 resent the insured's interest.
14 (9) The public adjuster shall give the insured written notice of the
15 insured's rights as provided in this section.
16 (10) The insured has the right to rescind the contract within three (3)
17 business days after the date the contract was signed. The rescission shall be
18 in writing and mailed or delivered to the public adjuster at the address in
19 the contract within the three (3) business day period.
20 (11) If the insured exercises the right to rescind the contract, anything
21 of value given by the insured under the contract will be returned to the
22 insured within twenty-eight (28) days following the receipt by the public
23 adjuster of the cancellation notice.
24 41-5816. ESCROW OR TRUST ACCOUNTS. A public adjuster who receives,
25 accepts or holds any funds on behalf of an insured, towards the settlement of
26 a claim for loss or damage, shall deposit the funds in a noninterest bearing
27 escrow or trust account in a financial institution that is insured by an
28 agency of the federal government in the public adjuster's home state or where
29 the loss occurred.
30 41-5817. RECORD RETENTION. (1) A public adjuster shall maintain a com-
31 plete record of each transaction as a public adjuster. The records required by
32 this section shall include the following:
33 (a) Name of the insured;
34 (b) Date, location and amount of the loss;
35 (c) Copy of the contract between the public adjuster and insured;
36 (d) Name of the insurer, amount, expiration date and number of each pol-
37 icy carried with respect to the loss;
38 (e) Itemized statement of the insured's recoveries;
39 (f) Itemized statement of all compensation received by the public
40 adjuster, from any source whatsoever, in connection with the loss;
41 (g) A register of all moneys received, deposited, disbursed or withdrawn
42 in connection with a transaction with an insured, including fees, trans-
43 fers and disbursements from a trust account and all transactions concern-
44 ing all interest bearing accounts;
45 (h) Name of public adjuster who executed the contract;
46 (i) Name of the attorney representing the insured, if applicable, and the
47 name of the claims representatives of the insurance company; and
48 (j) Evidence of financial responsibility in a format prescribed by the
49 department.
50 (2) Records shall be maintained for at least five (5) years after the
51 termination of the transaction with an insured and shall be open to examina-
52 tion by the department at all times.
53 (3) Records submitted to the department in accordance with this section
11
1 that contain information identified in writing as proprietary by the public
2 adjuster shall be treated as confidential by the department pursuant to sec-
3 tion 9-340D, Idaho Code.
4 41-5818. STANDARDS OF CONDUCT OF PUBLIC ADJUSTER. (1) A public adjuster
5 is obligated, under his or her license, to serve with objectivity and complete
6 loyalty the interest of his or her client alone; and to render to the insured
7 such information, counsel and service, as within the knowledge, understanding
8 and opinion in good faith of the licensee, as will best serve the insured's
9 insurance claim needs and interests.
10 (2) A public adjuster shall not solicit, or attempt to solicit, an
11 insured during the progress of a loss-producing occurrence, as defined in the
12 insured's insurance contract.
13 (3) A public adjuster shall not permit an unlicensed employee or repre-
14 sentative of the public adjuster to conduct business for which a license is
15 required under this chapter.
16 (4) A public adjuster shall not have a direct or indirect financial
17 interest in any aspect of the claim, other than the salary, fee, commission or
18 other consideration established in the written contract with the insured,
19 unless full written disclosure has been made to the insured as set forth in
20 section 41-5815(6), Idaho Code.
21 (5) A public adjuster shall not acquire any interest in salvage of prop-
22 erty subject to the contract with the insured unless the public adjuster
23 obtains written permission from the insured after settlement of the claim with
24 the insurer as set forth in section 41-5815(4), Idaho Code.
25 (6) The public adjuster shall disclose to an insured if he or she has any
26 interest or will be compensated by any construction firm, salvage firm, build-
27 ing appraisal firm, motor vehicle repair shop or any other firm that performs
28 any work in conjunction with damages caused by the insured loss. The word
29 "firm" shall include any person.
30 (7) Any compensation or anything of value in connection with an insured's
31 specific loss that will be received by a public adjuster shall be disclosed by
32 the public adjuster to the insured in writing, including the source and amount
33 of any such compensation.
34 (8) Public adjusters shall adhere to the following general ethical
35 requirements:
36 (a) A public adjuster shall not undertake the adjustment of any claim if
37 the public adjuster is not competent and knowledgeable as to the terms and
38 conditions of the insurance coverage, or which otherwise exceeds the pub-
39 lic adjuster's current expertise;
40 (b) A public adjuster shall not knowingly make any oral or written mate-
41 rial misrepresentations or statements which are false or maliciously crit-
42 ical and intended to injure any person engaged in the business of insur-
43 ance to any insured client or potential insured client;
44 (c) No public adjuster, while so licensed by the department, may repre-
45 sent or act as a company adjuster or as an independent adjuster on the
46 same claim;
47 (d) The contract shall not be construed to prevent an insured from pursu-
48 ing any civil remedy after the three (3) business day revocation or can-
49 cellation period;
50 (e) A public adjuster shall not enter into a contract or accept a power
51 of attorney that vests in the public adjuster the effective authority to
52 choose the persons who shall perform repair work; and
53 (f) A public adjuster shall ensure that all contracts for the public
54 adjuster's services are in writing and set forth all terms and conditions
12
1 of the engagement.
2 (9) A public adjuster may not agree to any loss settlement without the
3 insured's knowledge and consent.
4 41-5819. REPORTING OF ACTIONS. (1) The public adjuster shall report to
5 the department any administrative action taken against the public adjuster in
6 another jurisdiction or by another governmental agency in this state within
7 thirty (30) days of the final disposition of the matter. This report shall
8 include a copy of the order, consent to order, or other relevant legal docu-
9 ments.
10 (2) Within thirty (30) days of the initial pretrial hearing date, the
11 public adjuster shall report to the department any criminal prosecution of the
12 public adjuster taken in any jurisdiction. The report shall include a copy of
13 the initial complaint filed, the order resulting from the hearing, and any
14 other relevant legal documents.
15 41-5820. RULES. The department may, in accordance with section 41-211,
16 Idaho Code, promulgate reasonable rules as are necessary or proper to carry
17 out the purposes of this chapter.
18 41-5821. SEVERABILITY. If any provisions of this chapter, or the applica-
19 tion of a provision to any persons or circumstances, shall be held invalid,
20 the remainder of the chapter, and the application of the provision to persons
21 or circumstances other than those to which it is held invalid, shall not be
22 affected.
23 SECTION 2. This act shall be in full force and effect on and after July
24 1, 2008. Provided however, that the provisions of section 41-5805, Idaho Code,
25 do not become effective until a state participates in the NAIC's central
26 repository for the purpose of obtaining criminal background information.
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature Second Regular Session - 2008
Moved by Goedde
Seconded by Werk
IN THE SENATE
SENATE AMENDMENT TO S.B. NO. 1397
1 AMENDMENTS TO SECTION 1
2 On page 1 of the printed bill, delete lines 27 through 29; in line 30,
3 delete "(2)" and insert: "(1)"; delete lines 32 through 40; and in line 41,
4 delete "(4)" and insert: "(2)".
5 On page 2, in line 3, delete "(5)" and insert: "(3)"; in line 11, delete
6 "(6)" and insert: "(4)"; in line 12, delete "(7)" and insert: "(5)"; and in
7 line 13, delete "(8)" and insert: "(6)".
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature Second Regular Session - 2008
IN THE SENATE
SENATE BILL NO. 1397, As Amended
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO PUBLIC ADJUSTING; AMENDING TITLE 41, IDAHO CODE, BY THE ADDITION
3 OF A NEW CHAPTER 58, TITLE 41, IDAHO CODE, TO PROVIDE FOR PURPOSE AND
4 SCOPE, TO DEFINE TERMS, TO REQUIRE A LICENSE, TO PROVIDE FOR EXCEPTIONS TO
5 LICENSING, TO PROVIDE FOR APPLICATION FOR LICENSE, TO PROVIDE FOR LICENSE
6 QUALIFICATIONS, TO PROVIDE FOR EXAMINATION, TO PROVIDE FOR EXEMPTIONS FROM
7 EXAMINATION, TO PROVIDE FOR NONRESIDENT LICENSE RECIPROCITY, TO PROVIDE
8 FOR LICENSE, TO PROVIDE FOR LICENSE DENIAL, NONRENEWAL OR REVOCATION, TO
9 REQUIRE BOND OR LETTER OF CREDIT, TO REQUIRE CONTINUING EDUCATION, TO PRO-
10 VIDE LIMITATIONS OF FEES PAID BY PUBLIC ADJUSTER, TO PROVIDE FOR CONTRACTS
11 BETWEEN PUBLIC ADJUSTERS AND INSURED, TO PROVIDE FOR ESCROW OR TRUST
12 ACCOUNTS, TO PROVIDE FOR RECORD RETENTION, TO PROVIDE STANDARDS OF CONDUCT
13 OF PUBLIC ADJUSTER, TO PROVIDE FOR REPORTING OF ACTIONS, TO GRANT AUTHOR-
14 ITY TO PROMULGATE RULES AND TO PROVIDE FOR SEVERABILITY; AND TO PROVIDE
15 FOR AN EFFECTIVE DATE WITH A CONTINGENCY.
16 Be It Enacted by the Legislature of the State of Idaho:
17 SECTION 1. That Title 41, Idaho Code, be, and the same is hereby amended
18 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
19 ter 58, Title 41, Idaho Code, and to read as follows:
20 CHAPTER 58
21 PUBLIC ADJUSTER LICENSING ACT
22 41-5801. PURPOSE AND SCOPE. This chapter governs the qualifications and
23 procedures for the licensing of public adjusters. It specifies the duties of
24 and restrictions on public adjusters, which include limiting their licensure
25 to assisting insureds in first party claims.
26 41-5802. DEFINITIONS. As used in this chapter:
27 (1) "Business entity" means a corporation, association, partnership, lim-
28 ited liability company, limited liability partnership or other legal entity.
29 (2) "Fingerprints" means an impression of the lines on the finger taken
30 for purpose of identification. The impression may be electronic or in ink con-
31 verted to electronic format.
32 (3) "Home state" means the District of Columbia or any state or territory
33 of the United States in which the public adjuster's principal place of resi-
34 dence or principal place of business is located. If neither the state in which
35 the public adjuster maintains the principal place of residence nor the state
36 in which the public adjuster maintains the principal place of business has a
37 substantially similar law governing public adjusters, the public adjuster may
38 declare another state in which it becomes licensed and acts as a public
39 adjuster to be the home state.
40 (4) "Individual" means a natural person.
41 (5) "Person" means an individual or a business entity.
2
1 (6) "Public adjuster" means any person who, for compensation or any other
2 thing of value on behalf of the insured:
3 (a) Acts or aids, solely in relation to first party claims arising under
4 insurance contracts that insure the real or personal property of the
5 insured, on behalf of an insured in negotiating for, or effecting the set-
6 tlement of, a claim for loss or damage covered by an insurance contract;
7 (b) Advertises for employment as a public adjuster of insurance claims or
8 solicits business or represents himself or herself to the public as a pub-
9 lic adjuster of first party insurance claims for losses or damages arising
10 out of policies of insurance that insure real or personal property; or
11 (c) Directly or indirectly solicits business, investigates or adjusts
12 losses, or advises an insured about first party claims for losses or dam-
13 ages arising out of policies of insurance that insure real or personal
14 property for another person engaged in the business of adjusting losses or
15 damages covered by an insurance policy, for the insured.
16 41-5803. LICENSE REQUIRED. (1) A person shall not act or hold himself out
17 as a public adjuster in this state unless the person is licensed as a public
18 adjuster in accordance with this chapter.
19 (2) A person licensed as a public adjuster shall not misrepresent to a
20 claimant that he or she is an adjuster representing an insurer in any capac-
21 ity, including acting as an employee of the insurer or acting as an indepen-
22 dent adjuster unless so appointed by an insurer in writing to act on the
23 insurer's behalf for that specific claim or purpose. A licensed public
24 adjuster is prohibited from charging that specific claimant a fee when
25 appointed by the insurer and the appointment is accepted by the public
26 adjuster.
27 41-5804. EXCEPTIONS TO LICENSING. Notwithstanding section 41-5803, Idaho
28 Code, a license as a public adjuster shall not be required of the following:
29 (1) An attorney admitted to practice in this state, when acting in his or
30 her professional capacity as an attorney;
31 (2) A producer licensed in Idaho who acts only on behalf of his or her
32 own insured and does not hold himself or herself out to the public as a public
33 adjuster;
34 (3) A person who negotiates or settles claims arising under a life or
35 health insurance policy or an annuity contract;
36 (4) A person employed only for the purpose of obtaining facts surrounding
37 a loss or furnishing technical assistance to a licensed public adjuster
38 including, but not limited to, photographers, estimators, private investigat-
39 ors, engineers and handwriting experts;
40 (5) A licensed health care provider, or employee of a licensed health
41 care provider, who prepares or files a health claim form on behalf of a
42 patient; or
43 (6) A person who settles subrogation claims between insurers.
44 41-5805. APPLICATION FOR LICENSE. (1) A person applying for a public
45 adjuster license shall make application to the department on an application
46 form prescribed by the department.
47 (2) The applicant shall declare under penalty of perjury and under pen-
48 alty of refusal, suspension or revocation of the license that the statements
49 made in the application are true, correct and complete to the best of the
50 applicant's knowledge and belief.
51 (3) In order to make a determination of license eligibility, the depart-
52 ment is authorized to require fingerprints of applicants and submit the
3
1 fingerprints and the fee required to perform the criminal history record
2 checks to the Idaho state police and the federal bureau of investigation (FBI)
3 for state and national criminal history record checks; the department shall
4 require a criminal history record check on each applicant in accordance with
5 this chapter. The department shall require each applicant to submit a full set
6 of fingerprints in order for the department to obtain and receive national
7 criminal history records from the FBI criminal justice information services
8 division.
9 (a) The department may contract for the collection, transmission and
10 resubmission of fingerprints required under this section. If the depart-
11 ment does so, the fee for collecting, transmitting and retaining
12 fingerprints shall be payable directly to the contractor by the person.
13 The department may agree to a reasonable fingerprinting fee to be charged
14 by the contractor.
15 (b) The department is authorized to receive criminal history record
16 information in lieu of the Idaho state police that submitted the
17 fingerprints to the FBI.
18 41-5806. LICENSE QUALIFICATIONS. (1) Before issuing a public adjuster
19 license to an applicant under this section, the department shall find that the
20 applicant:
21 (a) Is at least eighteen (18) years of age;
22 (b) Is eligible to designate this state as his or her home state or is a
23 nonresident who is eligible for a license under section 41-5809, Idaho
24 Code;
25 (c) Has successfully passed the public adjuster examination;
26 (d) Has not committed any act that is a ground for denial, suspension or
27 revocation of a license as set forth in section 41-5811, Idaho Code;
28 (e) Is trustworthy, reliable, and of good reputation, evidence of which
29 may be determined by the department;
30 (f) Is financially responsible to exercise the license and has provided
31 proof of financial responsibility as required in section 41-5812, Idaho
32 Code;
33 (g) Has paid the fees set forth by rule adopted pursuant to section
34 41-401, Idaho Code; and
35 (h) Maintains an office in the home state of residence with public access
36 by reasonable appointment and/or regular business hours. This includes a
37 designated office within a home state of residence.
38 (2) In addition to satisfying the requirements of subsection (1), when
39 applicable, a business entity shall:
40 (a) Designate a licensed individual public adjuster responsible for the
41 business entity's compliance with the insurance laws and rules of this
42 state;
43 (b) Designate only licensed individual public adjusters to exercise the
44 business entity's license; and
45 (c) The department may require any documents reasonably necessary to ver-
46 ify the information contained in the application.
47 41-5807. EXAMINATION. (1) An individual applying for a public adjuster
48 license under this chapter shall pass a written examination unless exempt pur-
49 suant to section 41-5808, Idaho Code. The examination shall test the knowledge
50 of the individual concerning the duties and responsibilities of a public
51 adjuster and the insurance laws and rules of this state. Examinations required
52 by this section shall be developed and conducted under rules prescribed by the
53 department.
4
1 (2) The department may make arrangements, including contracting with an
2 outside testing service, for administering examinations and collecting the
3 nonrefundable fee set forth by rule of the department.
4 (3) Each individual applying for an examination shall remit a nonrefund-
5 able fee as prescribed by the department in an amount set by rule of the
6 department adopted pursuant to section 41-401, Idaho Code.
7 (4) An individual who fails to appear for the examination as scheduled or
8 fails to pass the examination shall reapply for an examination and remit all
9 required fees and forms before being rescheduled for another examination.
10 41-5808. EXEMPTIONS FROM EXAMINATION. (1) An individual who applies for a
11 public adjuster license in this state who was previously licensed as a public
12 adjuster in another state based on a public adjuster examination shall not be
13 required to complete any prelicensing examination. This exemption is only
14 available if the person is currently licensed in that state or if the person
15 applies for a license in this state within ninety (90) days of cancellation of
16 the applicant's previous license and if the prior state issues a certification
17 that, at the time of cancellation, the applicant was in good standing in that
18 state or the state's producer database records or records maintained by the
19 national association of insurance commissioners (NAIC), its affiliates, or
20 subsidiaries, indicate that the public adjuster is or was licensed and in good
21 standing.
22 (2) A person licensed as a public adjuster in another state based on a
23 public adjuster examination who moves to this state shall make application
24 within ninety (90) days of establishing legal residence to become a resident
25 licensee pursuant to section 41-5805, Idaho Code. No prelicensing examination
26 shall be required of that person to obtain a public adjuster license.
27 (3) An individual who applies for a public adjuster license in this state
28 who was previously licensed as a public adjuster in this state shall not be
29 required to complete any prelicensing examination. This exemption is only
30 available if the application is received within twelve (12) months of the can-
31 cellation of the applicant's previous license in this state and if, at the
32 time of cancellation, the applicant was in good standing in this state.
33 (4) A licensed individual who moves and establishes residency in this
34 state must apply for a resident license within ninety (90) days of establish-
35 ing residency here and must relinquish his or her resident license in the
36 former home state.
37 41-5809. NONRESIDENT LICENSE RECIPROCITY. (1) Unless denied licensure
38 pursuant to sections 41-5810 or 41-5811, Idaho Code, a nonresident person
39 shall receive a nonresident public adjuster license if:
40 (a) The person is currently licensed as a resident public adjuster and in
41 good standing in his or her home state;
42 (b) The person has submitted the proper request for licensure, has paid
43 the fees required by rule of the department adopted pursuant to section
44 41-5806(1)(g), Idaho Code, and has provided proof of financial responsi-
45 bility as required in section 41-5812, Idaho Code;
46 (c) The person has submitted or transmitted to the department the appro-
47 priate completed application for licensure; and
48 (d) The person's home state awards nonresident public adjuster licenses
49 to residents of this state on the same basis.
50 (2) The department may verify the public adjuster's licensing status
51 through the producer database maintained by the NAIC, its affiliates, or sub-
52 sidiaries.
53 (3) As a condition to continuation of a public adjuster license issued
5
1 under this section, the licensee shall maintain a resident public adjuster
2 license in his or her home state. The nonresident public adjuster license
3 issued under this section shall terminate and be surrendered immediately to
4 the department if the home state public adjuster license terminates for any
5 reason, unless the public adjuster has been issued a license as a resident
6 public adjuster in his or her new home state. Notification to the state or
7 states where a nonresident license is issued must be made as soon as possible,
8 within thirty (30) days of the change in new state resident license. The
9 licensee shall include new and old addresses. A new state resident license is
10 required for nonresident licenses to remain valid. The new state resident
11 license must have reciprocity with the licensing nonresident state(s) for the
12 nonresident license not to terminate.
13 41-5810. LICENSE. (1) Unless denied licensure under this chapter, persons
14 who have met the requirements of this chapter shall be issued a public
15 adjuster license.
16 (2) A public adjuster license shall remain in effect unless revoked, ter-
17 minated or suspended as long as the request for renewal and the fee set forth
18 in the rule promulgated under section 41-5806(1)(g), Idaho Code, is paid and
19 any other requirements for license renewal are met by the due date.
20 (3) The licensee shall inform the department by any means acceptable to
21 the department of a change of address, change of legal name, or change of
22 information submitted on the application within thirty (30) days of the
23 change.
24 (4) A public adjuster who allows his or her license to lapse may, within
25 twelve (12) months from the due date of the renewal, reinstate his or her pub-
26 lic adjuster license upon the department's receipt of the request for renewal,
27 payment of a penalty in the amount of double the unpaid renewal fee and certi-
28 fication that all continuing education requirements have been met. The new
29 public adjuster license shall be effective the date the department receives
30 all of the above stated items required for reinstatement.
31 (5) A licensed public adjuster who is unable to comply with license
32 renewal procedures due to military service, a long-term medical disability or
33 some other extenuating circumstance, may request a waiver of those procedures.
34 The public adjuster may also request a waiver of any examination requirement,
35 fine or other sanction imposed for failure to comply with renewal procedures.
36 (6) The license shall contain the licensee's name, city and state of
37 business address, license number, the date of issuance, the expiration date
38 and any other information the department deems necessary.
39 (7) In order to assist in the performance of the department's duties, the
40 department may contract with nongovernmental entities, including the NAIC or
41 any affiliates or subsidiaries that the NAIC oversees, to perform any ministe-
42 rial functions, including the collection of fees and data, related to licens-
43 ing that the department may deem appropriate.
44 41-5811. LICENSE DENIAL, NONRENEWAL OR REVOCATION. (1) The department may
45 place on probation, suspend, revoke or refuse to issue or renew a public
46 adjuster's license or may levy a civil penalty in accordance with section
47 41-1016, Idaho Code, or any combination of actions, for any one (1) or more of
48 the following causes:
49 (a) Providing incorrect, misleading, incomplete or materially untrue
50 information in the license application;
51 (b) Violating any insurance laws, or violating any rule, regulation, sub-
52 poena or order of the department or of another state's insurance depart-
53 ment;
6
1 (c) Obtaining or attempting to obtain a license through misrepresentation
2 or fraud;
3 (d) Improperly withholding, misappropriating or converting any moneys or
4 properties received in the course of doing insurance business;
5 (e) Intentionally misrepresenting the terms of an actual or proposed
6 insurance contract or application for insurance;
7 (f) Having been convicted of a felony, or a misdemeanor which evidences
8 bad moral character, dishonesty, a lack of integrity and financial respon-
9 sibility, or an unfitness and inability to provide acceptable service to
10 the consuming public;
11 (g) Having admitted to or been found to have committed any insurance
12 unfair trade practice or insurance fraud;
13 (h) Using fraudulent, coercive or dishonest practices; or demonstrating
14 incompetence, untrustworthiness or financial irresponsibility in the con-
15 duct of business in this state or elsewhere;
16 (i) Having an insurance license, or its equivalent, denied, suspended or
17 revoked in any other state, province, district or territory;
18 (j) Forging another's name to an application for insurance or to any doc-
19 ument related to an insurance transaction;
20 (k) Cheating, including improperly using notes or any other reference
21 material, to complete an examination for an insurance license;
22 (l) Knowingly accepting insurance business from an individual who is not
23 licensed but who is required to be licensed by the department;
24 (m) Failing to comply with an administrative or court order imposing a
25 child support obligation, provided however, that nothing in this provision
26 shall be deemed to abrogate or modify chapter 14, title 7, Idaho Code; or
27 (n) Failing to pay state income tax or comply with any administrative or
28 court order directing payment of state income tax.
29 (2) The license of a business entity may be suspended, revoked or refused
30 if the department finds, after hearing, that an individual licensee's viola-
31 tion was known or should have been known by one (1) or more of the partners,
32 officers or managers acting on behalf of the business entity and the violation
33 was neither reported to the department nor corrective action taken.
34 (3) In addition to or in lieu of any applicable denial, suspension or
35 revocation of a license, a person may, after hearing, be subject to a civil
36 fine or administrative penalty according to section 41-1016, Idaho Code.
37 (4) The department shall retain the authority to enforce the provisions
38 of and impose any penalty or remedy authorized by this chapter and title 41,
39 Idaho Code, against any person who is under investigation for or charged with
40 a violation of this chapter or title 41, Idaho Code, even if the person's
41 license or registration has been surrendered or has lapsed by operation of
42 law.
43 41-5812. BOND OR LETTER OF CREDIT. Prior to issuance of a license as a
44 public adjuster and for the duration of the license, the applicant shall
45 secure evidence of financial responsibility in a format prescribed by the
46 department through a security bond or irrevocable letter of credit.
47 (1) A surety bond executed and issued by an insurer authorized to issue
48 surety bonds in this state, which bond:
49 (a) Shall be in the minimum amount of twenty thousand dollars ($20,000);
50 (b) Shall be in favor of this state and shall specifically authorize
51 recovery by the department on behalf of any person in this state who sus-
52 tained damages as the result of erroneous acts, a failure to act, convic-
53 tion of fraud, or conviction of unfair practices in his or her capacity as
54 a public adjuster; and
7
1 (c) Shall not be terminated unless at least thirty (30) days' prior writ-
2 ten notice will have been filed with the department and given to the
3 licensee.
4 (2) An irrevocable letter of credit issued by a qualified financial
5 institution, which letter of credit:
6 (a) Shall be in the minimum amount of twenty thousand dollars ($20,000);
7 (b) Shall be to an account within the department and subject to lawful
8 levy of execution on behalf of any person to whom the public adjuster has
9 been found to be legally liable as the result of erroneous acts, a failure
10 to act, fraudulent acts, or unfair practices in his or her capacity as a
11 public adjuster; and
12 (c) Shall not be terminated unless at least thirty (30) days' prior writ-
13 ten notice will have been filed with the department and given to the
14 licensee.
15 (3) The issuer of the evidence of financial responsibility shall notify
16 the department upon termination of the bond or letter of credit, unless other-
17 wise directed by the department.
18 (4) The department may ask for the evidence of financial responsibility
19 at any time deemed relevant.
20 (5) The authority to act as a public adjuster shall automatically termi-
21 nate if the evidence of financial responsibility terminates or becomes
22 impaired.
23 41-5813. CONTINUING EDUCATION. (1) An individual, who holds a public
24 adjuster license and who is not exempt under subsection (2) of this section,
25 shall satisfactorily complete a minimum of twenty-four (24) hours of continu-
26 ing education courses, including three (3) hours of law or ethics, reported on
27 a biennial basis in conjunction with the license renewal cycle.
28 (2) This section shall not apply to:
29 (a) Licensees not licensed for one (1) full year prior to the end of the
30 applicable continuing education biennium; or
31 (b) Licensees holding nonresident public adjuster licenses who have met
32 the continuing education requirements of their home state and whose home
33 state gives credit to residents of this state on the same basis.
34 (3) Only continuing education courses approved by the department shall be
35 used to satisfy the continuing education requirement of subsection (1) of this
36 section.
37 (4) Failure of the licensee to comply with the applicable education
38 requirement by the expiration date of the license shall be grounds for the
39 director to refuse to continue any such license. The licensee may reinstate
40 his or her license by submitting proof of all education requirements within
41 ninety (90) days from the date of expiration of the license and by submitting
42 an additional administrative penalty of one hundred dollars ($100) for a
43 delinquency of one (1) day to thirty (30) days, two hundred dollars ($200) for
44 a delinquency of thirty-one (31) days to sixty (60) days, and three hundred
45 dollars ($300) for a delinquency of sixty-one (61) days to ninety (90) days.
46 Following the ninetieth day from the date of nonrenewal of the license and up
47 to one (1) year from the nonrenewal date, the licensee must complete all
48 requirements for licensure including retesting, submission of a new applica-
49 tion and payment of all new licensing fees. In addition, the individual must
50 submit proof of completion of the required education requirements from the
51 licensing period in which the license was terminated. After the license has
52 been expired for one (1) year or more, the individual must reapply and retest
53 as a new applicant.
8
1 41-5814. PUBLIC ADJUSTER FEES. (1) A public adjuster shall not pay a com-
2 mission, service fee or other valuable consideration to a person for investi-
3 gating or settling claims in this state if that person is required to be
4 licensed under this chapter and is not so licensed.
5 (2) A person shall not accept a commission, service fee or other valuable
6 consideration for investigating or settling claims in this state if that per-
7 son is required to be licensed under this chapter and is not so licensed.
8 (3) A public adjuster may pay or assign commission, service fees or other
9 valuable consideration to persons who do not investigate or settle claims in
10 this state, unless the payment would violate section 41-1314, Idaho Code.
11 41-5815. CONTRACT BETWEEN PUBLIC ADJUSTER AND INSURED. (1) Public adjust-
12 ers shall ensure that all contracts for their services are in writing and con-
13 tain the following terms:
14 (a) Legible full name of the adjuster signing the contract, as specified
15 in department records;
16 (b) Permanent home state business address and phone number;
17 (c) Department license number;
18 (d) Title of "public adjuster contract";
19 (e) Insured's full name, street address, insurance company name and pol-
20 icy number, if known, or upon notification;
21 (f) Description of the loss and its location, if applicable;
22 (g) Description of services to be provided to the insured;
23 (h) Signatures of the public adjuster and the insured;
24 (i) Date contract was signed by the public adjuster and date the contract
25 was signed by the insured;
26 (j) Attestation language stating that the public adjuster is fully bonded
27 pursuant to state law; and
28 (k) Full salary, fee, commission, compensation or other considerations
29 the public adjuster is to receive for services.
30 (2) The contract may specify that the public adjuster shall be named as a
31 co-payee on an insurer's payment of a claim.
32 (a) If the compensation is based on a share of the insurance settlement,
33 the exact percentage shall be specified.
34 (b) Initial expenses to be reimbursed to the public adjuster from the
35 proceeds of the claim payment shall be specified by type, with dollar
36 estimates set forth in the contract and with any additional expenses first
37 approved by the insured.
38 (3) If the insurer, not later than seventy-two (72) hours after the date
39 on which the loss is reported to the insurer, either pays or commits in writ-
40 ing to pay to the insured the policy limit of the insurance policy, the public
41 adjuster shall:
42 (a) Not receive a commission consisting of a percentage of the total
43 amount paid by an insurer to resolve a claim;
44 (b) Inform the insured that the loss recovery amount might not be
45 increased by insurer; and
46 (c) Be entitled only to reasonable compensation from the insured for ser-
47 vices provided by the public adjuster on behalf of the insured, based on
48 the time spent on a claim and expenses incurred by the public adjuster,
49 until the claim is paid or the insured receives a written commitment to
50 pay from the insurer.
51 (4) A public adjuster shall provide the insured a written disclosure con-
52 cerning any direct or indirect financial interest that the public adjuster has
53 with any other party that is involved in any aspect of the claim, other than
54 the salary, fee, commission or other consideration established in the written
9
1 contract with the insured including, but not limited to, any ownership of,
2 other than as a minority stockholder, or any compensation expected to be
3 received from, any construction firm, salvage firm, building appraisal firm,
4 motor vehicle repair shop, or any other firm that provides estimates for work,
5 or that performs any work, in conjunction with damages caused by the insured
6 loss on which the public adjuster is engaged. The word "firm" shall include
7 any person.
8 (5) A public adjuster contract may not contain any contract term that:
9 (a) Allows the public adjuster's percentage fee to be collected when
10 money is due from an insurance company, but not paid, or that allows a
11 public adjuster to collect the entire fee from the first check issued by
12 an insurance company, rather than as a percentage of each check issued by
13 an insurance company;
14 (b) Requires the insured to authorize an insurance company to issue a
15 check only in the name of the public adjuster;
16 (c) Imposes collection costs or late fees; or
17 (d) Precludes a public adjuster from pursuing civil remedies.
18 (6) Prior to the signing of the contract the public adjuster shall pro-
19 vide the insured with a separate disclosure document regarding the claim proc-
20 ess that states:
21 (a) Property insurance policies obligate the insured to present a claim
22 to his or her insurance company for consideration. There are three (3)
23 types of adjusters that could be involved in that process. The definitions
24 of the three types are as follows:
25 (i) "Company adjuster" means the insurance adjusters are employees
26 of an insurance company. They represent the interest of the insurance
27 company and are paid by the insurance company. They will not charge
28 you a fee.
29 (ii) "Independent adjuster" means the insurance adjusters are hired
30 on a contract basis by an insurance company to represent the insur-
31 ance company's interest in the settlement of the claim. They are paid
32 by your insurance company. They will not charge you a fee.
33 (iii) "Public adjuster" means the insurance adjusters do not work for
34 any insurance company. They work for the insured to assist in the
35 preparation, presentation and settlement of the claim. The insured
36 hires them by signing a contract agreeing to pay them a fee or com-
37 mission based on a percentage of the settlement or other method of
38 compensation.
39 (b) The insured is not required to hire a public adjuster to help the
40 insured meet his or her obligations under the policy, but has the right to
41 do so.
42 (c) The insured has the right to initiate direct communications with the
43 insured's attorney, the insurer, the insurer's adjuster, and the insurer's
44 attorney, or any other person regarding the settlement of the insured's
45 claim.
46 (d) The public adjuster is not a representative or employee of the
47 insurer.
48 (e) The salary, fee, commission or other consideration is the obligation
49 of the insured, not the insurer.
50 (7) The contract shall be executed in duplicate to provide an original
51 contract to the public adjuster, and an original contract to the insured. The
52 public adjuster's original contract shall be available at all times for
53 inspection without notice by the department.
54 (8) The public adjuster shall provide the insurer a notification letter,
55 which has been signed by the insured, authorizing the public adjuster to rep-
10
1 resent the insured's interest.
2 (9) The public adjuster shall give the insured written notice of the
3 insured's rights as provided in this section.
4 (10) The insured has the right to rescind the contract within three (3)
5 business days after the date the contract was signed. The rescission shall be
6 in writing and mailed or delivered to the public adjuster at the address in
7 the contract within the three (3) business day period.
8 (11) If the insured exercises the right to rescind the contract, anything
9 of value given by the insured under the contract will be returned to the
10 insured within twenty-eight (28) days following the receipt by the public
11 adjuster of the cancellation notice.
12 41-5816. ESCROW OR TRUST ACCOUNTS. A public adjuster who receives,
13 accepts or holds any funds on behalf of an insured, towards the settlement of
14 a claim for loss or damage, shall deposit the funds in a noninterest bearing
15 escrow or trust account in a financial institution that is insured by an
16 agency of the federal government in the public adjuster's home state or where
17 the loss occurred.
18 41-5817. RECORD RETENTION. (1) A public adjuster shall maintain a com-
19 plete record of each transaction as a public adjuster. The records required by
20 this section shall include the following:
21 (a) Name of the insured;
22 (b) Date, location and amount of the loss;
23 (c) Copy of the contract between the public adjuster and insured;
24 (d) Name of the insurer, amount, expiration date and number of each pol-
25 icy carried with respect to the loss;
26 (e) Itemized statement of the insured's recoveries;
27 (f) Itemized statement of all compensation received by the public
28 adjuster, from any source whatsoever, in connection with the loss;
29 (g) A register of all moneys received, deposited, disbursed or withdrawn
30 in connection with a transaction with an insured, including fees, trans-
31 fers and disbursements from a trust account and all transactions concern-
32 ing all interest bearing accounts;
33 (h) Name of public adjuster who executed the contract;
34 (i) Name of the attorney representing the insured, if applicable, and the
35 name of the claims representatives of the insurance company; and
36 (j) Evidence of financial responsibility in a format prescribed by the
37 department.
38 (2) Records shall be maintained for at least five (5) years after the
39 termination of the transaction with an insured and shall be open to examina-
40 tion by the department at all times.
41 (3) Records submitted to the department in accordance with this section
42 that contain information identified in writing as proprietary by the public
43 adjuster shall be treated as confidential by the department pursuant to sec-
44 tion 9-340D, Idaho Code.
45 41-5818. STANDARDS OF CONDUCT OF PUBLIC ADJUSTER. (1) A public adjuster
46 is obligated, under his or her license, to serve with objectivity and complete
47 loyalty the interest of his or her client alone; and to render to the insured
48 such information, counsel and service, as within the knowledge, understanding
49 and opinion in good faith of the licensee, as will best serve the insured's
50 insurance claim needs and interests.
51 (2) A public adjuster shall not solicit, or attempt to solicit, an
52 insured during the progress of a loss-producing occurrence, as defined in the
11
1 insured's insurance contract.
2 (3) A public adjuster shall not permit an unlicensed employee or repre-
3 sentative of the public adjuster to conduct business for which a license is
4 required under this chapter.
5 (4) A public adjuster shall not have a direct or indirect financial
6 interest in any aspect of the claim, other than the salary, fee, commission or
7 other consideration established in the written contract with the insured,
8 unless full written disclosure has been made to the insured as set forth in
9 section 41-5815(6), Idaho Code.
10 (5) A public adjuster shall not acquire any interest in salvage of prop-
11 erty subject to the contract with the insured unless the public adjuster
12 obtains written permission from the insured after settlement of the claim with
13 the insurer as set forth in section 41-5815(4), Idaho Code.
14 (6) The public adjuster shall disclose to an insured if he or she has any
15 interest or will be compensated by any construction firm, salvage firm, build-
16 ing appraisal firm, motor vehicle repair shop or any other firm that performs
17 any work in conjunction with damages caused by the insured loss. The word
18 "firm" shall include any person.
19 (7) Any compensation or anything of value in connection with an insured's
20 specific loss that will be received by a public adjuster shall be disclosed by
21 the public adjuster to the insured in writing, including the source and amount
22 of any such compensation.
23 (8) Public adjusters shall adhere to the following general ethical
24 requirements:
25 (a) A public adjuster shall not undertake the adjustment of any claim if
26 the public adjuster is not competent and knowledgeable as to the terms and
27 conditions of the insurance coverage, or which otherwise exceeds the pub-
28 lic adjuster's current expertise;
29 (b) A public adjuster shall not knowingly make any oral or written mate-
30 rial misrepresentations or statements which are false or maliciously crit-
31 ical and intended to injure any person engaged in the business of insur-
32 ance to any insured client or potential insured client;
33 (c) No public adjuster, while so licensed by the department, may repre-
34 sent or act as a company adjuster or as an independent adjuster on the
35 same claim;
36 (d) The contract shall not be construed to prevent an insured from pursu-
37 ing any civil remedy after the three (3) business day revocation or can-
38 cellation period;
39 (e) A public adjuster shall not enter into a contract or accept a power
40 of attorney that vests in the public adjuster the effective authority to
41 choose the persons who shall perform repair work; and
42 (f) A public adjuster shall ensure that all contracts for the public
43 adjuster's services are in writing and set forth all terms and conditions
44 of the engagement.
45 (9) A public adjuster may not agree to any loss settlement without the
46 insured's knowledge and consent.
47 41-5819. REPORTING OF ACTIONS. (1) The public adjuster shall report to
48 the department any administrative action taken against the public adjuster in
49 another jurisdiction or by another governmental agency in this state within
50 thirty (30) days of the final disposition of the matter. This report shall
51 include a copy of the order, consent to order, or other relevant legal docu-
52 ments.
53 (2) Within thirty (30) days of the initial pretrial hearing date, the
54 public adjuster shall report to the department any criminal prosecution of the
12
1 public adjuster taken in any jurisdiction. The report shall include a copy of
2 the initial complaint filed, the order resulting from the hearing, and any
3 other relevant legal documents.
4 41-5820. RULES. The department may, in accordance with section 41-211,
5 Idaho Code, promulgate reasonable rules as are necessary or proper to carry
6 out the purposes of this chapter.
7 41-5821. SEVERABILITY. If any provisions of this chapter, or the applica-
8 tion of a provision to any persons or circumstances, shall be held invalid,
9 the remainder of the chapter, and the application of the provision to persons
10 or circumstances other than those to which it is held invalid, shall not be
11 affected.
12 SECTION 2. This act shall be in full force and effect on and after July
13 1, 2008. Provided however, that the provisions of section 41-5805, Idaho Code,
14 do not become effective until a state participates in the NAIC's central
15 repository for the purpose of obtaining criminal background information.
STATEMENT OF PURPOSE
RS17818
This legislation licenses public adjusters in Idaho. A public
adjuster is an insurance adjuster who works for an insured (rather
than an insurance company) to help evaluate and document losses to
support an insurance claim.
The legislation is taken from the National Association of Insurance
Commissioners (NAIC) model act with minor modifications to
accommodate Idaho insurance laws. Forty-two states currently license
or regulate public adjusters. Idaho is one of only eight states
without a licensing mechanism.
Unfortunately, because of ambiguity created by an Idaho Supreme Court
decision in 1994, without passage of legislation like this, it is
unclear whether public adjusters may lawfully conduct business in
Idaho. This legislation would permit public adjusters to help
insureds document losses under their own polices while providing
regulatory oversight by the Department of Insurance.
FISCAL NOTE
There will be modest increased costs to the Department of Insurance
that will be partially offset by licensing fees.
CONTACT
Name: Ken McClure
Jeremy Chou
Phone: 388-1200
STATEMENT OF PURPOSE/FISCAL NOTE S 1397