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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 - 2008IN 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 - 2008Moved 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 - 2008IN 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