National Association of Insurance Commissioners Working Group Reviews Unlicensed Practice of Public Adjusting
Aug 25, 2016
Utilizing managed repair programs for property claims and using contractors controlled by claims organizations to provide property damage repair services could constitute an impermissible conflict of interest and a potential harm to insurance customers, the National Association of Public Insurance Adjusters (“NAPIA”) told the National Association of Insurance Commissioners (“NAIC”) in a letter earlier this year requesting an immediate review of the situation.
While directing claimants to preferred vendor contractors has been prevalent in the automobile industry for years, NAPIA said, what has not been seen until recently is ” . . . contractors being owned or controlled by insurance organizations, such as claims adjustment companies who already have relationships with the very insurers they are now servicing as contractors.”
“It brings new validity to the question of whether ‘independent’ adjusters who perform claims services for the industry really can be independent when they are part of the claims process,” wrote NAPIA President R. Scott deLuise in his April 2016 letter to the NAIC.
In testimony given before the NAIC in 2012, NAPIA Past President Ronald J. Papa urged that an “aggressive crackdown on UPPA (the unlicensed practice of public adjusting) is needed now if the consumer is to be protected, especially in times of catastrophes.”
In response, the NAIC has created a Public Adjuster Working Group Chaired by Oklahoma Insurance Commissioner John Doak under the auspices of the Property and Casualty Insurance Committee.
The Working Group met on August 22, 2016 and reviewed requests from NAPIA to address the UPPA problem, which NAPIA called ” . . . a direct assault on insurance consumers as policyholders and claimants, insurance companies and certainly law-abiding, fully licensed and professional public insurance adjusters.”
In a 2014 letter to the NAIC, the NAPIA urged the improvement of regulators’ enforcement capabilities and tools, as well as enhancement of the NAIC’s Public Adjuster Model Act, which was effectuated in 2006. Ways insurance regulators could better interface with law enforcement and the evaluation of questionable practices by insurer managed property repair programs were among the other suggestions.
“The unauthorized practice of public adjusting continues to serve as a parasitic force within the industry, preying upon an unwitting consumer population by offering deals that are simply too good to be true,” Papa said in 2012. “A critical element missing in the war on UPPA is the insurer’s direct engagement on it.”
At its meeting this week, the NAIC’s Public Adjuster Working Group reviewed the NAPIA requests, as well as the NAIC’s reference documents on the licensing of public adjusters. The Working Group also discussed the results of a state-by-state regulator survey pertaining to public adjuster oversight.
To access the meeting materials, click on the hyperlinks below.
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