senate Bill S5775

Signed By Governor
2013-2014 Legislative Session

Requires public adjusters to work for the benefit of insureds and requires disclosure of conflicts of interest

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Archive: Last Bill Status - Signed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Dec 18, 2013 signed chap.546
Dec 06, 2013 delivered to governor
Jun 20, 2013 returned to senate
passed assembly
ordered to third reading rules cal.526
substituted for a6786b
Jun 18, 2013 referred to codes
delivered to assembly
passed senate
ordered to third reading cal.1468
committee discharged and committed to rules
Jun 14, 2013 referred to insurance

Votes

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Co-Sponsors

S5775 - Bill Details

See Assembly Version of this Bill:
A6786B
Law Section:
Insurance Law
Laws Affected:
Amd ยงยง2108 & 2110, Ins L

S5775 - Bill Texts

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Requires public adjusters to work for the benefit of insureds and requires disclosure of conflicts of interest.

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BILL NUMBER:S5775

TITLE OF BILL: An act to amend the insurance law, in relation to public
adjusters and payment of property/casualty claims

PURPOSE: The purpose of this bill is to clearly establish conflict of
interest standards, in statute, so that public adjusters have an affir-
mative duty to act on behalf of and in the best interests of the insured
who have retained such adjuster when settling or negotiating an insur-
ance claim for such insured. In addition, such adjuster or their close
family relatives, cannot have a financial interest in any business that
he or she recommends to an insured for the performance of services, work
or repairs associated with the insurance claim that is being negotiated,
unless such financial interest is clearly disclosed and acknowledged by
the insured in writing.

SUMMARY OF PROVISIONS:

Section 1: Amends Insurance Law section 2108 to add a new subsection
(s). This new subsection places on the public adjuster an affirmative
duty to act on behalf of and in the best interests of the insured when
settling or negotiating an insurance claim for such insured.

This new subsection prohibits a public adjuster from receiving any
compensation, either directly or indirectly, in consideration of the
referral or recommendation to an insured that such insured use another
individual or firm to perform services, work or repairs relating to any
insurance claim settled or negotiated by such public adjuster. Provided
however, that such public adjuster may receive such compensation, if
such arrangement is clearly disclosed to the insured and acknowledged by
such insured in a signed writing.

In addition, every public adjuster shall not receive any additional fee
or compensation, either directly or indirectly, other than what was
stated in the compensation agreement as it relates to the kinds of
compensation that a public adjuster may receive with regard to referrals
or performing services, work or repairs by companies owned by such
adjuster, or his or her spouse or close blood relatives. Under this
provision, an adjuster or his close family may not receive any form of
compensation, from any individual or entity in which such adjuster
recommends or suggests to an insured for the performance of services,
work or repairs related to an insurance claim that such adjuster is
involved with, unless the public adjuster discloses that relationship to
the insured in a writing that is signed by the insured. The blood
relationships covered under this bill are of blood or affinity to the
second degree of consanguinity, (i.e. cousins or more distantly related
family members).

Section 2: Amends Insurance Law section 2110 (a) to authorize the Super-
intendent to suspend or revoke the license of a public adjuster for
failing to act in the best interests of the insured or for failing to

disclose any conflict of interest that such public adjuster may have as
provided for under this bill.

JUSTIFICATION: Under current statutory law, there is not a strict
conflict of interest standard incorporated in the law to ensure that
public adjusters act in the best interests of their insured in which
they are negotiating an insurance claim. Further, under current law,
some unscrupulous public adjusters are acting in their own best finan-
cial interests and not in the best interest of their clients by refer-
ring such clients to businesses that they have a direct or indirect
financial stake in (or which are owned by their close family relatives)
to perform services, work or repairs related to an insurance claim.

This has lead to a blurring of the lines where certain public adjusters
are acting in their own best financial interests and not in the best
interest of the individuals who have retained them to obtain the best
offer possible to settle an insurance claim. Further, as these improper
transactions occur, the Department maintains that they may not be
completely able to curtail this activity or suspend or revoke the
licenses of those public adjusters that are not acting in their
insured's best interest. This bill establishes a heightened standard of
conduct for public adjusters and clearly authorizes the Department to
suspend or revoke a license of a public adjuster that violates such
trust.

LEGISLATIVE HISTORY: This bill is similar to S. 3771-A which passed the
NYS Senate in June 2013.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: January 1st of the year next succeeding the date upon
which this bill shall have become a law.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5775

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              June 14, 2013
                               ___________

Introduced  by  Sens.  KLEIN, MARTINS -- read twice and ordered printed,
  and when printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to public  adjusters  and
  payment of property/casualty claims

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  Section 2108 of the insurance law is amended by  adding  a
new subsection (s) to read as follows:
  (S) (1) EVERY PUBLIC ADJUSTER SHALL HAVE AN AFFIRMATIVE DUTY TO ACT ON
BEHALF  AND IN THE BEST INTERESTS OF THE INSURED WHEN NEGOTIATING FOR OR
EFFECTING THE SETTLEMENT OF AN INSURANCE CLAIM FOR THE INSURED OR OTHER-
WISE ACTING AS A PUBLIC ADJUSTER.
  (2) (A) NO PUBLIC ADJUSTER  SHALL  RECEIVE  ANY  COMPENSATION,  EITHER
DIRECTLY  OR  INDIRECTLY, FOR A REFERRAL OF THE INSURED TO AN INDIVIDUAL
OR ENTITY FOR SERVICES, WORK OR REPAIRS, RELATING TO ANY INSURANCE CLAIM
FOR WHICH THE PUBLIC ADJUSTER REPRESENTS THE INSURED OR  HAS  NEGOTIATED
OR  EFFECTED  A  SETTLEMENT,  UNLESS THE COMPENSATION IS PROMINENTLY AND
CLEARLY DISCLOSED TO THE INSURED IN THE WRITTEN MEMORANDUM DESCRIBED  IN
SUBSECTION (P) OF THIS SECTION.  ANY SUCH COMPENSATION RECEIVED SHALL BE
DEEMED  TO BE COMPENSATION FROM THE INSURED AND, IN COMBINATION WITH ANY
OTHER COMPENSATION RECEIVED FROM THE INSURED, SHALL NOT EXCEED THE MAXI-
MUM AMOUNT THAT THE ADJUSTER MAY CHARGE IN  ACCORDANCE  WITH  THE  REGU-
LATIONS REQUIRED PURSUANT TO SUBSECTION (P) OF THIS SECTION.
  (B)  NO  PUBLIC  ADJUSTER WHO HAS A FINANCIAL OR OWNERSHIP INTEREST IN
THE INDIVIDUAL OR ENTITY THAT PERFORMS THE SERVICES, WORK,  OR  REPAIRS,
SHALL REFER THE INSURED TO THE INDIVIDUAL OR ENTITY UNLESS THE FINANCIAL
OR  OWNERSHIP  INTEREST  IS  PROMINENTLY  AND  CLEARLY  DISCLOSED TO THE
INSURED IN THE WRITTEN MEMORANDUM DESCRIBED IN SUBSECTION  (P)  OF  THIS
SECTION.  IF A PUBLIC ADJUSTER REFERS AN INSURED TO AN INDIVIDUAL WHO IS
RELATED  TO  THE INDIVIDUAL BY BLOOD OR AFFINITY TO THE SECOND DEGREE OF
CONSANGUINITY, OR TO AN ENTITY OWNED OR CONTROLLED BY SUCH  AN  INDIVID-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08964-06-3

S. 5775                             2

UAL, FOR SERVICES, WORK, OR REPAIRS, RELATING TO ANY INSURANCE CLAIM FOR
WHICH  THE  PUBLIC  ADJUSTER REPRESENTS THE INSURED OR HAS NEGOTIATED OR
EFFECTED A SETTLEMENT, THEN  THE  PUBLIC  ADJUSTER  SHALL  DISCLOSE  THE
RELATIONSHIP  TO  THE  INSURED  IN  THE  WRITTEN MEMORANDUM DESCRIBED IN
SUBSECTION (P) OF THIS SECTION.
  S 2. Paragraphs 15 and 16 of subsection (a) of  section  2110  of  the
insurance law are renumbered paragraphs 16 and 17 and a new paragraph 15
is added to read as follows:
  (15) WHILE ACTING AS A PUBLIC ADJUSTER, THE LICENSEE HAS FAILED TO ACT
ON  BEHALF AND IN THE BEST INTERESTS OF THE INSURED WHEN NEGOTIATING FOR
OR EFFECTING THE SETTLEMENT OF AN INSURANCE CLAIM FOR  SUCH  INSURED  OR
OTHERWISE ACTING AS A PUBLIC ADJUSTER, OR HAS FAILED TO MAKE THE DISCLO-
SURES  REQUIRED  BY PARAGRAPH TWO OF SUBSECTION (S) OF SECTION TWO THOU-
SAND ONE HUNDRED EIGHT OF THIS ARTICLE;
  S 3. This act shall take effect on the first of January next  succeed-
ing the date on which it shall have become a law.

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