By: Barrientos S.B. No. 1167
73R4309 CAG-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of public insurance adjusters; providing
1-3 a penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter A, Chapter 21, Insurance Code, is
1-6 amended by adding Article 21.07-5 to read as follows:
1-7 Art. 21.07-5. PUBLIC INSURANCE ADJUSTERS
1-8 Sec. 1. DEFINITIONS. In this article:
1-9 (1) "Person" means a corporation, partnership,
1-10 individual, or association.
1-11 (2) "Adjustment or settlement of a claim" means
1-12 preparing and presenting factual documentation necessary to
1-13 substantiate values of damages and negotiating with an insurer in
1-14 behalf of the insured in order to accurately establish the amount
1-15 of damage, the cause of the damage, or the extent of a loss covered
1-16 by an insurance policy, including:
1-17 (A) negotiating with an insurer to determine:
1-18 (i) the proximate cause of the loss and
1-19 its relationship to the policy;
1-20 (ii) the method of repair and the per unit
1-21 cost of repair to or replacement of a structure or real or personal
1-22 property; and
1-23 (iii) the assessment of earnings loss;
1-24 (B) advising an insured in areas relevant to the
2-1 policy of insurance, its coverage, limitations, and conditions, the
2-2 appraisal process, and Article 21.55 of this code; and
2-3 (C) advising an insured to seek the services of
2-4 an attorney whenever the public adjuster believes that the need for
2-5 legal assistance is warranted.
2-6 (3) "Public adjuster" means a person who, for
2-7 compensation, represents an insured as an adjuster of first-party
2-8 property insurance claims and acts on the behalf of or aids an
2-9 insured in adjusting or effecting the settlement of a claim or
2-10 claims for loss or damage under a policy of insurance. The term
2-11 does not include:
2-12 (A) an attorney who adjusts insurance losses;
2-13 (B) an individual who only performs clerical or
2-14 technical duties;
2-15 (C) a contractor who submits a scope and cost of
2-16 repairs to an insured without providing any other services
2-17 involving the adjustment or settlement of a claim;
2-18 (D) a person employed for the purpose of
2-19 furnishing technical assistance to a public adjuster, including a
2-20 photographer, engineer, architect, accountant, or attorney;
2-21 (E) a salaried employee of an insurer regularly
2-22 engaged in the adjustment, investigation, or supervision of
2-23 insurance claims on behalf of the insurer;
2-24 (F) a licensed agent or general agent of an
2-25 insurer who processes an undisputed or uncontested claim for an
2-26 insurer under policies issued by the agent or general agent;
2-27 (G) an independent insurance adjuster who is an
3-1 authorized agent of an authorized insurer and who processes
3-2 undisputed or uncontested or disputed claims for the insurer; and
3-3 (H) a person handling claims arising under life,
3-4 accident, and health insurance policies.
3-5 Sec. 2. LICENSE REQUIRED. (a) A person may not act as or
3-6 hold himself out to be a public adjuster or an associate adjuster
3-7 unless the person holds a license issued under this article.
3-8 (b) A license issued under this article is effective for two
3-9 years from the date of issuance.
3-10 Sec. 3. QUALIFICATIONS; BOND REQUIREMENTS. (a) The
3-11 commissioner shall issue a public adjuster license to an applicant
3-12 on determining that an application is complete, that the license
3-13 fee has been paid, and that the applicant meets the requirements
3-14 for a license under this article.
3-15 (b) An applicant for a license must have:
3-16 (1) a reasonable understanding of the provisions,
3-17 terms, and conditions of insurance policies;
3-18 (2) an understanding of the insurance laws of this
3-19 state; and
3-20 (3) a good business reputation.
3-21 (c) An applicant must be of good moral character to act as a
3-22 public adjuster.
3-23 (d) An applicant must have demonstrable experience,
3-24 training, or instruction relating to the assessment of real and
3-25 personal property values and physical loss or damage to real and
3-26 personal property that may be the subject of insurance claims,
3-27 including earnings loss.
4-1 (e) An applicant must pass the examination required by
4-2 Section 14 of this article.
4-3 (f) An individual applicant must be at least 20 years of
4-4 age, be a citizen of the United States and of this state, and have
4-5 been a resident of this state for at least 12 months immediately
4-6 preceding the date of filing of the application for a license as a
4-7 public adjuster.
4-8 (g) The applicant for a license may not be licensed as an
4-9 independent or company staff adjuster under Chapter 407, Acts of
4-10 the 63rd Legislature, Regular Session, 1973 (Article 21.07-4,
4-11 Vernon's Texas Insurance Code), and its subsequent amendments.
4-12 (h) An individual applicant for a license must have held an
4-13 associate adjuster license issued under Section 8 of this article
4-14 for at least two years immediately preceding the date of the filing
4-15 of the application for a license as a public adjuster.
4-16 (i) A corporation or partnership may qualify for a license
4-17 under this article if the corporation or partnership is organized
4-18 or existing under the laws of this state and each officer,
4-19 director, and person owning 90 percent or more of the outstanding
4-20 voting securities of the corporation and each general partner of
4-21 the partnership is a licensed public adjuster under this article.
4-22 Sec. 4. BOND REQUIREMENTS FOR PUBLIC ADJUSTERS. (a) An
4-23 individual applicant must either:
4-24 (1) file a surety bond with the commissioner in the
4-25 amount of $10,000, payable to the state for the benefit of any
4-26 person recovering a judgment against the applicant and conditioned
4-27 on the faithful performance of the individual applicant's duties as
5-1 a public adjuster;
5-2 (2) file an adjuster's professional liability policy
5-3 or contract of professional liability coverage acceptable to the
5-4 commissioner, insuring the individual applicant against errors and
5-5 omissions in the amount of $10,000 or more; or
5-6 (3) deposit with the state treasurer $10,000 to be
5-7 held for the protection of a person recovering a final judgment
5-8 against the individual applicant.
5-9 (b) A corporate or partnership applicant shall file a surety
5-10 bond in the amount of $100,000 with the application for a license.
5-11 The bond must be conditioned that the bond is for the benefit of a
5-12 person having a claim against it by an insured on whose behalf the
5-13 corporation or partnership has acted as public adjuster.
5-14 (c) A bond issued under Subsection (a) or (b) of this
5-15 section shall authorize recovery by the commissioner of damages
5-16 sustained if the licensee is guilty of fraud or unfair practices in
5-17 connection with the licensee's business as a public adjuster. The
5-18 aggregate liability of the surety for damages may not exceed the
5-19 amount of the bond.
5-20 (d) A deposit with the state treasurer made under Subsection
5-21 (a) of this section may be withdrawn by the applicant only on
5-22 filing with the commissioner evidence satisfactory to the
5-23 commissioner that the applicant has withdrawn from the business of
5-24 public adjusting and has no unsecured liabilities outstanding or
5-25 that the individual applicant has provided for the protection of
5-26 any person recovering a final judgment against the applicant by
5-27 furnishing an errors and omissions policy or a bond as provided by
6-1 this section. The deposit may be withdrawn by any person or on
6-2 showing that the final judgment has been secured against the
6-3 applicant and that final judgment remains unsatisfied. A
6-4 withdrawal predicated on an unsatisfied final judgment may be made
6-5 only to the extent of the deficiency in the satisfaction of the
6-6 final judgment.
6-7 Sec. 5. CRIMINAL HISTORY BACKGROUND CHECK. The commissioner
6-8 may request a law enforcement agency to assist in a criminal
6-9 history background check on an applicant as provided by Article
6-10 1.10C of this code.
6-11 Sec. 6. NONRESIDENT LICENSE. (a) An individual who resides
6-12 outside this state and who holds a public adjuster license issued
6-13 by another state is eligible to apply for a nonresident license
6-14 under this section.
6-15 (b) Any application for a nonresident license must be
6-16 accompanied by a certificate issued by the appropriate licensing
6-17 agency in the other state that states each line of insurance for
6-18 which the applicant is qualified in the other state, provides proof
6-19 that the applicant is in good standing, and provides that the
6-20 applicant's license has never been suspended or revoked.
6-21 (c) The application must be accompanied by a list of
6-22 properties where the applicant is to adjust claims and the names
6-23 and addresses of the insureds for whom the applicant will be
6-24 working.
6-25 (d) A nonresident public adjuster is subject to any
6-26 restrictions under which a public adjuster licensed in this state
6-27 is subject to in the jurisdiction in which the nonresident
7-1 applicant resides.
7-2 (e) A nonresident license is valid for 90 days after the
7-3 date of issuance and may be renewed on application for an
7-4 additional 90 days until a claim is settled.
7-5 (f) An application fee of $250 must accompany each
7-6 application or renewal for a nonresident public adjuster license.
7-7 The application fee is nonrefundable.
7-8 (g) A nonresident public adjuster must be sponsored and
7-9 supervised by a public adjuster licensed in this state and the
7-10 application must be accompanied by the affidavit of the public
7-11 adjuster acting as the sponsor and supervisor.
7-12 (h) An application for a nonresident public adjuster license
7-13 must be submitted within 24 hours after the applicant arrives in
7-14 the state for the purpose of adjusting insurance claims.
7-15 (i) A nonresident public adjuster may not solicit business
7-16 in this state.
7-17 (j) A public adjuster who acts as the sponsor and supervisor
7-18 of the nonresident public adjuster must notify the commissioner in
7-19 writing of the sponsorship within 24 hours after the nonresident
7-20 has entered the state to act as a public adjuster. The notice must
7-21 include a copy of the nonresident's application for a license under
7-22 this section.
7-23 (k) The public adjuster who sponsors or supervises a
7-24 nonresident public adjuster may not sponsor more than two
7-25 nonresident public adjusters during the term of a nonresident's
7-26 license.
7-27 (l) Each nonresident public adjuster shall file with the
8-1 commissioner a bond equal to the bond a resident public adjuster
8-2 must file.
8-3 Sec. 7. QUALIFICATION FOR LICENSING BY RECIPROCITY. (a) To
8-4 qualify for a reciprocal license as a public adjuster, an applicant
8-5 for licensing must:
8-6 (1) submit to the commissioner a reciprocity fee as
8-7 determined by the commissioner and a completed application given
8-8 under oath, in the form prescribed by the commissioner;
8-9 (2) have possessed at the time of initial licensing as
8-10 a public adjuster other qualifications necessary to have been
8-11 eligible for licensing at that time in this state;
8-12 (3) have presented to the commissioner proof of
8-13 initial licensing by examination and proof that the license and
8-14 other license or licenses granted to the applicant by any other
8-15 state have not been suspended, revoked, canceled, surrendered, or
8-16 otherwise restricted for any reason;
8-17 (4) submit to the board a notice of sponsorship of the
8-18 applicant by a licensee of the state under whom the applicant will
8-19 practice; and
8-20 (5) satisfy any other requirement set by statute.
8-21 (b) An applicant is not eligible for licensing by
8-22 reciprocity unless the state in which the applicant was initially
8-23 licensed as a public adjuster also grants reciprocal licensing to
8-24 public adjusters duly licensed by examination in this state, under
8-25 like circumstances and conditions.
8-26 Sec. 8. ASSOCIATE ADJUSTER LICENSE. (a) An applicant for
8-27 an associate adjuster license must:
9-1 (1) be at least 18 years of age; and
9-2 (2) be a resident of this state.
9-3 (b) On payment of the application fee, the commissioner
9-4 shall issue an associate adjuster license to an applicant qualified
9-5 under this section. The commissioner may not issue a license as an
9-6 associate adjuster to a person licensed as an agent, broker,
9-7 solicitor, or surplus lines broker.
9-8 (c) A license of an associate adjuster may be renewed
9-9 annually on payment of the license renewal fee.
9-10 (d) A holder of an associate adjuster license may only
9-11 perform an activity under this article if the holder is working
9-12 under the supervision of a public adjuster.
9-13 Sec. 9. LICENSE RENEWAL. (a) A license may be renewed for
9-14 one or two years, as determined by the commissioner, by payment of
9-15 a license renewal fee as determined by the commissioner and by
9-16 filing a completed application given under oath before the
9-17 expiration date of the license. The application must state that
9-18 the requirements for renewal have been completed by the licensee
9-19 during the preceding license period.
9-20 (b) On timely receipt of the completed application, the
9-21 renewal fee, and proof of completion of any other requirements, the
9-22 commissioner shall issue a license renewal bearing the public
9-23 adjuster's license number, the period for which it is renewed, and
9-24 other information the commissioner determines necessary.
9-25 (c) If a person's license has been expired for 90 days or
9-26 less, the person may renew the license by paying to the
9-27 commissioner the required renewal fee and a fee that is one-half of
10-1 the application fee for a license.
10-2 (d) If a person's license has been expired for 90 days or
10-3 more, the person may not renew the license.
10-4 (e) At least 30 days before the expiration of a person's
10-5 license, the commissioner shall send written notice of the
10-6 impending license expiration to the person at the licensee's last
10-7 known address according to the records of the commissioner.
10-8 Sec. 10. PLACE OF BUSINESS; DISPLAY OF LICENSE. (a) A
10-9 public adjuster shall maintain a place of business accessible to
10-10 the public from which the licensee principally conducts
10-11 transactions under the license. The address of that place of
10-12 business must be listed on the application for a license or renewal
10-13 of the license and the licensee shall promptly notify the
10-14 commissioner in writing of any change of address.
10-15 (b) A public adjuster or an associate adjuster shall display
10-16 the license in a conspicuous place in the place of business in a
10-17 location customarily open to the public and shall show the license
10-18 on request to a person with whom the licensee is doing business.
10-19 (c) A copy of the license shall be carried by a public
10-20 adjuster or an associate adjuster and presented on request.
10-21 (d) A public adjuster shall keep a record of:
10-22 (1) all investigations and adjustments undertaken;
10-23 (2) any fee, commission, or other compensation
10-24 received or to be received by an adjuster for an investigation or
10-25 adjustment; and
10-26 (3) accounts for all work in progress or funds held by
10-27 the adjuster.
11-1 (e) A public adjuster shall make the records described in
11-2 Subsection (d) of this section available for examination by the
11-3 commissioner at all times, shall retain the records for at least
11-4 three years, and shall maintain the records at the adjuster's place
11-5 of business.
11-6 Sec. 11. ADJUSTER'S RIGHTS IN DEALING WITH INSURED AND
11-7 INSURER. (a) A public adjuster may, on the consent of the
11-8 adjuster's insured client, receive a limited power of attorney to
11-9 act on behalf of the insured to:
11-10 (1) give prompt notice to the insurance company or its
11-11 agent;
11-12 (2) furnish a complete inventory of damaged real and
11-13 personal property and loss of earnings, showing the quantity,
11-14 description, and amount of loss, and to attach all bills, receipts,
11-15 and related documents that justify the claims in the estimate or
11-16 inventory;
11-17 (3) provide the insurer with access to the damaged
11-18 property or to exhibit the damaged property;
11-19 (4) provide the insurer with copies of requested
11-20 records and documents;
11-21 (5) determine the repair or replacement cost of the
11-22 damaged property;
11-23 (6) determine the scope and the value of the loss as
11-24 it pertains to structure, contents, and loss of earnings;
11-25 (7) negotiate on behalf of the insured;
11-26 (8) discuss policy coverage; or
11-27 (9) inform the insured when it is necessary to seek
12-1 legal counsel.
12-2 (b) An insurer notified of the adjuster's power of attorney
12-3 shall deal with the public adjuster in the same manner as it would
12-4 with the insured.
12-5 (c) An insured shall be reimbursed for all expenses incurred
12-6 in obtaining a settlement following a loss.
12-7 (d) An insurer notified of a public adjuster's contract
12-8 shall acknowledge the contract between the public adjuster and the
12-9 insured.
12-10 Sec. 12. ADVISORY COMMITTEE. (a) The board shall appoint
12-11 an industry advisory committee to aid the commissioner in
12-12 administering this article. The industry advisory committee is
12-13 composed of five persons, including two persons licensed to
12-14 practice law in this state, one person who is an independent
12-15 adjuster for an insurance company, and two licensed public
12-16 adjusters.
12-17 (b) A member of the advisory committee serves a two-year
12-18 term. A member of the advisory committee is not entitled to
12-19 compensation but is entitled to reimbursement for reasonable and
12-20 necessary expenses incurred in performing duties as a member,
12-21 subject to any applicable limitation in the General Appropriations
12-22 Act.
12-23 (c) The advisory committee may propose reasonable rules
12-24 necessary for the proper administration of this article as it
12-25 relates to the licensing of public adjusters, including a code of
12-26 ethics to foster the education of all public adjusters concerning
12-27 the ethical, legal, and business principles that should govern
13-1 their conduct, and rules relating to the interaction between a
13-2 public adjuster and an insurance company adjuster.
13-3 Sec. 13. PENALTY. (a) A person commits an offense if the
13-4 person knowingly or intentionally violates this article.
13-5 (b) An offense under this section is a Class B misdemeanor.
13-6 Sec. 14. EXAMINATION. (a) An examination for a public
13-7 adjuster license shall be approved by the commissioner and must be
13-8 similar to the examination administered for applicants for an
13-9 adjuster license provided by Section 10, Chapter 407, Acts of the
13-10 63rd Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's
13-11 Texas Insurance Code), and its subsequent amendments.
13-12 (b) The examination shall be reviewed by the industry
13-13 advisory committee.
13-14 (c) The examination shall be offered on a monthly basis.
13-15 Sec. 15. DENIAL, SUSPENSION, OR REVOCATION OF A LICENSE.
13-16 (a) The commissioner may deny, suspend, or revoke a public
13-17 adjuster license on the following grounds:
13-18 (1) the licensee has obtained or attempted to obtain a
13-19 license through willful misrepresentation or fraud;
13-20 (2) the licensee has failed to pass a required
13-21 examination;
13-22 (3) the licensee has been convicted of a felony; or
13-23 (4) the licensee has, with the intent to deceive,
13-24 materially misrepresented the licensee's affiliation or status as a
13-25 public adjuster or associate adjuster.
13-26 (b) Proceedings for the denial, suspension, or revocation of
13-27 a license and appeals from those proceedings shall be conducted in
14-1 the manner provided for analogous proceedings under Section 18,
14-2 Chapter 407, Acts of the 63rd Legislature, Regular Session, 1973
14-3 (Article 21.07-4, Vernon's Texas Insurance Code), and its
14-4 subsequent amendments.
14-5 (c) An order suspending a public adjuster or associate
14-6 adjuster license shall specify the period of the suspension, which
14-7 may not be longer than 12 months from the date of the suspension.
14-8 The holder of a license that has been revoked or suspended shall
14-9 surrender the license to the commissioner on demand. Issuance or
14-10 reinstatement of a license may be ordered in the discretion of the
14-11 commissioner on a finding that the cause for suspension,
14-12 revocation, or refusal no longer exists.
14-13 (d) A public adjuster or associate adjuster whose license
14-14 has been revoked may not reapply for a license to act as a public
14-15 adjuster or associate adjuster until 12 months from the date of the
14-16 final order revoking the license.
14-17 Sec. 16. UNAUTHORIZED PRACTICE OF LAW. A holder of a
14-18 license, acting in strict conformity with this article, is not
14-19 engaged in the unauthorized practice of law.
14-20 Sec. 17. CONTINUING EDUCATION REQUIREMENTS. A public
14-21 adjuster shall complete 30 hours of continuing education approved
14-22 by the commissioner during each two-year licensing period. The
14-23 commissioner may approve the continuing education classes available
14-24 to an insurance company adjuster, insurance company agent, or
14-25 independent adjuster.
14-26 SECTION 2. (a) A person appointed before September 1, 1995,
14-27 to the Industry Advisory Committee as a public adjuster member is
15-1 not required to be licensed as a public adjuster under Article
15-2 21.07-5, Insurance Code, as added by this Act, but must be eligible
15-3 for a license.
15-4 (b) For two years beginning on the effective date of this
15-5 Act, the commissioner shall waive the examination requirement and
15-6 associate adjuster requirement imposed under Section 3, Article
15-7 21.07-5, Insurance Code, as added by this Act, and grant a license
15-8 under this Act to any person who applies for the exemption and
15-9 provides evidence that the person:
15-10 (1) is a licensed or registered insurance adjuster;
15-11 (2) has worked as an adjuster for one year or more
15-12 preceding the date of the application for exemption; and
15-13 (3) meets all other licensing requirements provided by
15-14 statute or rules of the State Board of Insurance.
15-15 SECTION 3. This Act takes effect September 1, 1993.
15-16 SECTION 4. The importance of this legislation and the
15-17 crowded condition of the calendars in both houses create an
15-18 emergency and an imperative public necessity that the
15-19 constitutional rule requiring bills to be read on three several
15-20 days in each house be suspended, and this rule is hereby suspended.