By Barrientos                                         S.B. No. 1400
       74R6787 PB-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the regulation of certain public adjusters of insurance
    1-3  claims.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 1, Chapter 407, Acts of the 63rd
    1-6  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
    1-7  Insurance Code), is amended by amending Subsection (b) and adding
    1-8  Subsections (f)-(h) to read as follows:
    1-9        (b)  "Adjuster" shall not include:
   1-10              (1)  an attorney at law who adjusts insurance losses
   1-11  from time to time and incidental to the practice of law, and who
   1-12  does not advertise or represent that the attorney <he> is an
   1-13  adjuster;
   1-14              (2)  a salaried employee of an insurer who is not
   1-15  regularly engaged in the adjustment, investigation, or supervision
   1-16  of insurance claims;
   1-17              (3)  persons employed only for the purpose of
   1-18  furnishing technical assistance to a licensed adjuster, including,
   1-19  but not limited to, photographers, estimators, private detectives,
   1-20  engineers, handwriting experts, and attorneys at law;
   1-21              (4)  a licensed agent or general agent of an authorized
   1-22  insurer who processes undisputed and/or uncontested losses for such
   1-23  insurer under policies issued by said agent or general agent;
   1-24              (5)  a person who performs clerical duties with no
    2-1  negotiations with the parties on disputed and/or contested claims;
    2-2              (6)  any person who handles claims arising under life,
    2-3  accident and health insurance policies; <or>
    2-4              (7)  a person who is employed principally as a
    2-5  right-of-way agent or right-of-way and claims agent and whose
    2-6  primary responsibility is the acquisition of easements, leases,
    2-7  permits, or other real property rights and whose claims handling
    2-8  arises out of operations under those easements, leases, permits, or
    2-9  other contracts or contractual obligations; or
   2-10              (8)  a contractor who submits an analysis of the scope
   2-11  and cost of repairs without providing any other service involving
   2-12  the adjustment or settlement of a claim.
   2-13        (f)  "Adjustment or settlement of a claim" means the
   2-14  preparation and presentation of factual documentation necessary to
   2-15  substantiate the value of damages or actual loss.  The term
   2-16  includes negotiations conducted between the parties to establish
   2-17  accurately the amount of actual damages, the cause of the damages,
   2-18  or the extent of the loss as covered by an insurance policy.
   2-19        (g)  "Public adjuster" means a person who, for compensation,
   2-20  exclusively represents one or more insureds as an adjuster of a
   2-21  first-party insurance claim for property loss or damage, other than
   2-22  a claim relating to motor vehicle insurance coverage, and who acts
   2-23  on the behalf of or aids the insured in adjusting or effecting a
   2-24  settlement through presenting, documenting, and negotiating with an
   2-25  insurer, a claim for loss of or damage to real or personal property
   2-26  or loss of income from loss of rents or business, under a policy of
   2-27  fire, allied lines, or inland marine insurance.  The term includes
    3-1  a professional loss consultant.  The term does not include an
    3-2  employee of an insured who is not available for simultaneous
    3-3  employment by another insured and is not an independent contractor.
    3-4        (h)  "Loss consultant" means a person who:
    3-5              (1)  acts as, engages, or coordinates specialized
    3-6  experts and other licensed professionals to prepare the necessary
    3-7  and required documentation to substantiate the value of a named
    3-8  insured's loss or claim; and
    3-9              (2)  performs other tasks as necessary to make the
   3-10  named insured whole after a settlement has been obtained.
   3-11        SECTION 2.  Section 2(a), Chapter 407, Acts of the 63rd
   3-12  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   3-13  Insurance Code), is amended to read as follows:
   3-14        (a)  No person shall act as or hold himself out to be an
   3-15  adjuster or public adjuster in this state unless then licensed
   3-16  therefor by this state, except that an individual, who is
   3-17  undergoing education and training as an adjuster or public adjuster
   3-18  under the direction and supervision of a licensed adjuster or
   3-19  public adjuster, may for a period not exceeding 12 months act as an
   3-20  adjuster or public adjuster without having an adjuster's or public
   3-21  adjuster's license, if at the beginning of such training period,
   3-22  the name of such trainee has been registered as such with the
   3-23  commissioner.  No license shall be required under this article of a
   3-24  nonresident insurance adjuster or public adjuster for the
   3-25  adjustment in this state of a single loss, or losses arising out of
   3-26  a catastrophe common to all such losses, or who is acting as a
   3-27  temporary substitute for a licensed adjuster or public adjuster,
    4-1  unless as outlined specifically in a separate section of this law.
    4-2        SECTION 3.  Section 3, Chapter 407, Acts of the 63rd
    4-3  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
    4-4  Insurance Code), is amended to read as follows:
    4-5        Sec. 3.  APPLICATION FOR LICENSE.  Application for a license
    4-6  as an insurance adjuster or public adjuster shall be made to the
    4-7  board upon forms as prescribed and furnished by said board.  As a
    4-8  part of, or in connection with any such application, the applicant
    4-9  shall furnish such information concerning his identity, personal
   4-10  history, experience, business record, and other pertinent facts as
   4-11  said board may reasonably require.
   4-12        SECTION 4.  Section 5, Chapter 407, Acts of the 63rd
   4-13  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   4-14  Insurance Code), is amended to read as follows:
   4-15        Sec. 5.  CATASTROPHE OR EMERGENCY ADJUSTERS.  (a)  In the
   4-16  event of a catastrophe or emergency which arises out of a disaster,
   4-17  act of God, riot, civil commotion, conflagration or other similar
   4-18  occurrence, the commissioner shall, upon application, issue an
   4-19  emergency license to persons who are residents or nonresidents of
   4-20  this state and who may or may not be otherwise licensed adjusters
   4-21  or public adjusters.  Such emergency license shall remain in force
   4-22  for a period not to exceed 90 days, unless extended for an
   4-23  additional period of 90 days by the commissioner.  The applicant
   4-24  must be certified by (i) a person licensed under the provisions of
   4-25  this Act, or by (ii) an insurer which maintains an office in this
   4-26  state and is licensed to do business in this state.  The licensed
   4-27  adjuster, public adjuster, or insurer who certifies said applicant
    5-1  under the provisions of this section of this Act shall be
    5-2  responsible for the loss or claims practices of the emergency
    5-3  license holder.
    5-4        (b)  Within five days of any applicant commencing work as an
    5-5  adjuster or public adjuster hereunder, the employer of such
    5-6  adjuster or public adjuster shall certify to the commissioner such
    5-7  application without being deemed in violation of this Act, provided
    5-8  that the commissioner may, after notice and hearing, revoke said
    5-9  emergency license upon the grounds as otherwise contained in this
   5-10  Act providing for revocation of a <an adjuster's> license.
   5-11        (c)  The fee for an emergency license shall be in an amount
   5-12  not to exceed $20 as determined by the board and shall be due and
   5-13  payable within 30 days of the issuance of such emergency license.
   5-14        SECTION 5.  Section 7, Chapter 407, Acts of the 63rd
   5-15  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   5-16  Insurance Code), is amended to read as follows:
   5-17        Sec. 7.  QUALIFICATIONS FOR <ADJUSTER'S> LICENSE.  The
   5-18  commissioner shall license as an insurance adjuster or public
   5-19  adjuster only an individual who has otherwise complied with this
   5-20  Act, and who has furnished evidence satisfactory to the board that
   5-21  the individual:
   5-22              (1)  <he> is at least 18 years of age;
   5-23              (2)  <he> is a bona fide resident of this state, or is
   5-24  a resident of a state or country which will permit residents of
   5-25  this state to act as insurance adjusters in such other state or
   5-26  country;
   5-27              (3)  if <he is> a nonresident of the United States,
    6-1  <he> has complied with all federal laws pertaining to employment or
    6-2  the transaction of business in the United States;
    6-3              (4)  <he> is a trustworthy person;
    6-4              (5)  <he> has had experience or special education or
    6-5  training with reference to the handling of loss claims under
    6-6  insurance contracts of sufficient duration and extent to make the
    6-7  individual <him> competent to fulfill the responsibilities of an
    6-8  insurance adjuster or public adjuster; and
    6-9              (6)  <he> has successfully passed an examination as
   6-10  required by the commissioner in accordance with this Act or has
   6-11  been exempted according to the provisions of this Act.
   6-12        SECTION 6.  Sections 7A(b) and (c), Chapter 407, Acts of the
   6-13  63rd Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's
   6-14  Texas Insurance Code), are amended to read as follows:
   6-15        (b)  Each adjuster and public adjuster, in order to renew a
   6-16  license issued under this article, must participate in a continuing
   6-17  education program relating to consumer protection laws, including:
   6-18              (1)  Article 21.21, Insurance Code;
   6-19              (2)  the Unauthorized Insurers False Advertising
   6-20  Process Act (Article 21.21-1, Vernon's Texas Insurance Code);
   6-21              (3)  the Unfair Claim Settlement Practices Act (Article
   6-22  21.21-2, Insurance Code);
   6-23              (4)  the Deceptive Trade Practices-Consumer Protection
   6-24  Act (Subchapter E, Chapter 17, Business & Commerce Code); and
   6-25              (5)  analogous laws as specified by the board.
   6-26        (c)  On written request of the adjuster or public adjuster,
   6-27  the board may extend the time <for the adjuster> to comply with the
    7-1  continuing education requirements of this section or may exempt the
    7-2  adjuster or public adjuster from some or all of the requirements
    7-3  for a licensing period if the board finds that the adjuster or
    7-4  public adjuster is unable to comply with the requirements because
    7-5  of illness, medical disability, or another extenuating circumstance
    7-6  beyond the control of the adjuster or public adjuster.  The
    7-7  criteria for such exemptions and extensions shall be established by
    7-8  rule.
    7-9        SECTION 7.  Sections 8(a)-(c), Chapter 407, Acts of the 63rd
   7-10  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   7-11  Insurance Code), are amended to read as follows:
   7-12        (a)  If the board considers it necessary, a special insurance
   7-13  adjuster's license or special public adjuster's license may be
   7-14  issued under this Act to any license applicant in the manner
   7-15  provided for the issuance of an insurance adjuster's license or
   7-16  public adjuster's license.
   7-17        (b)  A special <insurance adjuster's> license shall
   7-18  specifically limit the lines of insurance which may be handled by
   7-19  the licensee.
   7-20        (c)  No person who is acting under a special <insurance
   7-21  adjuster's> license may handle any other lines of insurance other
   7-22  than those lines specified in the license.
   7-23        SECTION 8.  Section 9(b), Chapter 407, Acts of the 63rd
   7-24  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   7-25  Insurance Code), is amended to read as follows:
   7-26        (b)  The advisory board is composed of nine members as
   7-27  follows:
    8-1              (1)  three <.  Three> members must be representatives
    8-2  of the general public;
    8-3              (2)  one member must be <.  The remaining members are>
    8-4  the chairman of the Joint Conference Committee on the Unauthorized
    8-5  Practice of Law of the State Bar of Texas;
    8-6              (3)  <and> two members must be persons with knowledge
    8-7  and experience in the insurance adjusting profession;
    8-8              (4)  <,> one member must be a representative of <from>
    8-9  a domestic insurance company authorized to do business in Texas;
   8-10              (5)  <,> one member must be a representative of <from>
   8-11  a foreign insurance company licensed to do business in Texas;
   8-12  <,> and
   8-13              (6)  one member must be a public adjuster <independent
   8-14  adjusters>.
   8-15        SECTION 9.  Section 10, Chapter 407, Acts of the 63rd
   8-16  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   8-17  Insurance Code), is amended to read as follows:
   8-18        Sec. 10.  EXAMINATION FOR LICENSE; EXEMPTIONS.  (a)  Each
   8-19  applicant for a license as an adjuster or public adjuster shall,
   8-20  prior to the issuance of such license, personally take and pass, to
   8-21  the satisfaction of the commissioner, an examination as a test of
   8-22  the applicant's <his> qualifications and competency.
   8-23        (b)  The <; but the> requirement of an examination shall not
   8-24  apply to any of the following:
   8-25              (1)  <an applicant who for the 90-day period next
   8-26  preceding the effective date of this Act has been principally
   8-27  engaged in the investigation, adjustment, or supervision of losses
    9-1  and who is so engaged on the effective date of this Act;>
    9-2              <(2)>  an applicant for the renewal of a license issued
    9-3  hereunder;
    9-4              (2) <(3)>  an applicant who is licensed as an insurance
    9-5  adjuster or public adjuster, as defined by this statute, in another
    9-6  state with which state a reciprocal agreement has been entered into
    9-7  by the commissioner; or
    9-8              (3) <(4)>  any person who has completed a course or
    9-9  training program in adjusting of losses as prescribed and approved
   9-10  by the commissioner and is certified to the commissioner upon
   9-11  completion of the course that such person has completed said course
   9-12  or training program, and has passed an examination testing the
   9-13  person's <his> knowledge and qualification, as prescribed by the
   9-14  commissioner.
   9-15        SECTION 10.  Section 11(a), Chapter 407, Acts of the 63rd
   9-16  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   9-17  Insurance Code), is amended to read as follows:
   9-18        (a)  Each examination for a license as an adjuster or public
   9-19  adjuster shall be as the board may prescribe and shall be of
   9-20  sufficient scope reasonably to test the applicant's knowledge
   9-21  relative to the kinds of insurance which may be dealt with under
   9-22  the license applied for, and of the duties and responsibilities of,
   9-23  and laws of this state, applicable to such a licensee.
   9-24        SECTION 11.  Section 12(d), Chapter 407, Acts of the 63rd
   9-25  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   9-26  Insurance Code), is amended to read as follows:
   9-27        (d)  Scheduling and administration of examinations by persons
   10-1  approved by the board pursuant to Section 10(3) <10(4)> shall be
   10-2  effected by such persons.
   10-3        SECTION 12.  Section 13, Chapter 407, Acts of the 63rd
   10-4  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   10-5  Insurance Code), is amended to read as follows:
   10-6        Sec. 13.  FORM OF <ADJUSTER'S> LICENSE.  The commissioner
   10-7  shall prescribe the form of a <the insurance adjuster's> license
   10-8  issued under this article.  The license shall contain:
   10-9              (1)  the name of the insurance adjuster or public
  10-10  adjuster and the address of the license holder's <his> place of
  10-11  business;
  10-12              (2)  date of issuance and date of expiration of the
  10-13  license; and
  10-14              (3)  for an insurance adjuster, the firm or insurer
  10-15  with whom insurance adjuster is employed at time license is issued.
  10-16        SECTION 13.  Section 14(a), Chapter 407, Acts of the 63rd
  10-17  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
  10-18  Insurance Code), is amended to read as follows:
  10-19        (a)  The commissioner shall collect in advance the following
  10-20  nonrefundable fees for a <an adjuster's> license and examination:
  10-21              (1)  Insurance adjuster's or public adjuster's license,
  10-22  each two years, a fee in an amount not to exceed $50 as determined
  10-23  by the board, plus a fee equal to one-half of the original license
  10-24  fee if the license is expired for not more than 90 days; and
  10-25              (2)  For each examination, if given by the board, a fee
  10-26  in an amount not to exceed $50 as determined by the board.
  10-27        SECTION 14.  Section 15, Chapter 407, Acts of the 63rd
   11-1  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   11-2  Insurance Code), is amended to read as follows:
   11-3        Sec. 15.  PLACE OF BUSINESS.  Every licensed adjuster and
   11-4  public adjuster shall have and maintain in this state a place of
   11-5  business accessible to the public.  Such place of business shall be
   11-6  located where the adjuster or public adjuster principally conducts
   11-7  transactions under the <his> license.  The address of the <his>
   11-8  place of business shall appear on all licenses of the licensee, and
   11-9  the licensee shall promptly notify the commissioner of any change
  11-10  thereof.
  11-11        SECTION 15.  Section 16, Chapter 407, Acts of the 63rd
  11-12  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
  11-13  Insurance Code), is amended to read as follows:
  11-14        Sec. 16.  EXPIRATION AND RENEWAL OF LICENSES.  (a)  Except as
  11-15  may be provided by a staggered renewal system adopted under Article
  11-16  21.01-2, Insurance Code, an adjuster's license and a public
  11-17  adjuster's license expire <expires> two years after the date of
  11-18  issuance.
  11-19        (b)  Subject to the right of the commissioner to suspend,
  11-20  revoke, or refuse to renew a <an adjuster's> license, any such
  11-21  license may be renewed by filing, on the form prescribed by the
  11-22  commissioner, on or before the expiration date, a written request,
  11-23  by or on behalf of the licensee, for such renewal, accompanied by
  11-24  payment of the renewal fee.
  11-25        SECTION 16.  Section 17, Chapter 407, Acts of the 63rd
  11-26  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
  11-27  Insurance Code), is amended to read as follows:
   12-1        Sec. 17.  DENIAL, SUSPENSION, OR REVOCATION OF LICENSE.
   12-2  (a)  The department may discipline an adjuster or public adjuster
   12-3  or deny an application under Section 5, Article 21.01-2, Insurance
   12-4  Code, for any of the following causes:
   12-5              (1)  for any cause for which issuance of the license
   12-6  could have been refused had it been existent and been known to the
   12-7  board;
   12-8              (2)  if the applicant or licensee willfully violates or
   12-9  knowingly participates in the violation of any provision of this
  12-10  Act;
  12-11              (3)  if the applicant or licensee has obtained or
  12-12  attempted to obtain any such license through willful
  12-13  misrepresentation or fraud, or has failed to pass any examination
  12-14  required under this Act;
  12-15              (4)  if the applicant or licensee has misappropriated,
  12-16  or converted to the applicant's or licensee's own use, or has
  12-17  illegally withheld moneys required to be held in a fiduciary
  12-18  capacity;
  12-19              (5)  if the applicant or licensee has, with intent to
  12-20  deceive, materially misrepresented the terms or effect of an
  12-21  insurance contract, or has engaged in any fraudulent transactions;
  12-22  or
  12-23              (6)  if the applicant or licensee is convicted, by
  12-24  final judgment, of a felony.
  12-25        (b)  An applicant or licensee whose license application or
  12-26  license has been denied, refused, or revoked under this section may
  12-27  not apply for any license as an insurance agent or as an adjuster
   13-1  or public adjuster before the first anniversary of the effective
   13-2  date of the denial, refusal, or revocation, or, if the applicant or
   13-3  licensee seeks judicial review of the denial, refusal, or
   13-4  revocation, before the first anniversary of the date of the final
   13-5  court order or decree affirming that action.  The commissioner may
   13-6  deny an application timely filed if the applicant does not show
   13-7  good cause why the denial, refusal, or revocation of the previous
   13-8  license application or license should not be considered a bar to
   13-9  the issuance of a new license.  This subsection does not apply to
  13-10  an applicant whose license application was denied for failure to
  13-11  pass a required written examination.
  13-12        SECTION 17.  Section 18, Chapter 407, Acts of the 63rd
  13-13  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
  13-14  Insurance Code), is amended to read as follows:
  13-15        Sec. 18.  AUTOMATIC REVOCATION.  The commissioner may revoke
  13-16  or refuse to renew any license of an adjuster or public adjuster
  13-17  immediately and without hearing, upon the licensee's conviction of
  13-18  a felony, by final judgment, in any court of competent
  13-19  jurisdiction.
  13-20        SECTION 18.  Section 21, Chapter 407, Acts of the 63rd
  13-21  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
  13-22  Insurance Code), is amended to read as follows:
  13-23        Sec. 21.  REPEAL.  All laws and parts of laws in conflict
  13-24  with this Act are hereby repealed.  <Upon the passage of this Act
  13-25  the provisions of The Private Investigators and Private Security
  13-26  Agencies Act, as amended (Article 4413(29bb), Vernon's Texas Civil
  13-27  Statutes), will have no applicability to insurance adjusters
   14-1  licensed pursuant to this Act.  Article 19.01(3), Title 122-A,
   14-2  Taxation--General, Revised Civil Statutes of Texas, 1925, as
   14-3  amended, is hereby expressly repealed.>
   14-4        SECTION 19.  Section 23, Chapter 407, Acts of the 63rd
   14-5  Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's Texas
   14-6  Insurance Code), is amended to read as follows:
   14-7        Sec. 23.  DUPLICATE LICENSE; FEE.  The Commissioner of
   14-8  Insurance shall collect in advance from adjusters and public
   14-9  adjusters requesting duplicate licenses a fee not to exceed $20.
  14-10  The State Board of Insurance shall determine the amount of the fee.
  14-11        SECTION 20.  Chapter 407, Acts of the 63rd Legislature,
  14-12  Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
  14-13  Code), is amended by adding Section 24 to read as follows:
  14-14        Sec. 24.  PUBLIC ADJUSTERS; AUTHORIZED ACTIVITIES.  (a)  In
  14-15  addition to any other activity authorized under this article, a
  14-16  licensed public adjuster may advise an insured:
  14-17              (1)  regarding procedures relevant to settling a claim;
  14-18              (2)  whether a settlement is adequate to make the
  14-19  insured whole after the loss; and
  14-20              (3)  to seek the services of an attorney.
  14-21        (b)  A public adjuster may not accept a settlement without
  14-22  the permission of the insured.
  14-23        (c)  A public adjuster may act as a consultant to an attorney
  14-24  who represents an insured, but may not act in the capacity of an
  14-25  attorney unless licensed to practice law.
  14-26        SECTION 21.  (a)  Except as provided by Subsection (b) of
  14-27  this section, this Act takes effect September 1, 1995.
   15-1        (b)  A person is not required to hold a license under Chapter
   15-2  407, Acts of the 63rd Legislature, Regular Session, 1973 (Article
   15-3  21.07-4, Vernon's Texas Insurance Code), as amended by this Act, to
   15-4  practice as a public adjuster until January 1, 1996.
   15-5        SECTION 22.  The importance of this legislation and the
   15-6  crowded condition of the calendars in both houses create an
   15-7  emergency and an imperative public necessity that the
   15-8  constitutional rule requiring bills to be read on three several
   15-9  days in each house be suspended, and this rule is hereby suspended.