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.