AAICP FEDERAL PRIORITIES
The Claims Licensing Advancement for Interstate Matters (CLAIM) Act
Background
In today’s marketplace, independent claims adjusters handle the majority of the nation’s insurance claims and are relied upon by claimants and insurers alike. Responding to the needs of consumers quickly and efficiently requires flexibility and mobility to apply the right expertise to adjusting losses from natural disasters or individual accidents especially in cases occurring across state lines in today’s global market.
Unfortunately, a patchwork of often conflicting state laws frustrates interstate claims adjusting and prevents the most efficient, timely, and cost-effective customer service across state lines, whether for workers’ compensation, disability, residential, auto, crop, or other claims.
The Problem
The complex array of state laws and regulations can frustrate qualified out-of-state adjusters. Especially in this age of advanced telecommunications, these adjusters otherwise would be able to meet customer needs over the phone and online across state lines, including from home and while traveling.
Currently, claims adjusters have to deal with inefficiencies and outdated restrictions that impose otherwise avoidable costs that ultimately affect consumers.
What is outdated and inefficient with the current insurance claims process?
- Residency Restrictions: At least two jurisdictions refuse to license an adjuster who is not a resident of that jurisdiction. Such restrictions are likely unconstitutional under the Interstate Commerce Clause.
- In-state Office Requirement: Several states require a physical business location for adjusters operating within the state, despite the fact that there is no need for an adjuster to have office space in a state to effectively and efficiently adjust claims within that state.
- Refusal to Recognize Licensing Reciprocity: At least nine states do not grant reciprocity for out-of-state adjusters who have passed the licensing exam in their designated home states (so designated because their state of residence does not require licensing).
- Refusal to Adopt Uniform Application: Eleven states use the uniform application for adjuster licenses developed by the National Association of Insurance Commissioners.
- Refusal to Accept Online Applications: Fourteen states do not allow for online submissions of applications for nonresident adjuster licenses. Thirteen states do not allow for electronic submissions of renewal forms.
- Impediments to Adjusting Disaster Claims: Despite the need for disaster-ravaged consumers to have their claims adjusted quickly, several states require time-consuming, case-by-case state approval before nonresident adjusters can act in that jurisdiction.
- Discriminatory Reference Requirement: One state requires that out-of-state candidates provide certificates of character signed by “five reputable citizens of the community in which such applicant resides or transacts business, each of whom shall certify that he has personally known the person or individual for a period of at least five years…” This rule effectively denies licensure to new U.S. citizens or legal aliens, since the state in question refuses to consider certificates from persons in the applicant’s prior country of residence.
- Arbitrary Changing of Rules: An adjusting firm in a non-licensing state, recently selected another state to serve as the “designated home state” for its adjusters for the commonly accepted purpose of achieving reciprocity with other states. However, shortly after several of the firm’s adjusters passed the adopted state’s exam, the state changed its policy and refused to issue home state certifications to them. The adjusters then had to repeat the pre-licensing requirements and examinations elsewhere to qualify in other states.
- Uncertainty When Adjusting Disaster Claims: In the event of a catastrophe, it is often unclear, particularly in many states, whether temporary licenses for out-of-state adjusters are valid for a set number of days or until a disaster designation has been lifted for an area.
- Impediments to Assigning Claims: Costly, time-consuming problems also emerge when an adjuster assigns claims to a licensed adjuster in another state. For example, Adjuster #1 in Illinois may assign a Florida claim to be handled by Adjuster #2 in Florida. Adjuster #2 is properly licensed in Florida, but Adjuster #1 is not. Some then argue that, by talking over the phone to Adjuster #2 in Florida, Adjuster #1 still “handled” the Florida claim, even though the claim had been assigned to an adjuster with the proper Florida credentials. Congressional legislation could help to eliminate this ambiguity by enabling Adjuster #1 in Illinois to receive reciprocity more readily in Florida.
- Redundant Filing Requirements: Certain states, require insurers to provide names of out-of-state adjusters receiving temporary licenses to handle that insurer’s claims. However, an independent adjusting company contracting with an insurer cannot bring in out-of-state adjusters directly under that same arrangement. Instead, the insurer must file the out-of-state adjuster information on the company’s behalf. This time-consuming step benefits neither consumers, nor independent adjusters, nor the insurers who have already made the decision to delegate their adjusting responsibilities.
The Solution: THE CLAIM ACT
The CLAIM Act advances uniformity, reciprocity, and consumer protections for claims adjusting across state lines by implementing the following provisions:
- Each state has three years to work with the National Association of Insurance Commissioners (NAIC) and every other state to adopt uniform educational, training, and ethical criteria needed for the proper licensing of independent claims adjusters. The bill also calls for the NAIC to develop a multi-state exam to test those criteria. In addition, each state also has three years to work with the other states and the NAIC to adopt reciprocity standards to enable adjusters properly licensed in their designated home states to assess and settle claims across state lines without discrimination. In other words, the state-based regulation of independent adjusters remains in place, but the states must undertake needed reforms during those three years.
- After that time, if such uniformity and reciprocity has not been achieved by a certain state, then the CLAIM Act automatically authorizes independent claims adjusters to operate there, if they are properly licensed to adjust claims in their designated home state, and they have passed a multi-state adjuster exam as established by the NAIC. If the state fails to achieve uniformity and reciprocity within three years, the CLAIM Act provides needed Congressional incentives to improve state regulation of independent adjusters while giving the state-based system enough time to adopt reforms on its own.
- The CLAIM Act also will enable disaster victims to receive expedited, quality service, as adjusters who are properly licensed in their home state will be automatically authorized to adjust disaster-related claims in a Presidentially-declared disaster area.
AAICP since its inception, has been focused on introducing and advocating for enactment of legislation to resolve the current inefficiencies with the claims handling process. The CLAIM Act represents a balanced approach, enabling adjusters to handle claims more efficiently and effectively across states lines with reciprocal licensing reforms. More importantly, The CLAIM ACT protects consumers and accelerates adjusting of personal claims related to natural disasters by encouraging states to adopt uniform licensing criteria and by creating incentives for adjusters to take a multistate exam proposed by the National Association of Insurance Commissioners (NAIC).