MISSISSIPPI LEGISLATURE

2006 Regular Session

To: Insurance

By: Representative Formby

House Bill 1217

AN ACT TO AMEND SECTIONS 83-17-401, 83-17-403, 83-17-405, 83-17-413, 83-17-415, 83-17-417, 83-17-419, 83-17-421 AND 83-17-425, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE LICENSURE AND REGULATION OF PUBLIC ADJUSTERS BY THE COMMISSIONER OF INSURANCE; TO CREATE NEW CODE SECTION 83-17-424, MISSISSIPPI CODE OF 1972, TO REQUIRE PUBLIC ADJUSTERS TO ENSURE THAT ALL CONTRACTS FOR THEIR SERVICES ARE IN WRITING AND TO REQUIRE PUBLIC ADJUSTERS TO ADHERE TO CERTAIN ETHICAL REQUIREMENTS; AND FOR RELATED PURPOSES.

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

     SECTION 1.  Section 83-17-401, Mississippi Code of 1972, is amended as follows:

     83-17-401.  As used in this article, unless the context otherwise requires:

          (a)  "Adjuster" means any person who, as an independent contractor, or as an employee of an independent contractor, adjustment bureau, association, insurance company or corporation, managing general agent or self-insured, investigates or adjusts losses on behalf of either an insurer or a self-insured, or any person who supervises the handling of claims.  "Adjuster" shall not include:

              (i)  An attorney at law who adjusts insurance losses from time to time and incidental to the practice of law, and who does not advertise or represent that he is an adjuster;

              (ii)  A salaried employee of an insurer who is regularly engaged in the adjustment, investigation or supervision of insurance claims;

              (iii)  Persons employed only for the purpose of furnishing technical assistance to a licensed adjuster, including, but not limited to, photographers, estimators, private detectives, engineers, handwriting experts and attorneys at law;

              (iv)  A licensed agent or general agent of an authorized insurer who processes undisputed or uncontested losses, or both, for such insurer under policies issued by the licensed agent or general agent;

              (v)  A person who performs clerical duties with no negotiations with the parties on disputed or contested claims, or both; or

              (vi)  Any person who handles claims arising under life, accident and health insurance policies.

          (b)  "Insurer" means any insurance company or self-insured.

          (c)  "Commissioner" means the Commissioner of Insurance.

          (d)  "Public Adjuster" means any person who contracts with an insured to investigate, estimate and assess property and casualty losses on behalf of a claimant, subject to the prohibitions provided in Section 73-3-55.

          (e)  "Claimant" is one who submits a claim for an incurred loss.

     SECTION 2.  Section 83-17-403, Mississippi Code of 1972, is amended as follows:

     83-17-403.  (1)  No person shall act as or hold himself out to be an adjuster or public adjuster in this state unless he is licensed therefor by the Commissioner of Insurance in this state, except that an individual, who is undergoing education and training as an adjuster under the direction and supervision of a licensed adjuster for a period not exceeding twelve (12) months may act as an adjuster without having an adjuster's license, if at the beginning of such training period, the name of such trainee has been registered as such with the commissioner.

     (2)  Any person who violates the provisions of this section shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than Two Hundred Fifty Dollars ($250.00) or by confinement in the county jail for not more than six (6) months, or by both such fine and confinement.

     SECTION 3.  Section 83-17-405, Mississippi Code of 1972, is amended as follows:

     83-17-405.  Application for a license as an insurance adjuster or public adjuster shall be made to the commissioner upon forms as prescribed and furnished by the commissioner.  As a part of, or in connection with, any such application, the applicant shall furnish such information concerning his identity, personal history, experience, business record and any other pertinent facts as the commissioner may reasonably require.

     SECTION 4.  Section 83-17-413, Mississippi Code of 1972, is amended as follows:

     83-17-413.  The commissioner shall license as an insurance adjuster or public adjuster only an individual who has otherwise complied with this article and who has furnished evidence satisfactory to the commissioner that:

          (a)  He is at least eighteen (18) years of age;

          (b)  He is a bona fide resident of this state, or is a resident of a state or country which will permit residents of this state to act as insurance adjusters in such other state or country;

          (c)  If he is a nonresident of the United States, he has complied with all federal laws pertaining to employment or the transaction of business in the United States;

          (d)  He is a trustworthy person;

          (e)  He has had experience or special education or training with reference to the handling of loss claims under insurance contracts of sufficient duration and extent to make him competent to fulfill the responsibilities of an insurance adjuster; and

          (f)  He has successfully passed an examination as required by the commissioner in accordance with this article or has been exempted according to the provisions of this article.

     SECTION 5.  Section 83-17-415, Mississippi Code of 1972, is amended as follows:

     83-17-415.  The commissioner shall adopt a procedure for certifying continuing education programs.  Each adjuster or public adjuster, in order to renew a license issued under this article, shall participate in a continuing education program(s) for at least twelve (12) hours each license year.

     SECTION 6.  Section 83-17-417, Mississippi Code of 1972, is amended as follows:

     83-17-417.  (1) Each applicant for a license as an adjuster or public adjuster, before the issuance of such license, shall personally take and pass, to the satisfaction of the commissioner, an examination as a test of his qualifications and competency; but the requirement of an examination shall not apply to any of the following:

          (a)  An applicant who for the one-year period next preceding the effective date of this article has been principally engaged in the investigation, adjustment or supervision of losses and who is so engaged on the effective date of this article;

          (b)  An applicant for the renewal of a license issued hereunder;

          (c)  An applicant who is licensed as an insurance adjuster, as defined by this article, in another state with which state a reciprocal agreement has been entered into by the commissioner; or

          (d)  Any person who has completed a course or training program in adjusting of losses as prescribed and approved by the commissioner and is certified to the commissioner upon completion of the course that such person has completed the course or training program, and has passed an examination testing his knowledge and qualification, as prescribed by the commissioner.

     (2)  Each examination for a license as an adjuster or public adjuster shall be as the commissioner may prescribe and shall be of sufficient scope reasonably to test the applicant's knowledge relative to the kinds of insurance which may be dealt with under the license applied for and the duties, responsibilities and laws of this state applicable to such a licensee.

     (3)  The commissioner shall prepare and make available to applicants a manual or instructions specifying in general terms the subjects which may be covered in any examination for such a license.

     SECTION 7.  Section 83-17-419, Mississippi Code of 1972, is amended as follows:

     83-17-419.  (1)  Each license issued to an adjuster or public adjuster shall expire on May 31 following the date of issue, unless prior thereto it is revoked or suspended by the commissioner.

     (2)  Each adjuster or public adjuster shall file an application for renewal of license on the form and in the manner prescribed by the commissioner for such purpose.  Upon the filing of such application for renewal of license and the payment of the required fees, the current license shall continue to be in force until the renewal license is issued by the commissioner or until the commissioner has refused for cause to issue such renewal license, as provided in this article, and has given notice of such refusal in writing to the adjuster or public adjuster.

     SECTION 8.  Section 83-17-421, Mississippi Code of 1972, is amended as follows:

     83-17-421.  (1)  A license may be refused, or a license duly issued may be suspended or revoked or the renewal thereof refused by the commissioner, or the commissioner may levy a civil penalty in an amount not to exceed One Thousand Dollars ($1,000.00) per violation and such penalty shall be deposited into the special fund of the State Treasury designated as the "Insurance Department Fund," if, after notice and hearing as hereinafter provided, he finds that the applicant for, or holder of, such license:

          (a)  Has willfully violated any provision of the insurance laws of this state; or

          (b)  Has intentionally made a material misstatement in the application for such license; or

          (c)  Has obtained, or attempted to obtain, such license by fraud or misrepresentation; or

          (d)  Has misappropriated or converted to his own use or illegally withheld money belonging to an insurer or beneficiary; or

          (e)  Has otherwise demonstrated lack of trustworthiness or competence to act as an adjuster or public adjuster; or

          (f)  Has been guilty of fraudulent or dishonest practices or has been convicted of a felony; or

          (g)  Has materially misrepresented the terms and conditions of insurance policies or contracts; or willfully exaggerated prospective returns on investment features of policies or fails to identify himself as an adjuster or public adjuster and in so doing receives a compensation for his participation in the sale of insurance; or

          (h)  Has made or issued, or caused to be made or issued, any statement misrepresenting or making incomplete comparisons regarding the terms or conditions of any insurance or annuity contract legally issued by any insurer, for the purpose of inducing or attempting to induce the owner of such contract to forfeit or surrender such contract or allow it to lapse for the purpose of replacing such contract with another; * * *

          (i)  Has obtained or attempted to obtain such license, not for the purpose of holding himself out to the general public as an adjuster or public adjuster, but primarily for the purpose of soliciting, negotiating or procuring insurance or annuity contracts covering himself or members of his family; or

          (j)  Has violated any insurance laws, or any regulation, subpoena or order of the commissioner or of another state's commissioner.

     (2)  Before any license shall be refused (except for failure to pass a required written examination) or suspended or revoked or the renewal thereof refused hereunder, the commissioner shall give notice of his intention so to do, by registered mail, to the applicant for or holder of such license and the insurer whom he represents or who desires that he be licensed, and shall set a date not less than twenty (20) days from the date of mailing such notice when the applicant or licensee and a duly authorized representative of the insurer may appear to be heard and produce evidence.  Such notice shall constitute automatic suspension of license if the person involved is a licensed adjuster or public adjuster.  In the conduct of such hearing, the commissioner or any regular salaried employee specially designated by him for such purpose shall have power to administer oaths, to require the appearance of and examine any person under oath and to require the production of books, records or papers relevant to the inquiry upon his own initiative or upon the request of the applicant or licensee.  Upon the termination of such hearing, findings shall be reduced to writing and, upon approval by the commissioner, shall be filed in his office; and notice of the findings shall be sent by registered mail to the applicant or licensee and the insurer concerned.

     (3)  Where the grounds set out in subsection (1)(d) or (1)(g) are the grounds for any hearing, the commissioner may, in his discretion in lieu of the hearing provided for in subsection (2) of this section, file a petition to suspend or revoke any license authorized hereunder in a court of competent jurisdiction of the county or district in which the alleged offense occurred.  In such cases, subpoenas may be issued for witnesses, and mileage and witness fees paid as in other cases.  All costs of such cause shall be paid by the defendant, if found guilty, and if costs cannot be made and collected from the defendant, such costs shall be assessed against the company issuing the contract involved in such cause.

     (4)  No licensee whose license has been revoked hereunder shall be entitled to file another application for a license as an adjuster or public adjuster within one (1) year from the effective date of such revocation or, if judicial review of such revocation is sought, within one (1) year from the date of final court order or decree affirming such revocation.  Such application, when filed, may be refused by the commissioner unless the applicant shows good cause why the revocation of his license shall not be deemed a bar to the issuance of a new license.

     SECTION 9.  Section 83-17-425, Mississippi Code of 1972, is amended as follows:

     83-17-425.  This article is declared to be cumulative and supplemental to all other valid statutes relating to insurance agents, solicitors, adjusters and public adjustersThe Commissioner of Insurance is directed and authorized to make such reasonable rules and regulations as may be necessary for the administration of this article.

     SECTION 10.  The following shall be codified as Section 83-17-424, Mississippi Code of 1972:

     83-17-424.  (1)  Public adjusters shall ensure that all contracts for their services are in writing, signed by the claimant and the public adjuster who solicited the contract, and are subject to the following provisions:

          (a)  No public adjuster shall charge, agree to or accept as compensation or reimbursement any payment, commission, fee or other thing of value equal to more than ten percent (10%) of any insurance settlement or proceeds;

          (b)  No public adjuster shall require, demand or accept any fee retainer, compensation, deposit or other thing of value, prior to settlement of the claims or any part thereof;

          (c)  Any costs to be reimbursed to the public adjuster out of the proceeds shall be specified by type, with dollar estimates set forth in contract;

          (d)  A public adjuster's contract with the claimant shall be revocable or cancelable by the claimant, without penalty or obligation, for at least three (3) business days after the contract is entered into.  Nothing in this provision shall be construed to prevent a claimant from pursuing any civil remedy after the three (3) business day cancellation period.

     (2)  Public adjusters shall adhere to the following ethical requirements:

          (a)  A public adjuster shall not undertake the adjustment of any claim for which the public adjuster is not currently competent and knowledgeable as to the terms and conditions of the insurance coverage, or which otherwise exceeds the public adjuster's current expertise;

          (b)  No person shall, as a public adjuster, represent any person or entity whose claim the public adjuster has previously adjusted while acting as an independent adjuster representing any insurer, either directly or through an independent adjusting firm retained by the insurer;

          (c)  A public adjuster shall not represent or imply to any client or potential client that insurers, company adjusters or independent adjusters routinely attempt to, or do in fact, deprive claimants of their full rights under an insurance policy;

          (d)  No public adjuster shall knowingly enter into a contract to adjust a residential property claim subsequent to an insurer declaring the property a total loss, unless the services to be provided by the public adjuster can reasonably be expected to result in the claimant obtaining an insurance settlement, net of the public adjuster's compensation, in excess of what the claimant would have obtained without the services of the public adjuster.

     SECTION 11.  This act shall take effect and be in force from and after May 31, 2006.