2007 Regular Session

To: Insurance

By: Representative Formby

House Bill 1524

(As Sent to Governor)



     SECTION 1.  As used in this act, unless the context otherwise requires:

          (a)  "Certified" means, except as used in Section 10(2) of this act, written representations addressed to the commissioner concerning the integrity, competence and qualifications of a person, in form and content satisfactory to the commissioner, or concerning other matters as the commissioner may by regulation hereafter prescribe.

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

          (c)  "Department" means the Mississippi Insurance Department.

          (d)  "Insurer" means any insurance company or self-insured person or entity.

          (e)  "Public adjuster" means any person who, for compensation or any other thing of value on behalf of the insured and subject to the prohibition provided in Section 73-3-55:

              (i)  Acts or aids, solely in relation to first party claims arising under insurance contracts that insure the real or personal property of the insured, on behalf of an insured in negotiating for, or effecting the settlement of, a claim for loss or damage covered by an insurance contract;

              (ii)  Advertises for employment as a public adjuster of insurance claims or solicits business or represents himself or herself to the public as a public adjuster of first party insurance claims for losses or damages arising out of policies of insurance that insure real or personal property; or

              (iii)  Directly or indirectly solicits business, investigates or adjusts losses, or advises an insured about first party claims for losses or damages arising out of policies of insurance that insure real or personal property for another person engaged in the business of adjusting losses or damages covered by an insurance policy, for the insured. 

     A public adjuster shall not include an attorney at law who does not advertise or represent that he is a public adjuster.

     SECTION 2.  (1)  No person shall act as or hold himself out to be a public adjuster in this state unless he is licensed therefor by the commissioner, except that an individual, who is undergoing education and training as a public adjuster under the direction and supervision of a licensed public adjuster for a period not exceeding twelve (12) months may act as a public adjuster without having a public 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 One Thousand Dollars ($1,000.00) or by confinement in the county jail for not more than one (1) year, or by both such fine and confinement.

     SECTION 3.  Application for a license as a 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.  The commissioner may waive any license requirement for an applicant with a valid license from another state having license requirements substantially equivalent to those of this state.

     SECTION 5.  In the event of a catastrophe or emergency which arises out of a disaster, Act of God, riot, civil commotion, conflagration or other similar occurrence, the commissioner, upon application, may issue an emergency license to persons who are residents or nonresidents of this state and who may or may not be otherwise licensed public adjusters.  Such emergency license shall remain in force for a period not to exceed ninety (90) days, unless extended for an additional period of ninety (90) days by the commissioner.  The applicant must be certified by (a) a person licensed under the provisions of this act, or by (b) such other person as may be approved by the commissioner.  The licensed public adjuster or other person who certifies the applicant under the provisions of this section shall be responsible for the loss or claims practices of the emergency license holder.

     Within five (5) days of any applicant beginning work as a public adjuster under this section, the application and certification provided for in the preceding paragraph shall be provided to the commissioner without such public adjuster being deemed in violation of this act, provided that the commissioner, after notice and hearing, may revoke the emergency license upon the grounds as otherwise contained in this act providing for revocation of a public adjuster’s license.

     The fee for an emergency license shall be in an amount not to exceed Fifty Dollars ($50.00) as determined by the commissioner and shall be due and payable within thirty (30) days of the issuance of such emergency license.

     SECTION 6.  The commissioner shall license as a public adjuster only an individual who has otherwise complied with this act and who has furnished evidence satisfactory to the commissioner that:

          (a)  He is at least twenty-one (21) years of age;

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

          (c)  He is a trustworthy person;

          (d)  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 a public adjuster; and

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

     SECTION 7.  The commissioner shall adopt a procedure for certifying continuing education programs for public adjusters.  Each public adjuster, in order to renew a license issued under this act, shall participate in a continuing education program(s) for at least twelve (12) hours each license year.

     SECTION 8.  (1)  Each applicant for a license as a 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 for the renewal of a license issued hereunder;

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

          (c)  Any person who has completed a course or training program in adjusting for 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 a 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 9.  (1)  Each license issued to a 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 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, prior to the expiration date, 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 act, and has given notice of such refusal in writing to the public adjuster.

     SECTION 10.  (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 Five Thousand Dollars ($5,000.00) per violation, or both, and any 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 intentionally made a material misstatement in the application for such license; or

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

          (c)  Has misappropriated or converted to his own use or illegally withheld money belonging to another person or entity; or

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

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

          (f)  Has materially misrepresented the terms and conditions of insurance policies or contracts or failed to identify himself as a public adjuster; or

          (g)  Has obtained or attempted to obtain such license for a purpose other than holding himself out to the general public as a public adjuster; or

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

     (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 certified mail, return receipt requested, to the applicant for or holder of such license, and shall set a date not less than twenty (20) days from the date of mailing such notice when the applicant or licensee may appear to be heard and produce evidence in opposition to such refusal, suspension or revocation.  Such notice shall constitute automatic suspension of license if the person involved is a licensed public adjuster.  In the conduct of such hearing, the commissioner or any regular salaried employee of the department specially designated by him for such purpose shall have the 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 certified mail, return receipt requested, to the applicant or licensee.

     (3)  Where the grounds set out in subsection (1)(c) or (1)(f) of this section 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 requesting the court 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 the finding of the court be against him.

     (4)  No licensee whose license has been revoked hereunder shall be entitled to file another application for a license as a 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.  An application filed after such one-year period shall 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 11.  Any person aggrieved by any action or decision of the commissioner under the provisions of this act may appeal therefrom to the Circuit Court of the First Judicial District of Hinds County in the manner provided by law.  The circuit court shall have the authority and jurisdiction to hear the appeal and render its decision in regard thereto in termtime or vacation.

     SECTION 12.  (1)  Public adjusters shall ensure that all contracts for their services are in writing, signed by the insured and the public adjuster who solicited the contract, and a copy of the contract shall be provided to the insured upon execution.  All such contracts shall be subject to the following provisions:

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

          (b)  No public adjuster shall require, demand or accept any fee, retainer, compensation, deposit or other thing of value, prior to partial or full settlement of a claim.

          (c)  Any costs to be reimbursed to a public adjuster out of the proceeds of a settlement shall be specified by kind and estimated amounts.

          (d)  A public adjuster’s contract with the insured shall be revocable or cancelable by the insured without cause and without penalty or obligation for at least five (5) business days after the contract is executed by the insured.  Nothing in this provision shall be construed to prevent an insured from pursuing any civil legal remedy to revoke or cancel the contract after the expiration of such cancellation period.

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

          (a)  No public adjuster shall 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 public adjuster 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 knowingly make any oral or written material misrepresentations or statements to any insured or potential insured which are false and intended to injure any person engaged in the business of insurance.

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

          (e)  A public adjuster shall advise each insured that the insured has the right to retain an attorney at law of his choice throughout the public adjuster’s investigation and adjustment of the claim.

          (f)  If the claim is not settled by the public adjuster, the public adjuster shall advise the insured that the insured has the right to retain an attorney at law of his choice.

          (g)  No public adjuster shall contract for, agree to, or receive anything of value from any attorney at law or other person acting in concert with any attorney at law (i) for referring claims to the attorney, or (ii) in connection with any claim for which the public adjuster has performed or intends to perform services.

          (h)  No public adjuster shall split any attorney’s fee with any attorney at law.

          (i)  A public adjuster shall not testify as an expert witness in any judicial or administrative proceeding while maintaining a pecuniary interest in the outcome of the proceeding, as otherwise permitted by Section 12(1)(a) of this act; provided, however, that a public adjuster may testify as an expert witness if pursuant to the terms of his contract his compensation is converted to a specified hourly rate, which rate (i) is subject to such limitations as may be prescribed by the commissioner, and (ii) is not subject to any contingencies.  In the event of a conversion of the public adjuster's contract to an hourly rate agreement, the prior fee arrangement shall be inadmissible at trial.  

     SECTION 13.  This act shall not be construed as entitling a person who is not licensed by the Mississippi Supreme Court to practice law in this state.

     SECTION 14.  This act is declared to be cumulative and supplemental to all other valid statutes relating to insurance agents, solicitors, adjusters and public adjusters.  The Commissioner of Insurance is directed and authorized to make such reasonable rules and regulations as may be necessary for the administration of this act, including, but not limited to, rules and regulations (a) establishing procedures for the filing and approval of contracts to be used by public adjusters and/or prescribing one or more model contracts for use by public adjusters, (b) regulating solicitations by public adjusters, and (c) establishing bonding and/or errors and omissions insurance requirements for public adjusters.

     SECTION 15.  This act shall take effect and be in force from and after July 1, 2007.