The Texas Insurance Adjuster Exam
Insurance Adjuster
Any person who, as an independent contractor, or as an employee of an independent contractor, adjustment bureau, association, insurance company or corporation, local recording agent, 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.
Types of adjusters (Five)
staff adjusters, independent adjusters, contractors, public adjusters, temporary/emergency licenses
Staff Adjusters
on the payroll of an insurance company and are paid a salary or the the hour
independent adjusters
usually handle claims for more than one company and receive a fee based on time and expense. May be on the payroll of an independent adjusting firm and receive an annual salary. Some are paid a percentage of the loss, and others are paid a per diem.
Contractors
may work for a company that furnishes adjusters for the handling of catastrophic losses. Paid the same as independents.
Public Adjusters
work on the behalf of the insured in negotiating a claim settlement. Requires another license.
Temporary/Emergency licenses
the Department allows temporary licenses for the purposes of training and in cases of emergencies.
-catastrophe
-five-day notice, for training: firm or person requesting the emergency or temporary license is responsible for the actions of the licensee.
Line of business adjuster licenses (Three)
adjuster-workers’ compensation, Adjuster-property and causality, Adjuster- all lines
Adjuster-workers’ compensation
allows a person to adjust and/or supervise all workers’ compensation, employers liability, US Longshore and Harbor Workers’ Compensation Act, Jones Act, and all other federal acts.
Adjuster-property and casualty
allows a person to adjust and/or supervise claims in all areas of property and casualty insurance except workers’ compensation.
Adjuster-all lines
The license allows a person to adjust and/or supervise claims in all lines of insurance included in both workers’ compensation and property and casualty.
The insurance industry is regulated by who?
Texas Department of Insurance
Texas Department of Insurance
approves the wording of most of the policies issued in the state, regulates the pricing, and controls the licensing of all insurance agents and adjusters doing business in Texas.
Insurance companies are categorized by domicile (Three)
Domestic, foreign, alien
Domestic
an insurer organized, admitted, and writing insurance in Texas
Foreign
an insurer domiciled outside the state where it writes insurance
Alien
an insurance company organized and domiciled outside the US
The CEO of the Texas Department of Insurance is the and is appointed by the _
Commissioner, Governor
Basic qualifications to be an adjuster in Texas: (Six)
18 years old, citizen of Texas or approved by home state, nonresidents must comply with employment laws, trustworthy, sufficient training, passed examination
Four steps to obtaining the license
obtain a certificate- successful completion of the course
Submit fingerprints as a means of identification
Submit an application (completed and notarized)
Fee
Exemptions – the following persons are exempted from the requirement of an adjuster’s examination or reexamination
CPCU, AIC, a person whose adjuster’s license has expired within a period of less than one year
Maintenance and duration of license
Maintain a place of business (if this changes, 30 days to notify the Commissioner)
Renewal Fees- expires at 2 year anniversary
- adjusters may renew a license that has expired within less than 90 days, 50% penalty – not licensed until renewed
if a year passes, the whole process must be repeated
Out of State Licenses- go through the same process, and be approved by by home state OR the commissioner may waive the license requirement if other state license is substantially equivalent
Continuing Ed. (maintenance for license)
30 hours of continuing ed. for every two-year-cycle.
-15 in classroom
-2 ethic hours
Powers of the Commissioner (Three primary)
policing authority, audit, disciplinary actions
policing authority (Powers of the Comm)
the commissioner of Insurance has authority, under the Texas Insurance Code as a regulator of the insurance industry, to police the activities of insurance companies admitted to operate in Texas as well as insurance agents and adjusters
Audit (Powers of the Comm)
Commissioner is required to audit all admitted insurance companies at least once every 3 years. Newly admitted insurance companies must be audited once a year for the first three years.
Insurance company pays for the audit
The commissioner can take the following disciplinary actions upon 10 days notice and appropriate hearing: (eight listed)
- Issue subpoenas
-Issue cease and desist orders
-Levy fines up to 25000
-Revoke licenses
-Suspend licenses
-Refuse to renew licenses
-Investigate violations of the Texas Insurance Code and suspected fraud
-Refer cases to the Attorney General for prosecution
The Commissioner may deny, suspend, revoke, or refuse to renew any adjuster’s license for any of the following causes: (Seven)
-for any cause for which issuance of the license could have been refused had it been existent and known
-if the licensee willfully violates or knowingly participates in the violation of the Unfair Claims Practices Act
-if the licensee has obtained or attempted to obtain any such license though willful misrepresentation or fraud or has failed to pass any examination required
-if the licensee has misappropriated, converted to his own use, or illegally withheld moneys required to be held in a fiduciary capacity
-if the licensee misrepresented the terms of the insurance contract or engaged in fraud.
-If a licensee is convicted of a felony
-if a licensee is incompetent, untrustworthy, or a source of injury to the public
Texas Deceptive Trade Practices Act (DTPA)
a deceptive trade practice occurs in any commercial transaction in which the seller, acting knowingly or intentionally, causes provable mental anguish and/or economic damages to the consumer
Recovery: the plaintiff, who must be in the status of consumer, can recover, upon a decision of the court, for that mental anguish and up to three times the economic damages.
Federal Regulation- Fraud and False Statements Act
A person who transacts insurance in interstate commerce and who intentionally makes false material statements in connection with financial reports or documents presented to insurance regulators or their deputies appointed to investigate the person, and to influence the actions of such officials, is subject to the following penalties:
-fine
-imprisonment for up to 10 years (can be ordered for up to 15 years)
-both
officers, directors, agents, and employees of an insurance company are subject to the same fines for similar reasons
-if the amount embezzled does not exceed 5K, the perpetrator will be fined, imprisoned for one year, or both
The Attorney General may also prosecute: subject to 50K for each violation or the amount of compensation that the person received or offered for the prohibited conduct, which is greater.
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