New York State’s Act 5775, which took effect Jan. 1, restricts public adjusters from receiving a referral fee or having an ownership interest in a restoration or repair company working on the claim unless such compensation to the public adjuster is stated in the contract or other written disclosure form.
American Association of Public Insurance Adjusters (AAPIA) said New York’s Act 5775 further requires that the aggregate of all fees shall not exceed the maximum compensation or fee provided for in the agreement. There is also a requirement in Act 5775 to disclose a familial relationship with someone to whom the public adjuster is referring business (applicable to a relation by blood or affinity to the second degree of consanguinity). The new law codifies New York regulators’ existing position based upon interpretation of previous law.
Additionally, two other Northeast states currently have pending bills that could affect public adjusters.
In Maryland, the state’s senate finance committee is expected to have a hearing on Jan. 16 regarding Senate Bill 97. The proposed bill would prohibit a public adjuster from paying or offering to pay valuable consideration to an insured to induce the insured to use the public adjuster. (Many other states have similar language in their laws, AAPIA said.)
And in New Jersey, there are two bills currently before the legislature and one more in committee that affect public adjusters. Senate Bill 2472 proposes a 12.5 percent fee cap on all claims. AAPIA said it has been lobbying to educate the New Jersey senate on why that fee cap would be detrimental to consumers and public adjusters. AAPIA said it is cautiously optimistic about the outcome. A companion bill, the original Assembly Bill 3519, would impose a fee cap of 12.5 percent on catastrophic losses. AAPIA said it has supported this bill as a more reasonable and consumer friendly alternative to Senate Bill 2472. There is another proposal in the works, still in committee, that would expand the prohibited acts section of the law, and impose a further ban on solicitation, AAPIA said.
Source: American Association of Public Insurance Adjusters