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COMMITTEE REPORT
May 24, 2000
S. 1163
S. Printed 5/24/00--H.
Read the first time April 25, 2000.
To whom was referred a Bill (S. 1163), to amend Title 38, Code of Laws of South Carolina, 1976, by adding Chapter 48 so as to provide for the licensing of a public insurance adjuster by the director, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass with amendment:
Amend the bill, as and if amended, page 2, beginning on line 4 by deleting Section 38-48-20 and inserting:
/Section 38-48-20. Every individual commonly called a public adjuster, adjusting losses for an insured, must be licensed by the director or his designee. These individuals shall apply for a license on a form prescribed by the director or his designee. The written examination for a public adjuster license shall be the same as that prescribed for insurance adjusters. The director or his designee shall satisfy himself that each applicant for a public adjuster's license is an individual of good moral character, has sufficient knowledge of the insurance business and duties as a public adjuster, has not violated the insurance laws of the State, and is a fit and proper individual for the position. No license may be issued pursuant to reciprocal arrangements or agreements as provided in Section 38-48-40 to a nonresident public adjuster who resides in a state which has enacted a statute requiring the licensing of public adjusters and which refuses to license South Carolina public adjusters, however a license may be issued to such applicants upon a successful completion of the examination for public adjusters prescribed by the director or his designee. Only licensed public adjusters may solicit business from an insured who has sustained an insured loss. Individuals engaged in providing public adjusting services without a license shall be deemed to be engaged in unauthorized transaction of insurance business and subject to the remedies provided in Chapter 25, as well as the disgorgement of fees or restitution to the insured for any fees paid./
Amend the bill, further, Section 38-48-30 page 2, line 26 by deleting /address/ and inserting /addresses and telephone numbers/ so when amended Section 38-48-30 reads:
/Section 38-48-30. When an individual applies for a public adjuster's license, he shall supply the department his business and residence addresses and telephone numbers. The public adjuster shall notify the department within thirty days of any change in these addresses./
Amend the bill, further, Section 38-48-50 page 2, line 37 before /fee/ by inserting /biennial/ so when amended Section 38-48-50 reads:
/Section 38-48-50. The biennial fee for a public adjuster's license is eighty dollars payable in advance and fully earned when received, not refundable, transferable, nor proratable. However, when the laws of another state of the United States required in this State of nonresident public adjusters, the nonresident public adjusters shall pay an amount equal to the amount of charges imposed by the laws of this State upon public adjusters of this State./
Amend the bill, further, Section 38-48-70 page 3, by deleting /shall/ on lines 26, 30, 32, and 35; on line 37 by deleting the /./ and inserting /;/; and immediately after line 37 by inserting /(h) not offer or provide advice as to whether the insured's claim is covered by the insured's contract with the insurer./ so when amended Section 38-48-70 reads:
/Section 38-48-70. Public insurance adjusters are declared to be acting as the agents of the insureds they represent in the adjustment of any loss. A public insurance adjuster shall:
(a) be honest and fair in all communications with the insured and with the insurer or its representatives;
(b) have no financial interests in any aspect of the insured's claim, other than the salary, fee, commission, or other compensations that may be established in the written contract between the insured and the public insurance adjuster;
(c) not refer or direct any insured needing repairs or other services in connection with a loss to any person with whom the public insurance adjuster has a financial interest; nor to any person who will or is reasonably anticipated to provide the public adjuster any direct or indirect compensation for the referral of any resulting business;
(d) not prevent or attempt to dissuade an insured from communicating with an insurer, the insurer's adjuster, an independent adjuster representing the insurer, an attorney, or any other person regarding the settlement of the insured's claim;
(e) not engage in any conduct which constitutes the unauthorized practice of law;
(f) not acquire any interest in salvage of property subject to his contract, except with the express written permission of the insured, after settlement with the insurer; and
(g) not solicit or enter into any agreement for the repair or replacement of damaged property on which the public adjuster has been engaged to adjust or settle claims;
(h) not offer or provide advice as to whether the insured's claim is covered by the insured's contract with the insurer./
Amend the bill, further, Section 38-48-80 page 4, immediately after line 25 by inserting /Promptly after the contract of the insured with the public adjuster has been executed, and after the time to rescind has elapsed, the public adjuster shall give written notice to the insurer or its adjuster or representative that the public adjuster has entered into a written contract with the insured./ so when amended Section 38-48-80 reads:
/Section 38-48-80. Any agreement between the insured and the public insurance adjuster for the services described in this chapter shall be in writing and signed by both parties. The contract shall:
(a) state the full consideration for the public adjuster's services;
(b) specify in bold and conspicuous language that the consideration, compensation, commission, fee, percentage, or salary due to the public adjuster shall be paid by the insured from any sums the public adjuster assists the insured in recovering and not paid by the insurer;
(c) shall legibly state the full name and address as specified in the department's record of the licensed public adjuster;
(d) state the insured's full name and street address, the address and description of the loss, and the name of the insured's insurance company and policy number;
(e) disclose to the insured in bold, conspicuous language that (1) it is not necessary for the insured to hire a public adjuster; (2) the insured has the right to communicate directly with the insurer, the insurer's adjuster(s), the insured's counsel, or counsel for the insurer; and (3) the public adjuster is not an agent or employee of the insurer;
(f) show the date on which the contract was signed by both parties;
(g) clearly and conspicuously disclose the insured's right to rescind the contract within five working days or otherwise cancel it as provided by South Carolina law; and
(h) clearly and conspicuously outline the services to be provided by the public adjuster to the insured.
Promptly after the contract of the insured with the public adjuster has been executed, and after the time to rescind has elapsed, the public adjuster shall give written notice to the insurer or its adjuster or representative that the public adjuster has entered into a written contract with the insured./
Amend the bill, further, Section 38-48-130 page 5 line 34 after the /;/ by deleting /or/; and on page 5, by deleting item (d) on line 35 and inserting /act as both a contractor and a public adjuster in the adjustment of a claim for an insured; or/ so when amended Section 38-48-130 reads:
/ Section 38-48-130. It is unlawful for a person to:
(a) act as a public adjuster on a contract made other than as authorized by the laws of this State or made by an insurer who is not licensed to do business in this State; or
(b) adjust or aid in the adjustment, either directly or indirectly, of a claim arising under a contract of insurance not authorized by the laws of this State; or
(c) engage in the unauthorized transaction of insurance business as defined in this article and Chapter 25;
(d) act as both a contractor and a public adjuster in the adjustment of a claim for an insured; or
(e) violate any provision of this title.
A person who violates the provisions of this section is guilty of a felony and, upon conviction, must be fined in the discretion of the court or imprisoned not more than two years, or both./
Amend the bill, further, beginning on page 5, line 41 by deleting Section 38-48-140 and inserting:
/Section 38-48-140. When the director or his designee determines after investigation that there has been a violation of this chapter by a public adjuster, the director or his designee, after providing notice and an opportunity for a hearing in accordance with the Administrative Procedures Act, may impose penalties provided for in Section 38-2-10./
Amend the bill, further, page 6, immediately after line 9 by inserting:
/Section 38-48-160. The Department of Insurance shall promulgate regulations necessary to carry out the provisions of this chapter./
Renumber sections to conform.
Amend totals and title to conform.
HARRY F. CATO, for Committee.
FIRST YEAR GENERAL FUNDS: $25,910
FIRST YEAR FEDERAL AND/OR OTHER FUNDS: $0
ANNUAL TOTAL THEREAFTER: $22,410
EXPLANATION OF IMPACT:
This bill places the responsibility for the licensing and regulation of public adjusters with the Department of Insurance. The number of individuals that will become licensed as public adjusters is unknown. However, the department's current estimate of the number to be licensed is 500 to 1,000. At this level, the licensing area would need an additional position to handle functions related to licensing of these entities.
The department estimates, using comparable existing boards with similar number of licensees, that implementation would require annual expenditures totaling $22,410. Recurring costs include 1.00 FTE, $21,410 for personal service and fringe benefits, and $1,000 for operating expenses. A nonrecurring cost of $3,500 for office setup is anticipated.
Approved By:
Don Addy
Office of State Budget
TO AMEND TITLE 38, CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 48 SO AS TO PROVIDE FOR THE LICENSING OF A PUBLIC INSURANCE ADJUSTER BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 38 of the 1976 Code is amended by adding:
Section 38-48-10. As used in this chapter:
(1) 'Public insurance adjuster' means any individual who, for salary, fee, commission, or other compensation, engages in public adjusting and who is licensed under Section 38-48-20. A public insurance adjuster is not an attorney licensed to practice by the South Carolina Supreme Court who adjusts insurance losses in the course of the practice of law. A public insurance adjuster is not an adjuster representing an insurer and is not licensed in accordance with the provisions of Chapter 47.
(2) 'Public adjusting' means investigating, appraising or evaluating, and reporting to an insured in relation to a first party claim arising under insurance contracts, that insure the real or personal property, or both, of the insured. Public adjusting does not include acting in any manner in relation to claims for damages to or arising out of the operation of a motor vehicle. Public adjusting does not include any activities which may constitute the unauthorized practice of law. Nothing in this chapter shall be construed as permitting the unauthorized practice of law.
Section 38-48-20. Every individual commonly called a public adjuster, adjusting losses for an insured, must be licensed by the director or his designee. These individuals shall apply for a license on a form prescribed by the director or his designee. The director or his designee shall satisfy himself that each applicant for a public adjuster's license is an individual of good moral character, has sufficient knowledge of the insurance business and duties as a public adjuster, has not violated the insurance laws of the State, and is a fit and proper individual for the position. No license may be issued to a nonresident public adjuster who resides in a state which has enacted a statute requiring the licensing of public adjusters and which refuses to license South Carolina public adjusters. Only licensed public adjusters may solicit business from an insured who has sustained an insured loss. Individuals engaged in providing public adjusting services without out a license shall be deemed to be engaged in unauthorized transaction of insurance business and subject to the remedies provided in Chapter 25, as well as the disgorgement of fees or restitution to the insured for any fees paid.
Section 38-48-30. When an individual applies for a public adjuster's license, he shall supply the department his business and residence address. The public adjuster shall notify the department within thirty days of any change in these addresses.
Section 38-48-40. The director or his designee may enter into reciprocal agreements with the insurance commissioners or directors of other states in regard to licensing of nonresident public adjusters if in his judgment these arrangements or agreements are in the best interests of the State and if the applicant for a public adjuster's license meets the minimum statutory requirements in this State for the issuance of a license.
Section 38-48-50. The fee for a public adjuster's license is eighty dollars payable in advance and fully earned when received, not refundable, transferable, nor proratable. However, when the laws of another state of the United States required in this State of nonresident public adjusters, the nonresident public adjusters shall pay an amount equal to the amount of charges imposed by the laws of this State upon public adjusters of this State.
Section 38-48-60. A public adjuster's license is for an indefinite term, unless sooner revoked or suspended, if the biennial license fee is paid at the time and in the manner which the department provides by regulation. If the license fee for a public adjuster is not received when due, the license must be canceled. If the license is to be reinstated, an original application must be filed and a reinstatement fee equal to the biennial license fee unpaid must be paid in addition to the regular biennial license fee.
Section 38-48-70. Public insurance adjusters are declared to be acting as the agents of the insureds they represent in the adjustment of any loss. A public insurance adjuster shall:
(a) be honest and fair in all communications with the insured and with the insurer or its representatives;
(b) have no financial interests in any aspect of the insured's claim, other than the salary, fee, commission, or other compensations that may be established in the written contract between the insured and the public insurance adjuster;
(c) not refer or direct any insured needing repairs or other services in connection with a loss to any person with whom the public insurance adjuster has a financial interest; nor to any person who will or is reasonably anticipated to provide the public adjuster any direct or indirect compensation for the referral of any resulting business;
(d) shall not prevent or attempt to dissuade an insured from communicating with an insurer, the insurer's adjuster, an independent adjuster representing the insurer, an attorney, or any other person regarding the settlement of the insured's claim;
(e) shall not engage in any conduct which constitutes the unauthorized practice of law;
(f) shall not acquire any interest in salvage of property subject to his contract, except with the express written permission of the insured, after settlement with the insurer; and
(g) shall not solicit or enter into any agreement for the repair or replacement of damaged property on which the public adjuster has been engaged to adjust or settle claims.
Section 38-48-80. Any agreement between the insured and the public insurance adjuster for the services described in this chapter shall be in writing and signed by both parties. The contract shall:
(a) state the full consideration for the public adjuster's services;
(b) specify in bold and conspicuous language that the consideration, compensation, commission, fee, percentage, or salary due to the public adjuster shall be paid by the insured from any sums the public adjuster assists the insured in recovering and not paid by the insurer;
(c) shall legibly state the full name and address as specified in the department's record of the licensed public adjuster;
(d) state the insured's full name and street address, the address and description of the loss, and the name of the insured's insurance company and policy number;
(e) disclose to the insured in bold, conspicuous language that (1) it is not necessary for the insured to hire a public adjuster; (2) the insured has the right to communicate directly with the insurer, the insurer's adjuster(s), the insured's counsel, or counsel for the insurer; and (3) the public adjuster is not an agent or employee of the insurer;
(f) show the date on which the contract was signed by both parties;
(g) clearly and conspicuously disclose the insured's right to rescind the contract within five working days or otherwise cancel it as provided by South Carolina law; and
(h) clearly and conspicuously outline the services to be provided by the public adjuster to the insured.
Section 38-48-90. (A) No public adjuster shall compensate or provide anything of value except as provided in Section 38-57-160 to a person who is not licensed as a public adjuster in return for the referral of a business prospect to the public adjuster; provided, however, a public adjuster may enter into an agreement with another licensed public adjuster for the referral of business and sharing of commissions or compensation. Such an arrangement must be disclosed to the insured in the written agreement.
(B) No public adjuster shall represent or act as an adjuster representing an insurance company, either as an employee of the insurer or as an independent adjuster. No independent adjuster or adjuster licensed in accordance with the provisions of Chapter 47 shall act as a public insurance adjuster.
Section 38-48-100. All advertising by a public adjuster shall fairly and accurately describe the services to be rendered and shall not misrepresent either the public adjuster or the public adjuster's abilities, and shall comply with the following requirements:
(a) Advertisements must comply with all the requirements of Title 38 and the Unfair Trade Practices law.
(b) All advertisements must state the full name of the public adjuster and the public adjuster's firm, if applicable, and the complete business address and phone numbers.
(c) Advertisements shall not create an unjust expectation about results the public adjuster can achieve.
Section 38-48-110. The insured shall have until the close of business on the fifth business day after signing the contract to rescind the agreement. The exercise of the right to rescind the agreement must be in writing and delivered to the public adjuster at the address shown on the agreement.
If the insured property that is the subject of the claim is not the primary residence of the insured or used by the insured primarily for personal, family, or household purposes, the insured may waive the right to rescind the agreement. The waiver shall be in writing and signed and dated by the insured.
Section 38-48-120. Every public adjuster shall maintain all records of losses and claims adjusted for three years after the settlement or closing of each claim.
Section 38-48-130. It is unlawful for a person to:
(a) act as a public adjuster on a contract made other than as authorized by the laws of this State or made by an insurer who is not licensed to do business in this State; or
(b) adjust or aid in the adjustment, either directly or indirectly, of a claim arising under a contract of insurance not authorized by the laws of this State; or
(c) engage in the unauthorized transaction of insurance business as defined in this article and Chapter 25; or
(d) engage in the unauthorized practice of law; or
(e) violate any provision of this title.
A person who violates the provisions of this section is guilty of a felony and, upon conviction, must be fined in the discretion of the court or imprisoned not more than two years, or both.
Section 38-48-140. When the director or his designee determines after investigation that there has been a violation of this title by a public adjuster, upon ten days' notice of the opportunity for a public hearing he may impose the penalties provided in Section 38-2-10.
Section 38-48-150. Any provision of this statute that is deemed to be void, unenforceable, unconstitutional, or illegal by any court of competent jurisdiction shall be deemed severable and shall not affect the constitutionality, enforceability, or legality of the remaining provisions. The remaining provisions shall continue in full force and effect."
SECTION 2. This act takes effect ninety days after approval by the Governor.
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