PROPOSED RULEMAKING
INSURANCE DEPARTMENT
[31 PA. CODE CH. 115]
Public Adjuster Contracts and Licensing
[32 Pa.B. 609] The Insurance Department (Department) proposes to amend Chapter 115 (relating to publice adjuster contracts and licensing rquirements) to read as set forth in Annex A. This proposal is under the general rulemaking authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412) and under the specific statutory authority of sections 1--8 of the act of December 20, 1983 (P. L. 260, No. 72) (63 P. S. §§ 1601--1608) (act).
Purpose
Chapter 115 was promulgated in 1980 under the authority of a prior statute. The current authorizing statute, the act, was enacted in 1983. The Department seeks to amend Chapter 115 for consistency with the current statute and to more effectively regulate the licensing and conduct of public adjusters and public adjuster solicitors.
Explanation of Regulatory Changes
Section 115.1 (relating to definitions) is being amended to delete the definition of ''business day.'' The term has been recommended for deletion from all Department regulations and is being replaced with ''calendar day.'' In addition, the term ''public adjuster'' has been recommended for deletion as it is already defined in the statute. The term ''execution date'' has been added to clarify the date a document is signed. The terms ''active officer'' and ''active partner'' have been added to clarify which individuals must be licensed to obtain an agency license.
Section 115.2 (relating to contents of public adjuster contracts, minimum standards), as proposed, would reduce the cancellation notice currently in use, from a two-page document to a more concise, detachable form located at the bottom of the contract. Type size requirements and gender references have been deleted in the interest of uniformity with other Department regulations.
Section 115.3 (relating to additional procedures) clarifies the insured's right to cancel the contract, removes the reference to and required use of the formal name ''Notice of Right to Cancel.''
Sections 115.5--115.7 (relating to misrepresentation; other remedies; and penalties) are being proposed for deletion. The provisions of these sections are clearly and more effectively stated in the act and their inclusion in the regulation in no way enhances the statute.
Section 115.8 (relating to effective date and revision, filing and approval of existing contracts) is being retitled to reflect the elimination of references to prior effective dates. In addition, the appropriate address, within the Department, where applications and contracts are to be sent for the approval has been indicated.
Sections 115.11--115.22 (relating to licensing requirements) are being added to formalize the Department's policy with respect to the licensing of public adjusters and public adjuster solicitors, consistent with regulations pertaining to other types of licensees. Section 115.11--115.16 specifically relate to examinations for public adjuster and public adjuster solicitor licenses and include the standards which the Department intends to apply in contracting with an outside vendor for testing services. Sections 115.17--115.22 set forth procedures and requirements relating to applications for new and renewal licenses for individuals, partnerships or corporations.
External Comments
In drafting this updated proposal, the Department requested comments from the Insurance Federation of Pennsylvania, the Pennsylvania Public Adjuster Association and the Pennsylvania Association of Mutual Insurance Companies. The comments received in response to the Department's request were considered and, where appropriate, consolidated in the development of this proposed rulemaking.
Fiscal Impact
These proposed amendments are anticipated to have no measurable impact on costs associated with the Department's licensing of public adjusters or its review of public adjuster contracts. These proposed amendments should impose no additional costs on public adjusters or insurers. These proposed amendments should have no impact on costs to political subdivisions or the general public. The general public will benefit to the extent that adoption of these proposed amendments will enhance the clarity of public adjuster contracts, which is one of the goals of the amendments.
Paperwork
The proposed amendments will impose no additional paperwork requirements on the Department, public adjusters, insurers or the general public.
Persons Regulated
The proposed amendments apply to all public adjusters and public adjuster solicitors licensed, or seeking licensure, to do business in this Commonwealth.
Contact Person
Questions or comments regarding these proposed amendments may be addressed in writing to Peter J. Salvatore, Regulatory Coordinator, Insurance Department, 1326 Strawberry Square, Harrisburg, PA 17120, within 30 days following the publication of this notice in the Pennsylvania Bulletin. Questions and comments may also be e-mailed to psalvatore@state.pa.us or faxed to (717) 772-1969.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on January 23, 2002, the Department submitted a copy of these proposed amendments to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the Senate Banking and Insurance Committee and the House Insurance Committee. In addition to submitting the proposed amendments, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of that material is available to the public upon request.
If IRRC has objections to any portion of the proposed amendments, it will notify the Department within 10 days after the close of the Committees' review period. The notification shall specify the regulatory review criteria that have not been met by that portion. The Regulatory Review Act specifies detailed procedures for the Department, the Governor and the General Assembly to review these objections before final-form publication of the regulations.
M. DIANE KOKEN,
Insurance CommissionerFiscal Note: 11-146. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 31. INSURANCE
PART VII. PROPERTY, FIRE AND CASUALTY INSURANCE
CHAPTER 115. PUBLIC ADJUSTER CONTRACTS AND LICENSING REQUIREMENTS
GENERAL § 115.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Act--The act of [April 25, 1921 (P. L. 276, No. 136) (40 P. S. §§ 301--308) (Repealed)] December 20, 1983 (P. L. 260, No. 72) (63 P. S. §§ 1601--1608).
Active officer--A person who holds a current public adjuster license and is designated by the corporation as an officer of record for the public adjuster agency license.
Active partner--A person who holds a current public adjuster license and is designated by the partnership as a partner of record for the public adjuster agency license.
[Business day--A day other than a Saturday, Sunday or Holiday.]
Commission--The Insurance Commissioner of the Commonwealth.
Execution date--The date that a public adjuster contract has been signed by all parties.
* * * * * [Public adjuster--A person, partnership, association, corporation or other legal entity licensed as a public adjuster or public adjuster solicitor under the act.]
Resident--A person whose business address or legal residence is located in this Commonwealth.
§ 115.2. Contents of public adjuster contracts, minimum standards.
(a) All public adjuster contracts shall contain, at a minimum, the following [minimum] information:
(1) The title of the contract to read: Public Adjuster Contract.
(2) [Business] The name, business name, address and [phone] telephone number of the public adjuster.
(3) [Name] The name and address of the insured.
(4) The consideration[,] expressed as a percentage of any payments to be received on the negotiated claim, and as a maximum dollar amount.
(5) [Date of execution (day, month, year)] A space provided for the execution date (month, day, year) of the contract.
(6) [Signature] A space provided for the signature of the insured and the public adjuster.
(7) [The following Right to Cancel language in bold face type of a minimum size of ten points,] A provision setting forth the insured's right to cancel, which shall be printed in prominent type on the first page of the public adjuster contract in substantially the following form:
[You, the insured may cancel this contract at any time prior to midnight of the third business day after the date of this contract. If you exercise your right to cancel this contract you will remain liable for reasonable and necessary emergency out-of-pocket expenses or services which were paid for or incurred by the public adjuster during the said three-day period to protect the interests of the insured. See the attached notice of right to cancel form for an explanation of this right.(8) The following completed form, in duplicate captioned ''Notice of Right to Cancel'' which shall be attached to and made a part of the contract, and shall be easily detachable, shall contain in ten-point bold face type the following information in substantially the following form:
Notice of Right to Cancel __________(Enter Date of Contract)
You may cancel this contract, without penalty or obligation, within three business days from the above date. If you exercise your right to cancel this contract you will remain liable for reasonable and necessary emergency out-of-pocket expenses or services which were paid for or incurred by the public adjuster during the said three-day period to protect the interests of the insured.If you cancel, anything of value given by you under the contract will be returned within ten business days following the receipt by the Public Adjuster of your cancellation notice, and any security interest arising out of the contract will be cancelled.To cancel this contract, mail or deliver a signed and dated copy of this notice or any other written notice, or telegram indicating cancellation and date thereof to (name of public adjuster) at (business address of public adjuster) not later than midnight of (date)).I hereby cancel this contract._________________(Date)_________________(Insured's signature)]
Notice of Right to Cancel You, the insured, may cancel this contract at any time prior to midnight of the fourth calendar day after the execution date of this contract. If you exercise your right to cancel this contract, you will be liable for reasonable and necessary emergency out-of-pocket expenses or services which were paid for or incurred by the public adjuster to protect the interests of the insured during the period preceding cancellation.
If you cancel this contract, anything of value given by you under the contract will be returned to you within 15 calendar days following the receipt by the public adjuster of your cancellation notice, and any security interest arising out of the contract will be cancelled.
To cancel this contract, mail, fax or deliver in person a signed and dated copy of this notice or any other written notice, indicating your intent to cancel and the date thereof to (name of public adjuster) at (business address of public adjuster) not later than midnight of (date).
I hereby cancel this contract.
_________________
(Date)
_________________
(Insured's signature)
(b) A public adjuster contract may not contain any contract term that:
(1) Allows the public adjuster's fee to be collected when money is due from an insurance company, but not paid, or that allows a public adjuster to collect the entire fee from the first check issued by an insurance company, rather than as percentage of each check issued by an insurance company.
(2) Requires the insured to authorize an insurance company to issue a check only in the name of the public adjuster.
(3) Imposes unreasonable late fees or collection costs on the insured.
§ 115.3. Additional procedures.
(a) Each insured shall be [orally]:
(1) Verbally informed by the public adjuster at the time [he signs] of signing the contract of [his] the right to cancel.
(2) Furnished with a copy of the executed public adjuster contract.
(b) Before furnishing [copies of the ''Notice of Right to Cancel'' to the insured, both copies] the approved notice to the insured setting forth the insured's right to cancel the contract, the notice shall be completed by entering the name of the public adjuster; the address of the public adjuster's place of business; the execution date of the contract; and the date, not earlier than the [third business] fourth calendar day following the execution date of the contract, by which the insured may give notice of cancellation.
(c) The cancellation period provided for in this chapter may not begin [to run] until the insured has been informed of [his] the insured's right to cancel and has been provided with [copies of the ''Notice of Right to Cancel''] the approved notice setting forth the insured's right to cancel.
(d) Within [10 business] 15 calendar days after the receipt of the cancellation notice, the public adjuster shall:
* * * * * (3) Take action necessary or appropriate to promptly terminate [promptly] any security interest created [in] under the contract.
(e) [No] A contract [shall] may not be negotiated, transferred, sold or assigned by the public adjuster to a finance company or other third party prior to midnight of the fifth [business] calendar day following the execution date of the contract [was signed].
(f) If an insured exercises [his] the insured's right to cancel the contract, [he] the insured shall [remain] be liable for reasonable and necessary emergency out-of-pocket expenses or services which were paid for or incurred by the public adjuster during the [3-day] period preceding cancellation [to protect the interests of the insured].
§ 115.5. [Misrepresentation] (Reserved).
[A misrepresentation of the right to cancel shall be deemed prima facie evidence of lack of competence and trustworthiness to transact business as a public adjuster and public adjuster solicitor.]
§ 115.6. [Other remedies] (Reserved).
[The provisions of this chapter may not impair other rights or remedies of insureds with respect to public adjuster contracts.]
§ 115.7. [Penalties] (Reserved).
[A violation of the provisions of this chapter will be subject to penalties set forth in section 6 of the act (40 P. S. § 306).]
§ 115.8. [Effective date and revision, filing and approval of existing contracts] Filing and approval of contracts.
[This chapter shall take effect August 15, 1980. Between May 17, 1980 and August 14, 1980 existing contracts shall be submitted to Mary Ellen Shope, Chief; Division of Agents and Brokers; Insurance Department; 14th Floor, Strawberry Square; Harrisburg, Pennsylvania 17120 for filing, revision and approval in accordance with this chapter.] Applications for licensure and contract forms shall be submitted to the Pennsylvania Insurance Department, Bureau of Producer Services, for filing and approval by the Commissioner.
LICENSING REQUIREMENTS § 115.11. Examination requirement.
Applicants for public adjuster and public adjuster solicitor licenses shall be required to successfully complete an examination, except as provided for in subsections (b) and (c). Applicants seeking a license shall apply for examination directly to the testing facility.
§ 115.12. Waiver of examination for resident applicants.
A resident applicant who has voluntarily terminated or allowed to lapse a public adjuster or public adjuster solicitor license within 2 years of reapplying for licensure shall be exempt from taking the written examination provided for in subsection (a), if the applicant reapplies for the same type of license for which the applicant was previously licensed.
§ 115.13. Examination requirements for nonresident applicants.
A nonresident applicant for a license shall:
(1) Submit, along with the application, a letter or other official document from the regulatory authority of the jurisdiction where the applicant holds a license, confirming the applicant's licensure in good standing for the same type of license for which application is being made with the Department, whether qualification is under a written examination or whether licensure preceded the requirement of a written examination.
(2) Be subject to reciprocal agreements between the Department and the regulatory authority of the confirming jurisdiction.
(3) Be required to pass the appropriate examination if unable to produce documentation from the confirming regulatory authority which is satisfactory to the Department.
§ 115.14. Qualifications for examination.
An individual, or officer of a corporation, partner in a partnership or member of an association, who is 18 years or age or older, who can read and write in the English language and who maintains a bona fide business office or legal residence in this Commonwealth, may take a public adjuster/public adjuster solicitor examination upon payment of the applicable fee and submission of an application form.
§ 115.15. Administration of examination.
The Commissioner may delegate to a person or corporation, by contract, the authority for administering and scoring examinations. An eligible delegee shall guarantee to adhere to the following standards:
(1) Examinations shall be offered at regular intervals at least 12 times each year.
(2) Testing may be conducted in locations throughout this Commonwealth and other designated locations.
(3) Test security shall be strictly maintained, and a set of security rules shall be developed by the testing facility, which shall be approved by the Commissioner.
(4) Bias or favoritism towards an applicant will not be permitted by the testing facility.
(5) The testing facility shall develop a comprehensive brochure describing, at a minimum, applicable fees, the nature of examination questions and providing sample questions. The brochure shall be distributed to an applicant at the time of registration for examination or, upon request, at any other reasonable time.
§ 115.16. Scope of examination.
Examinations shall be designed by the testing facility to test the adequacy of an applicant's knowledge of general principles of insurance, insurance laws of the Commonwealth and the business of adjusting losses.
§ 115.17. General application requirements.
Applicants for a license shall follow the procedures:
(1) An individual shall be required to take a written examination unless the requirement is waived under §§ 115.12 and 115.13 (relating to examination requirements; and waiver of examination for resident applicants).
(2) An active officer of a corporation, active partner in a partnership or member of an association shall be required to take a written examination unless the requirement is waived under §§ 115.12 and 115.13 or unless the active officer, active partner or member is a currently licensed public adjuster.
(3) Persons who have passed the examination may apply to the Department for a license. The applicant shall attach a certification from the testing facility attesting that the applicant passed the examination. The certification from the testing facility is not required if the testing facility reports test scores directly to the Department.
(4) Test scores and results shall remain valid for 1 year from the date of the examination. Applications received with test results in excess of 1 year shall be denied.
§ 115.18. Completion of application and renewal application forms.
Public adjusters and public adjuster solicitors shall complete application and renewal forms fully and accurately, and shall submit the required fees. Those applications and renewal forms submitted to the Department which are not complete and accurate or accompanied by required fees, will be returned for correction together with written notice of the reason for the return of the applications or renewal forms.
§ 115.19. Application procedures for individual persons.
(a) An individual shall complete the application for an initial license. Accompanying the application shall be:
(1) The appropriate application fee.
(2) A bond as required by statute.
(3) A receipt from the surety stating that the premium has been paid in full on the bond.
(4) A copy of the contract to be used in this Commonwealth.
(b) An applicant for a public adjuster solicitor license shall also obtain and present with the application a letter of intent from a licensed public adjuster to employ the applicant as a public adjuster solicitor.
(c) Applications shall be subscribed and sworn to before a notary public.
(d) Applications executed more than 3 months prior to the date of filing with the Department will not be accepted.
(e) Making a false statement in an application may constitute a ground for license denial or revocation.
(f) Initial licenses will be valid as of the date issued by the Department until the expiration date stated on the license, unless earlier revoked by the Commissioner.
(g) Before a license is granted, the applicant shall first answer and submit, in writing and under oath, interrogatories on forms prepared by the Department.
(h) When the Commissioner is satisfied that the applicant is worthy of a license, and that the applicant has passed the examination or qualified for a waiver, and has paid any appropriate fees, the Commissioner will issue a license stating that the licensee has been authorized by the Department to transact business as a public adjuster or public adjuster solicitor within this Commonwealth.
§ 115.20. Denial of application.
The applicant may be denied a license for any of the following reasons. The applicant:
(1) Has provided incorrect, misleading or incomplete answers to interrogatories on forms incidental to applying for a license.
(2) Has been denied a license or has had an existing license revoked, suspended or not renewed by the Department or a regulatory authority in another state, territory or possession of the United States, or in the District of Columbia, or the Canadian provinces.
(3) Does not possess the professional competence and trustworthiness required to engage in the business of being a public adjuster or public adjuster solicitor.
(4) Has pleaded guilty, entered a plea of nolo contendere or has been found guilty of a felony in a court of competent jurisdiction, or has pleaded guilty, entered a plea of nolo contendere, or been found guilty of criminal conduct which relates to the applicant's suitability to engage in the business of being a public adjuster or public adjuster solicitor.
(i) Examples of criminal violations which the Department may consider related to the applicant's suitability to engage in the business of being a public adjuster or public adjuster solicitor including unlawful practices as set forth in sections 6(a)(1)--(3), (5)--(7) and (12) of the act (63 P. S. § 1606(a)(1)--(3), (5)--(7) and (12)), embezzlement, obtaining money under false pretenses, conspiracy to defraud, bribery or corrupt influence, perjury or false swearing, unlicensed activity or a criminal offense involving moral turpitude or harm to another.
(ii) Examples of violations or incidents which the Department will not consider related to the applicant's suitability to engage in the business of being a public adjuster or public adjuster solicitor are all summary offenses, records of arrests if there is no conviction or a crime based on the arrest, convictions which have been annulled or expunged or convictions for which the applicant has received a pardon from the Governor.
(5) Fails to comply with the insurance-related provisions in sections 320 and 603(a) of the Violent Crime Control and Law Enforcement Act of 1994 (18 U.S.C.A. §§ 1033 and 1034), if applicable.
(6) Has unpaid and overdue amounts, including, fees and civil penalties, owing to the Department.
§ 115.21. Partnership or corporation application procedures.
Procedures for partnerships or corporations are as follows:
(1) Partnerships or corporations shall apply for licensure using the appropriate licensing application form. The form shall be signed in the name of the partnership or corporation by each active partner or active officer, and be accompanied by the appropriate licensing application form for each active partner or active officer who is not currently licensed. Accompanying the licensing application shall be:
(i) The appropriate application fee.
(ii) A bond as required by statute.
(iii) A receipt from the surety stating the premium has been paid in full on the bond.
(iv) A copy of the contract to be used in this Commonwealth.
(v) A copy of the articles of incorporation as filed with the Department of State, Corporation Bureau.
(vi) A copy of the public adjuster license of each active partner or active officer, if applicable.
(2) Employees of partnerships and corporations who apply for a license shall apply in their individual capacity.
(3) The worthiness of a partnership or corporation is determined by the worthiness of the active partner or the active officer.
(4) The application shall be subscribed and sworn to before a notary public.
(5) Applications executed more than 3 months prior to the date of filing with the Department will not be accepted.
(6) Making a false statement in an application may constitute a ground for license denial or revocation.
(7) Initial licenses will be valid as of the date issued by the Department until the expiration date stated on the license, unless earlier revoked by the Commissioner.
(8) Before a license is granted, the applicant shall first answer and submit, in writing and under oath, interrogatories on forms prepared by the Department. When the Commissioner is satisfied that the applicant is worthy of a license and has paid any appropriate fees, the Commissioner will issue a license stating that the licensee has been authorized by the Department to transact business as a public adjuster or public adjuster solicitor within this Commonwealth.
§ 115.22. Renewal of license.
License renewal procedures are as follows:
(1) Mailing of a license renewal form to the last known address of the licensee will satisfy the Department's obligation to provide the appropriate forms and notices.
(2) A license can be renewed only upon submission of a completed renewal form, payment of the required fees and a receipt from a surety stating the premium on the bond, as required, has been paid in full.
(3) Licenses shall be renewed annually on the anniversary of the effective date of the initial license.
(4) Corporations shall provide to the Department the names of each active officer with the renewal form to be eligible for license renewal. Partnerships shall provide to the Department the names of each active partner with the renewal form to be eligible for license renewal.
(5) Failure to complete and submit the renewal form and required fee by the expiration date shall be deemed voluntary termination by the public adjuster or public adjuster solicitor. Failure to correct and resubmit application renewal forms returned by the Department under this section, prior to the expiration date of the license, or within 15 days of the date the forms were mailed by the Department, whichever is greater, will be deemed voluntary termination by the public adjuster or public adjuster solicitor. Renewal forms received by the Department after expiration will be denied; except that renewal forms returned by the Department under this section and resubmitted as instructed by the Department after expiration but within 15 days of the date the incomplete forms were mailed by the Department to the applicant will be accepted.
[Pa.B. Doc. No. 02-173. Filed for public inspection February 1, 2002, 9:00 a.m.]
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