BILL ANALYSIS Ó
SB 488
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Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
SB
488 (Block) - As Amended June 16, 2016
SENATE VOTE: 38-0
SUBJECT: Public insurance adjusters
SUMMARY: Updates existing statutes governing public insurance
adjusters (public adjusters). Specifically, this bill:
1)Adds public adjusters to an existing statute regarding license
renewal for those in active military service.
2)Provides that fees collected related to the licensing of
public adjusters are earned fees and not refundable.
3)Defines various terms for the purposes of the Public Insurance
Adjusters Act.
4)Exempts various entities involved in submitting and
negotiating insurance claims from the act.
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5)Requires an applicant for a public adjuster license to
complete 20 hours of pre-license education.
6)Requires an applicant for a public adjuster license to have
either two-years of experience adjusting property claims or
completed one year while licensed as an apprentice public
adjuster.
7)Permits an individual who resides in a state that does not
license public adjusters to designate California as their home
state.
8)Exempts an individual licensed as a public adjuster in another
state from the pre-license education requirement.
9)Requires the issuance of a non-resident public adjuster
license to an applicant that meets the requirements for a
public adjuster in California and whose home state grants
non-resident licenses to California licensed public adjusters
on the same basis.
10)Establishes a license for apprentice public adjusters to
permit individuals to engage in specified public adjusting
activities under the supervision of a public adjuster while
preparing to become fully licensed.
11)Requires an applicant for the apprentice public adjuster to
complete 20 hours of pre-license education during the course
of their apprenticeship.
12)Prohibits the fee charged by a public adjuster to result in
the insured receiving less compensation from the insurer than
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before the public adjuster was retained.
13)Prohibits public adjusters from soliciting new business
before the event causing the loss is over.
14)Permits the insured to cancel a contract with a public
adjuster after a catastrophe up to five days after signing the
contract.
15)Establishes an inactive license category for public adjusters
who are not actively practicing.
16)Updates the fees listed in statute to reflect the current fee
schedule.
17)Makes findings and declarations related to the licensing fees
for public adjusters.
EXISTING LAW:
1)Requires individuals and organizations acting as public
adjusters to be licensed by the Department of Insurance (DOI).
2)Defines a public adjuster as an individual or organization
that assists insureds in negotiating and settling property
insurance claims for a fee.
3)Requires an applicant for a public adjuster license to have
sufficient experience adjusting property claims, as determined
by the Insurance Commissioner (commissioner).
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FISCAL EFFECT: This bill was reported out of the Senate
Appropriations Committee pursuant to Senate Rule 28.8.
COMMENTS:
1)Purpose. According to the author, Senate Bill 488 establishes
and enhances consumer protections against unfair practices by
public adjusters. The bill also more closely aligns
California law with national licensing standards.
Additionally, the bill enhances consumer protections by
clarifying the rules governing the compensation public
adjusters receive, better defines the conditions under which a
public adjuster may contact consumers, and changes the
notification requirement which allows consumers to cancel the
services of a public adjuster in claims relating to a
catastrophic disaster.
2)Public Adjusters. Insurance adjusters investigate the
circumstances of an insurance claim, evaluate the covered
losses, and negotiate settlements according to the policy and
applicable law. Adjusters fall into one of three categories,
"company adjusters" who are employed by insurers, "independent
insurance adjusters" who are independent contractors used by
insurers, and "public adjusters" who represent a policyholder
in the settlement of a claim. Public adjusters inspect the
property, evaluate the damage, prepare supporting
documentation and data, help to establish replacement costs,
and provide other services. They are typically paid on a
contingency fee basis by the policyholder.
3)Related Legislation. AB 2588 (Chu) which greatly expands the
regulation of independent insurance adjusters passed this
committee in April. The bill is scheduled for a hearing
before the Senate Insurance Committee on June 22.
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REGISTERED SUPPORT / OPPOSITION:
Support
Department of Insurance
Opposition
None received
Analysis Prepared by:Paul Riches / INS. / (916)
319-2086
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