BILL ANALYSIS Ó
SB 488
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Date of Hearing: June 29, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 488
(Block) - As Amended June 16, 2016
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|Policy |Insurance |Vote:|13 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill updates statutes governing public insurance adjusters
(public adjusters), a class of adjusters who represent
policyholders in the negotiation or settlement of insurance
claims. Specifically, this bill:
1)Adds experience and pre-license education requirements.
2)Establishes reciprocity with other states' educational
requirements, and permits an individual who resides in a state
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that does not license public adjusters to designate California
as their home state.
3)Updates fees listed in statute to reflect the current fee
schedule.
4)Establishes an inactive license category and an apprentice
license category, and eliminates the "interim" license
category.
5)Makes related minor and technical, as well as substantive,
changes.
FISCAL EFFECT:
Costs to the California Department of Insurance (CDI), which
currently licenses public adjusters, are anticipated to be under
$20,000 for the first year to develop and approve additional
pre-licensing courses, and under $20,000 annually ongoing to
accommodate a slightly increased volume of nonresident public
adjuster applications (Insurance Fund).
COMMENTS:
1)Purpose. According to the author, this bill establishes and
enhances consumer protections against unfair practices by
public adjusters. The bill also more closely aligns
California law with national licensing standards.
Additionally, it enhances consumer protections by clarifying
the rules governing the compensation public adjusters receive,
better defines the conditions under which a public adjuster
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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)Background. 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 policyholders.
Public adjusters inspect property, evaluate 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
(i.e., they get paid based on a successful resolution of the
claim). CDI currently licenses public adjusters and "interim"
public adjusters (trainees), as well as some independent
insurance adjusters.
3)Related Legislation. AB 2588 (Chu), which expands the
regulation of independent insurance adjusters, is pending in
the Senate Appropriations Committee.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081
SB 488
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