Federal legislation was again introduced to streamline the claims process during disasters by offering model adjuster licensing and testing requirements to states.
Originally introduced in 2012 by Representative Stephen Lee Fincher in the house as H.R. 6415 and then reintroduced in 2013 as H.R. 2156. – U.S. Representative David Kustoff, a member of the House Financial Services Committee – introduced H.R. 3363, the Claims Licensing Advancement for Interstate Matters Act (CLAIM Act), last week.
According to a joint study by the Association of Claims Professionals (ACP) and Bickmore, an insurance industry consulting service, there are more than 125,000 claims professionals nationwide. Each adjuster, on average, is licensed in 10 states.
Currently, 16 states don’t have any adjuster licensing requirements.
The legislation would allow adjusters from other states to aid in natural catastrophes and reduce duplicative licensing costs, Kustoff said.
“Unfortunately, when catastrophes occur, often thousands are affected at one time, overwhelming the select insurance adjusters in the area. The CLAIM Act would open doors for consumers to utilize independent claims adjusters in nearby states,” he said. “It will also encourage the states to adopt uniform and reciprocal licensing procedures, allowing adjusters to use their home state for licensure. Most importantly, this bill respects states’ rights and would ensure that each state keeps its independence to adopt rules as it sees fit.”
Industry organizations support the legislation.
“While it has become increasingly important for risk professionals to implement proactive strategies, insurance and the processes for settling claims remains critical to protecting an organization’s assets,” said Risk Management Society (RIMS) President Rick Roberts. “Allowing claims adjusters to practice across state lines is particularly important when natural disaster or catastrophe strike. Additional adjusters during those chaotic times would allow for more claims to be addressed and settlements to be determined faster.”
The ACP has been a driver of the legislation for several years.
David Farber, ACP counsel and partner at law firm King & Spalding, explained that it is normal for a bill to have many versions, indicating the first year is typically a test run where it is reviewed by a committee who suggest revisions. He said it can take a while for bills like this to gain traction, mainly because it isn’t changing the national economy.
“Smaller bills like this takes a while to socialize across Congress,” said Farber.
The adjuster licensing model was copied from NARAB 1’s agent licensing model, Farber said.
“The CLAIM ACT was modeled on legislation already passed by Congress, which was National Association of Registered Agents & Brokers (NARAB) 1, uniform and reciprocity,” he added.
Within two years, 43 states had adopted the model.
“If the Congress gives the states a nudge, we know from history that the states will come in to compliance quickly,” he said.
Farber said the language within the bill is virtually the same as when it was introduced during the last Congress, other than one small change.
Language in section 2 d (1) of the Act spells out who determines whether a state is in compliance with the CLAIM Act if it is enacted. The old language referred it to the Department of Treasury. This was changed in the new version to NARAB, since it is an organization focused on the insurance industry.
Farber said he expects additional co-sponsors will be added to the bill by the end of September. Then, it is anticipated the bill will move through Committee to the House floor and on to the Senate over the next 12-15 months.
If enacted, the legislation will give states time to become uniform with the model requirements.
“The whole idea here is to give the states four years to become uniform and reciprocal,” said Farber.
There is no language that suggests how states should govern how claims are adjusted, he added. States retain independent authority on licensing and enforcement, and can set their own fees, Farber said.
The Associated Press contributed to this article.
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