HB181 By Representative Martin RFD Insurance Rd 1 11-FEB-16

SYNOPSIS: Under existing law, insurance adjusters are defined to be representatives of the insurance company and not of the insured.

This bill would provide for the licensing and regulation of public adjusters of insurance claims on behalf of insureds.

A BILL TO BE ENTITLED AN ACT

Relating to insurance; to provide for the qualifications and procedures for the licensing of public adjusters; to provide definitions and exceptions to the licensing and registration requirements; to require public adjusters to take and pass a written examination, with exception; to provide for nonresident licensing; to require public adjusters to complete a minimum of 24 hours of continuing education on a biennial basis; to provide standards of conduct for public adjusters; to require public adjusters to report administrative action taken against them in other jurisdictions; to give the Commissioner of Insurance authority to promulgate rules necessary to administer and enforce this act; to authorize a delayed effective date for certain provisions; and to amend Section 27-4-2, Code of Alabama 1975, as amended by Act 2015-195, to provide license and application fees for public adjusters.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. Purpose and Scope.

This act governs the qualifications and procedures for the licensing of public adjusters. It specifies the duties of and restrictions on public adjusters, which include limiting their licensure to assisting insureds in first party claims.

Section 2. Definitions.

For purposes of this act, the following terms shall have the meanings respectively ascribed to them by this section:

(1) BUSINESS ENTITY. A corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

(2) COMMISSIONER. The Alabama Commissioner of Insurance.

(3) HOME STATE. The District of Columbia and any state or territory of the United States in which a public adjuster maintains his, her, or its principal place of residence or business and is licensed to act as a resident public adjuster. If the resident jurisdiction does not license public adjusters, the public adjuster shall designate as the adjuster's home state any state in which the public adjuster is licensed and in good standing.

(4) INDIVIDUAL. A natural person.

(5) NAIC. The National Association of Insurance Commissioners, its subsidiaries and affiliates, and any successor thereof.

(6) PERSON. An individual or a business entity.

(7) PUBLIC ADJUSTER. As defined in Section 3.

(8) STATE OF EMERGENCY. An event for which the existence of a state of emergency has been declared by the Governor or the Legislature under Section 31-9-8, Code of Alabama 1975.

(9) UNIFORM BUSINESS ENTITY APPLICATION. The versions of the NAIC Uniform Business Entity Application for a license and for renewal or continuation of a license current as of the time of use.

(10) UNIFORM INDIVIDUAL APPLICATION. The versions of the NAIC Uniform Individual Application for a license and for renewal or continuation of a license current as of the time of use.

Section 3. "Public adjuster" defined; exclusions.

(a) For purposes of this act, a "public adjuster" is a person who, for compensation or any other thing of value, does any of the following on behalf of an insured:

(1) Solely in relation to first party claims arising under insurance contracts that insure the real or personal property of the insured, to aid an insured in ascertaining the amount of the damage or loss made the subject of a claim for damage or loss covered by an insurance contract, and to assist in preparation and submission of the claim to an insurer.

(2) Investigates or adjusts losses, advises an insured about first-party claims for losses or damages arising out of policies of insurance that insure real or personal property for another person, or engages in the business of adjusting losses or damages covered by an insurance policy for the insured.

(b) Nothing in this act, nor the regulations adopted under this act, shall:

(1) Authorize any public adjuster or person operating at the discretion of a public adjuster to engage in conduct that is considered the practice of law as defined in Title 34, Chapter 3, Code of Alabama 1975.

(2) Apply to a person who is employed by, or under contract to, an insurance company.

(3) Affect or alter, in any way, the contractual obligations of an insured to his or her insurance company and the duties each owes to the other.

(c) A "public adjuster" does not include following:

(1) Attorneys-at-law admitted to practice in this state when acting in their professional capacity as an attorney.

(2) A person who negotiates or settles claims arising under a life or health insurance policy or an annuity contract.

(3) A person employed only for the purpose of obtaining facts surrounding a loss or furnishing technical assistance to a licensed public adjuster, including photographers, estimators, private investigators, engineers, and handwriting experts.

(4) A licensed health care provider, or employee of a licensed health care provider, who prepares or files a health claim form on behalf of a patient.

(5) A person who settles subrogation claims between insurers.

Section 4. License required.

(a) A person shall not act or hold himself or herself out as a public adjuster in this state unless the person is licensed as a public adjuster in accordance with this act.

(b) A business entity licensed as a public adjuster shall only designate licensed individual public adjusters to exercise the business entity's license.

Section 5. Application for license.

(a) The commissioner may contract with nongovernmental entities, including the NAIC, to perform any ministerial functions, including the collection of fees and data, related to licensing that the commissioner may deem appropriate. The commissioner may require that license applications, license renewal applications, and supporting documentation be filed and all required fees and charges be paid electronically through systems operated or maintained by the nongovernmental entities.

(b) An individual applying for a resident public adjuster license shall apply to the commissioner on the appropriate NAIC Uniform Individual Application and declare under penalty of perjury and suspension, revocation, or refusal of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner shall find that the individual:

(1) Is at least 18 years of age.

(2) Is eligible to designate this state as his or her home state.

(3) Has not committed any act that is a ground for probation, suspension, revocation, or refusal of a public adjuster's license as set forth in Section 10.

(4) Has completed a prelicensing course of study.

(5) Has successfully passed the public adjuster examination.

(6) Has paid the fees set forth in Section 27-4-2, Code of Alabama 1975.

(c) No resident of another state or of the District of Columbia may be licensed pursuant to this section or may designate Alabama as his or her home state unless the person has successfully passed the public adjuster examination and has otherwise complied with the other applicable portions of this section.

(d) A business entity applying for a resident public adjuster license shall apply to the commissioner on the appropriate NAIC Uniform Business Entity Application and declare under penalty of perjury, suspension, revocation, or refusal of the license that the statements made in the application are true, correct, and complete to the best of the business entity's knowledge and belief. Before approving the application, the commissioner shall find that the business entity:

(1) Is eligible to designate this state as its home state.

(2) As applicable, has qualified or registered with the office of the Alabama Secretary of State to engage in business in this state.

(3) Has designated an individual public adjuster licensed in this state as responsible for the business entity's compliance with this act and with the insurance laws, rules, and regulations of this state.

(4) Has not committed an act that is a ground for probation, suspension, revocation, or refusal of a public adjuster's license as set forth in Section 10.

(5) Has paid the fees set forth in Section 27-4-2, Code of Alabama 1975.

(e) Before issuing a public adjuster license to an applicant under this section, the commissioner shall also find that the applicant:

(1) Is financially responsible to exercise the license and has provided proof of financial responsibility as required in Section 11.

(2) Maintains an office in the home state with public access by reasonable appointment or regular business hours. This requirement shall not be deemed to prohibit maintenance of such an office in the applicant's home.

(f) The commissioner may require any documents reasonably necessary to verify the information contained in the application.

Section 6. License; license renewal; name or address change.

(a) Unless denied licensure pursuant to Section 10, a person who meets the requirements of Sections 5 and 7 shall be issued a public adjuster license.

(b) A public adjuster license shall be initially renewed in accordance with a schedule prescribed by the commissioner and shall thereafter be subject to renewal on a biennial basis. A renewal shall be effected by submitting a renewal application, by paying the fee for renewal prescribed in Section 27-4-2, Code of Alabama 1975, and by meeting the requirements for renewal, including any applicable continuing education requirements, before the due date for renewal. A license expires if not renewed by the due date for renewal.

(c) Within the first 30 days following the date a public adjuster license expires, a reinstatement retroactive to the expiration date shall be effected by submitting a renewal application, by paying a fee of one and one-half times the renewal fee required in Section 27-4-2, Code of Alabama 1975, and by meeting the other requirements for renewal including any applicable continuing education requirements.

(d) After the first 30 days following the date a public adjuster license expires but within 12 months after the expiration date, the license may be reinstated effective as of the reinstatement by submitting a renewal application, by paying a fee of double the renewal fee required in Section 27-4-2, Code of Alabama 1975, and by meeting the other requirements for renewal including any applicable continuing education requirements.

(e) After a public adjuster license has been expired 12 months, the person must reapply pursuant to Section 5 to again become licensed.

(f) A public adjuster who is unable to comply with license renewal procedures and requirements due to military service, long-term medical disability, or some other extenuating circumstance may request a waiver of same and a waiver of any examination requirement, fine, or other sanction imposed for failure to comply with renewal procedures.

(g) The license shall contain the licensee's name, address, personal identification number, the date of issuance and expiration, and any other information the commissioner deems necessary.

(h) The public adjuster shall inform the commissioner of a change in legal name or address within 30 days of the change in a manner prescribed by the commissioner. Failure to timely inform the commissioner of a change in legal name or address shall result in a penalty of fifty dollars ($50). If the penalty is not paid within 30 days after notice of the penalty assessment, the license shall be suspended until the penalty is paid.

Section 7. Prelicensing course and examination.

(a)(1) Every individual subject to the examination required in subsection (b) must first complete a prelicensing course consisting of 20 classroom hours, or equivalent individual instruction.

(2) The prelicensing course must have been completed within 12 months before the date of the examination as shown on the certificate furnished by the prelicensing course provider.

(3) Every prelicensing course provider shall apply annually for the continued authority to issue certificates of completion under rules to be prescribed by the commissioner.

(4) At the time of initial approval and annually thereafter the commissioner shall collect from each prelicensing course provider a fee set by the commissioner not to exceed one hundred dollars ($100). The fee shall be deposited in the State Treasury to the credit of the Insurance Department Fund. Public institutions shall be exempt from paying the fee but shall otherwise be subject to the rules and regulations applicable to other providers.

(b)(1) An individual intending to apply for a public adjuster license must pass a written examination unless exempt pursuant to Section 8.

(2) The examination shall test the knowledge of the individual concerning property insurance, the duties and responsibilities of a public adjuster, and the insurance laws and regulations of this state. The examination required by this section shall be developed and conducted under rules and regulations prescribed by the commissioner.

(3) Each individual applying for the examination shall furnish a certificate of completion of the prelicensing course from an authorized prelicensing course provider and pay a nonrefundable fee prescribed by the commissioner as set forth in Section 27-4-2, Code of Alabama 1975.

(4) The commissioner may make arrangements, including contracting with an outside testing service, for administering examinations and collecting the nonrefundable fee set forth in Section 27-4-2, Code of Alabama 1975.

(5) An individual who fails to appear for the examination as scheduled or fails to pass the examination, shall reapply for an examination and remit all required fees and forms before being rescheduled for another examination.

(6) No individual who has taken and failed to pass two examinations given pursuant to this section shall be entitled to take any further examination until after the expiration of three months from the date of the last examination which the individual failed to pass. If the individual thereafter fails to pass the examination after two more attempts, the individual shall not be eligible to take any further examination until after the expiration of six months from the date of the last unsuccessful examination. An examination fee shall be paid for each and every examination.

Section 8. Exemptions from examination.

(a) An individual applicant for a public adjuster license in this state shall not be required to complete any prelicensing course or examination if the person is currently licensed in another state as a public adjuster based on a public adjuster examination that meets or exceeds the examination required as developed and conducted under rules and regulations prescribed by the commissioner. The applicant must either provide certification from the other state that the applicant's license is currently in good standing or the state's public adjuster database records maintained by the NAIC must indicate that the applicant is licensed in good standing.

(b) A person licensed as a public adjuster in another state based on a public adjuster examination, who, within 90 days of establishing legal residency in this state, applies to become a resident public adjuster pursuant to Section 6 shall not be required to complete a prelicensing course or an examination.

(c) An individual who applies for a public adjuster license in this state who was previously licensed as a public adjuster in this state shall not be required to complete a prelicensing course or examination, but this exemption is only available if the application is received within 12 months of the cancellation of the applicant's previous license in this state and if, at the time of cancellation, the applicant was in good standing in this state.

Section 9. Nonresident license.

(a) Unless refused licensure pursuant to Section 10, a nonresident person shall receive a nonresident public adjuster license if:

(1) The person is currently licensed in good standing as a resident public adjuster in his, her, or its resident or home state.

(2) The person has applied for a license and has paid the fees required by Section 27-4-2, Code of Alabama 1975.

(3) If a business entity, and as applicable, the entity has qualified or registered with the office of the Alabama Secretary of State to engage in business in this state.

(4) The person's designated home state awards nonresident public adjuster licenses to residents of this state on the same basis.

(b) The commissioner may verify the public adjuster's licensing status through any appropriate database, including the public adjuster database maintained by the NAIC or may request certification of good standing as described in subsection (a) of Section 8.

(c) As a condition to continuation of a nonresident public adjuster license in this state, the licensee shall maintain a resident public adjuster license in the adjuster's home state. A licensee shall notify the commissioner within 30 days if the licensee's resident public adjuster license terminates for any reason and shall include the new address if the licensee has obtained a resident license in a new home or resident state. Termination of a resident or home state license shall terminate the nonresident public adjuster license in this state unless the termination is due to the public adjuster being issued a new resident public adjuster license in the adjuster's new resident or home state, provided the new resident or home state awards nonresident public adjuster licenses to persons of this state on the same basis.

Section 10. License denial, nonrenewal, or revocation.

(a) The commissioner may place on probation, suspend, revoke, or refuse to issue or renew a public adjuster's license, or may levy a civil penalty in accordance with subsection (d), or any combination of actions, for any one or more of the following causes:

(1) Providing incorrect, misleading, incomplete, or materially untrue information in the license application.

(2) Violating any insurance laws, regulations, subpoena, or order of the commissioner or of another state's insurance regulator.

(3) Obtaining or attempting to obtain a license through misrepresentation or fraud.

(4) Improperly withholding, misappropriating, or converting any monies or properties received in the course of acting as an adjuster of any type or in otherwise doing insurance business in this state or elsewhere.

(5) Intentionally misrepresenting the terms of an actual insurance contract.

(6) Having been convicted of a felony or other offense involving dishonesty, fraud, deceit, or misrepresentation in a final decision of a court of competent jurisdiction.

(7) Having admitted or been found to have committed any insurance unfair trade practice or fraud.

(8) Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility, in the course of acting as an adjuster of any type or otherwise in the conduct of business in this state or elsewhere.

(9) Having a public adjuster license, independent adjuster license, company or employee adjuster license, emergency adjuster license or registration or its equivalent, or insurance producer license or its equivalent suspended, revoked, or refused in any other state, province, district, or territory.

(10) Forging another's name to any document or impersonating the insured related to an insurance transaction or in connection with a claim being adjusted by the adjuster.

(11) Cheating, including improperly using notes or any other reference material, to complete an examination for an insurance license.

(12) Failing to comply with an administrative or court order imposing a child support obligation.

(13) Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax which remains unpaid.

(14) Violation of one or more of the standards of conduct prescribed in Section 17.

(15) If not actively licensed as an attorney in Alabama, engaging in conduct in exercise of a public adjuster's license which is the practice of law.

(16) Knowingly accepting insurance business from an individual who is not licensed by the commissioner who is required to be so licensed.

(17) Allowing a person not licensed under this act to perform actions requiring licensure under this act.

(18) Failing to notify the insured, verbally or in writing, of the statutory requirements of this act, as they pertain to solicitation, contracting, and recision and the time frames contained in this act.

(b) In the event the action by the commissioner is to refuse application for licensure or renewal of an existing license, the commissioner shall notify the applicant or licensee in writing, advising of the reason for the refusal. The applicant or licensee may make written demand upon the commissioner within 30 days for a hearing before the commissioner to determine the reasonableness of the refusal. The hearing shall be held pursuant to Chapter 2 of Title 27, Code of Alabama 1975.

(c) The license of a business entity may be placed on probation, suspended, or revoked if the commissioner finds, after a hearing, that an individual licensee's violation occurred while acting on behalf of or representing the business entity and that the violation was known or should have been known by one or more of the business entity's partners, officers, or managers and that the violation was neither reported to the commissioner nor was corrective action taken in relation thereto.

(d) In the absence of a greater fine specifically provided elsewhere in Title 27 of the Code of Alabama 1975, and in addition to or in lieu of any applicable probation, suspension, revocation or refusal, a person, in the sole discretion of the commissioner after a hearing, may be subject additionally to a civil fine in an amount not to exceed ten thousand dollars ($10,000) per violation.

(e) The commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by this act or elsewhere in Title 27 of the Code of Alabama 1975, against any person who is under investigation for or charged with a violation of this act or Title 27 even if the person's license or registration has been surrendered or has lapsed by operation of law.

(f) The commissioner shall promptly report to the Alabama State Bar any evidence that a person licensed as a public adjuster on an emergency or permanent basis, but not also actively licensed as an attorney in Alabama is engaging, or has engaged, in activities which appear to be the practice of law.

Section 11. Bond or letter of credit.

(a) Prior to issuance of a license as a public adjuster and for the duration of the license, the applicant shall secure evidence of financial responsibility in a format prescribed by the commissioner through either a security bond or irrevocable letter of credit.

(b) The surety bond must be executed and issued by an insurer authorized to issue surety bonds in this state, and meet all of the following requirements:

(1) It shall be in the minimum amount of fifty thousand dollars ($50,000).

(2) It shall be in favor of this state and shall specifically authorize recovery by the commissioner on behalf of any person in this state who sustained damages as the result of erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices in his or her capacity as a public adjuster.

(3) It shall not be terminated unless at least 30 days' prior written notice has been filed with the commissioner and given to the licensee.

(c) The letter of credit must be irrevocable, issued by a qualified financial institution, and meet all of the following requirements:

(1) It shall be in the minimum amount of fifty thousand dollars ($50,000).

(2) It shall be to an account to the commissioner and subject to lawful levy of execution on behalf of any person to whom the public adjuster has been found to be legally liable as the result of erroneous acts, failure to act, fraudulent acts, or unfair practices in his or her capacity as a public adjuster.

(3) It shall not be terminated unless at least 30 days' prior written notice has been filed with the commissioner and given to the licensee.

(d) The issuer of the evidence of financial responsibility shall notify the commissioner upon termination of the bond or letter of credit, unless otherwise directed by the commissioner.

(e) The commissioner may ask for the evidence of financial responsibility at any time the commissioner deems relevant.

(f) The authority to act as a public adjuster shall automatically terminate if the evidence of financial responsibility terminates or becomes impaired.

Section 12. Continuing education.

(a) An individual who holds a public adjuster license and who is not exempt under subsection (b) shall satisfactorily complete a minimum of 24 hours of continuing education courses as may be approved by the commissioner, of which three hours must be in ethics, reported to the commissioner on a biennial basis in conjunction with the license renewal cycle.

(b) This section shall not apply to:

(1) Licensees not licensed for one full year prior to the end of the applicable continuing education biennium.

(2) Licensees holding nonresident public adjuster licenses who have met the continuing education requirements of their home state and whose home state gives credit to residents of this state on the same basis.

(c) Only continuing education courses and providers approved by the commissioner shall be used to satisfy the continuing education requirements of this section. Continuing education providers and courses shall be subject to the same requirements and fees set forth in Chapter 8A of Title 27 of the Code of Alabama 1975.

(d) The commissioner shall prescribe the number of hours of continuing education credit for each continuing education course approved. Continuing education courses submitted in accordance with a reciprocal agreement the commissioner enters with other states shall be approved according to the provisions of the reciprocal agreement.

(e) If a continuing education course requires successful completion of a written examination, no continuing education credit shall be given to licensees who do not successfully complete the written examination.

(f) An individual teaching any approved continuing education course shall qualify for the same number of hours of continuing education credit as would be granted to a licensee taking and satisfactorily completing the course.

Section 13. Public adjuster fees.

(a) A public adjuster shall not pay a commission, service fee, or other valuable consideration to a person for rendering public adjuster services under this act in this state if that person is required to be licensed under this act and is not so licensed.

(b) A person shall not accept a commission, service fee, or other valuable consideration for rendering public adjuster services under this act in this state if that person is required to be licensed under this act and is not so licensed.

(c) Pursuant to Section 34-3-25, Code of Alabama 1975, a person shall not accept a commission, service fee, or other valuable consideration from a person licensed to practice law.

(d) A public adjuster may pay or assign commissions, service fees, or other valuable consideration to persons who obtain facts surrounding a loss or furnish technical assistance pursuant to subdivision (3) of subsection (c) of Section 3.

(e) In the event of a state of emergency, no public adjuster shall charge or agree to or accept as compensation or reimbursement any payment, commission, fee, or other thing of value more than the payment, commission, fee or other thing of value established by the public adjuster if it were not a state of emergency.

(f) No public adjuster shall require, demand, or accept any fee, retainer, compensation, deposit, or other thing of value, prior to settlement of a claim.

(g) No public adjuster shall receive or accept a commission, service fee, or other valuable consideration for referral of an insured to any construction firm, salvage firm, building appraisal firm, motor vehicle repair shop, or any other firm that performs any work in conjunction with damages caused by the insured loss. "Firm" includes any corporation, partnership, association, joint stock company, or individual.

Section 14. Contract between public adjuster and insured.

(a) Public adjusters shall ensure that all contracts for their services are in writing and contain all of the following terms:

(1) Legible full name of the adjuster signing the contract, as specified in Department of Insurance records.

(2) Permanent home state business address and phone number.

(3) Department of Insurance license number.

(4) Title of "Public Adjuster Contract."

(5) The insured's full name, street address, insurance company name and policy number, if known or upon notification.

(6) A description of the loss and its location, if applicable.

(7) Description of services to be provided to the insured.

(8) Signatures of the public adjuster and the insured.

(9) Date contract was signed by the public adjuster and date the contract was signed by the insured.

(10) Attestation language stating that the public adjuster is fully bonded pursuant to state law.

(11) Full salary, fee, commission, compensation, or other considerations the public adjuster is to receive for services.

(12) Expenses to be reimbursed to a public adjuster as provided under subdivision 3 of subsection (c) of Section 3 shall be specified by type, with dollar estimates set forth in the contract and with any additional expenses to first be approved by the insured.

(13) Compensation provisions in a public adjusting contract shall not be redacted in any copy of the contract provided to the commissioner. Such a redaction shall constitute an omission of a material fact is hereby declared a deceptive act in violation of Chapter 12 of Title 27, Code of Alabama 1975.

(b) The contract shall provide that the insured has the right to cancel the contract without penalty or obligation within three business days after the date the contract was signed, provided that during any state of emergency declared under Section 31-9-8, Code of Alabama 1975, and for a period of one year after the date of the loss, the insured shall have five business days after the date on which the contract is executed to cancel the contract. The contract may provide that notice of cancellation be in writing and sent to the public adjuster or in a form of mailing which provides proof of delivery, at the address in the contract or the last reasonably ascertained address within the cancellation period. The contract shall provide that if the insured exercises the right to cancel the contract, anything of value given by the insured under the contract will be returned to the insured within 15 business days following the receipt by the public adjuster of the cancellation notice.

(c) If the insurer, not later than 72 hours after the date on which the loss is reported to the insurer, either pays or commits in writing to pay to the insured the policy limit of the insurance policy, the public adjuster shall:

(1) Not receive a commission consisting of a percentage of the total amount paid by an insurer to resolve a claim.

(2) Inform the insured that loss recovery amount might not be increased by insurer.

(3) Be entitled only to reasonable compensation from the insured for services provided by the public adjuster on behalf of the insured, based on the time spent on a claim and expenses incurred by the public adjuster, until the claim is paid or the insured receives a written commitment to pay from the insurer.

(d) A public adjuster shall provide the insured a written disclosure concerning any direct or indirect financial interest including, but not limited to, ownership that the public adjuster has with any other party involved in any aspect of the claim.

(e) A public adjuster contract may not contain any contract term that:

(1) Allows the public adjuster's percentage 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 or as a co-payee.

(3) Imposes collection costs or late fees.

(4) Precludes an insured from pursuing civil remedies.

(f) Prior to the signing of the contract the public adjuster shall provide the insured with a separate disclosure document regarding the claim process that states:

"(1) Property insurance policies obligate the insured to present a claim to his or her insurance company for consideration. There are three types of adjusters that could be involved in that process. The definitions of the three types are as follows:

"a. "Company adjuster" means the insurance adjusters who are employees of an insurance company. They represent the interest of the insurance company and are paid by the insurance company. They will not charge you a fee.

"b. "Independent adjuster" means the insurance adjusters who are hired on a contract basis by an insurance company to represent the insurance company's interest in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee.

"c. "Public adjuster" means the insurance adjusters who do not work for any insurance company. They work for the insured to assist in the preparation, presentation, and settlement of the claim. The insured hires them by signing a contract agreeing to pay them a fee.

"(2) The insured is not required to hire a public adjuster to help the insured meet his or her obligations under the policy, but has the right to do so.

"(3) The insured has the right to initiate direct communications with the insured's attorney, the insurer, the insurer's adjuster, and the insurer's attorney, or any other person regarding the settlement of the insured's claim.

"(4) The public adjuster is not a representative or employee of the insurer.

"(5) The salary, fee, commission, or other consideration of the public adjuster is the obligation of the insured, not the insurer.

"(6) If the insured also hires an attorney, the fees and expenses to be paid to the attorney will be in addition to the fees and expenses charged by the public adjuster."

(g) The contracts shall be executed in duplicate to provide an original contract to the public adjuster and an original contract to the insured. The public adjuster's original contract shall be available at all times for inspection without notice by the commissioner.

(h) The public adjuster shall provide the insurer a notification letter, which has been signed by the insured, authorizing the public adjuster to provide the insurer information on the insured's behalf.

Section 15. Insurance funds.

A public adjuster shall not receive, accept, or hold any funds on behalf of an insured towards the settlement of a claim for loss or damage.

Section 16. Record retention.

(a) A public adjuster shall maintain a complete record of each transaction as a public adjuster. The records required by this section shall include the following:

(1) Name of the insured.

(2) Date, location, and amount of the loss.

(3) Copy of the contract between the public adjuster and insured.

(4) Name of the insurer, amount, expiration date, and number of each policy carried with respect to the loss.

(5) Itemized statement of the insured's recoveries.

(6) Itemized statement of all compensation received by the public adjuster, from any source whatsoever, in connection with the loss.

(7) A register of all monies received, deposited, disbursed, or withdrawn in connection with a transaction with an insured, including fees transfers and disbursements from a trust account and all transactions concerning all interest bearing accounts.

(8) Name of the public adjuster who executed the contract.

(9) Name of the attorney representing the insured, if applicable, and the name of the claims representatives of the insurance company.

(10) Evidence of financial responsibility in a format prescribed by the insurance commissioner.

(b) Records shall be maintained for at least five years after the termination of the transaction with an insured and shall be open to examination by the commissioner at all times.

(c) Records submitted to the commissioner in accordance with this section that contain information identified in writing as proprietary by the public adjuster shall be treated as confidential by the commissioner and shall not be subject to any open record laws of this state.

Section 17. Standards of conduct of public adjuster.

(a) A public adjuster is obligated, under the adjuster's license, to serve with objectivity and complete loyalty the interest of the client alone; and to render to the insured such information, counsel, and service, as within the knowledge, understanding, and opinion in good faith of the licensee, as will best serve the insured's insurance claim needs and interest.

(b) A public adjuster shall not misrepresent to a claimant that the adjuster is an adjuster representing an insurer in any capacity, including acting as an employee of the insurer or acting as an independent adjuster unless so appointed by an insurer in writing to act on the insurer's behalf for that specific claim or purpose. A licensed public adjuster is prohibited from charging that specific claimant a fee when appointed by the insurer and the appointment is accepted by the public adjuster.

(c) A public adjuster shall not solicit, or attempt to solicit, an insured during the progress of a loss-producing occurrence, as defined in the insured's insurance contract.

(d) A public adjuster shall not permit an unlicensed employee or representative of the public adjuster to conduct business for which a license is required under this act.

(e) A public adjuster shall not have a direct or indirect ownership interest in any aspect of the claim, other than the salary, fee, commission, or other consideration established in the written contract with the insured, unless full written disclosure has been made to the insured as set forth in subsection (h).

(f) A public adjuster shall not acquire, directly or indirectly, any interest in salvage of property subject to the contract with the insured.

(g) A public adjuster shall abstain from referring or directing the insured to get needed repairs or services in connection with a loss from any person, unless disclosed to the insured with whom the public adjuster has an ownership interest.

(h) A public adjuster shall disclose to an insured if the adjuster has any ownership interest in any construction firm, salvage firm, building appraisal firm, motor vehicle repair shop, or any other firm that performs any work in conjunction with damages caused by the insured loss. The word "firm" shall include any corporation, partnership, association, joint stock company, or individual.

(i) Any compensation or anything of value in connection with an insured's specific loss that will be received by a public adjuster shall be disclosed by the public adjuster to the insured in writing including the source and amount of the compensation.

(j) A public adjuster shall not give or offer to give a monetary loan or advance to a client or prospective client.

(k) A public adjuster or any individual or entity acting on behalf of a public adjuster shall not directly or indirectly give or offer to give any article of merchandise having a value in excess of fifteen dollars ($15) to any individual for the purpose of advertising or as an inducement to enter into a contract with a public adjuster.

(l) A public adjuster shall not invite an insured to submit a claim by offering monetary or other valuable inducement.

(m) A public adjuster shall not invite an insured to submit a claim by stating there is "no risk" to the insured by submitting such claim.

(n) A public adjuster shall not use any statement, representation, logo, or shield that would imply or could be mistakenly construed that the solicitation was issued or distributed by a governmental agency, insurer, or is sanctioned or endorsed by a governmental agency or insurer.

(o) A public adjuster shall be required to add the following disclaimer in bold print and capital letters in typeface no smaller than the typeface of the body of the text to all written advertisement by any public adjuster:

"THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU MAY DISREGARD THIS ADVERTISEMENT."

(p) Public adjusters shall adhere to the following general ethical requirements:

(1) A public adjuster shall not undertake the adjustment of any claim if the public adjuster is not competent and knowledgeable as to the terms and conditions of the insurance coverage, or which otherwise exceeds the public adjuster's current expertise.

(2) A public adjuster shall not knowingly make any oral or written material misrepresentations or statements which are false or maliciously critical and intended to injure any person engaged in the business of insurance to any insured client or potential insured client.

(3) No public adjuster, while so licensed by the department, may represent or act as a company adjuster or independent adjuster on the same claim.

(4) The contract shall not be construed to prevent an insured from pursuing any civil remedy after the three business day revocation or cancellation period.

(5) A public adjuster shall not enter into a contract or accept a power of attorney that vests in the public adjuster the effective authority to do anything outside of what is allowed under this act, choose the persons who shall perform repair work, or perform the repair work, except as allowed under this act with proper disclosure.

(6) A public adjuster shall ensure that all contracts for the public adjuster's services are in writing and set forth all terms and conditions of the engagement.

(q) A public adjuster who is not actively licensed as an attorney in this state shall not give legal advice or otherwise engage in activities which are the practice of law.

Section 18. Reporting of actions.

(a) A public adjuster shall report to the commissioner any administrative action taken against the public adjuster in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. This report shall include a copy of the order, consent to order, or other relevant legal documents.

(b) Within 30 days of the initial pretrial hearing date, a public adjuster shall report to the commissioner any criminal action taken against the public adjuster in this or any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing, and any other relevant legal documents.

Section 19. Fingerprints.

(a) In order to make a determination of license eligibility, the commissioner is authorized to require fingerprints of applicants and submit the fingerprints and the fee required to perform the criminal history record checks to the Alabama Department of Public Safety and the Federal Bureau of Investigation (FBI) for state and national criminal history record checks.

(b) The commissioner is authorized to require a criminal history record check on each applicant in accordance with this section. The commissioner shall require each applicant to submit a full set of fingerprints (including a scanned file from a hard copy fingerprint) in order for the commissioner to obtain and receive national criminal history records from the FBI Criminal Justice Information Services Division. In the case of business entity applicants, the commissioner shall require the submission of fingerprints of all of the following:

(1) All executive officers and directors of the applicant.

(2) Any individual owning, directly or indirectly, 51 percent or more of the outstanding voting securities of the applicant.

(3) All executive officers and directors of entities owning 51 percent or more of the outstanding voting securities of the applicant.

(c) The commissioner may contract for the collection, transmission, and resubmission of fingerprints required under this section. If the commissioner does so, the fee for collecting, transmitting, and retaining fingerprints shall be payable directly to the contractor by the person. The commissioner may agree to a reasonable fingerprinting fee to be charged by the contractor.

(d) The commissioner may waive submission of fingerprints by any person who has previously furnished fingerprints and those fingerprints are on file with the centralized repository of the NAIC.

(e) The commissioner is authorized to receive criminal history record information in lieu of the Alabama Department of Public Safety that submitted the fingerprints to the FBI.

(f) The commissioner is authorized to submit electronic fingerprint records and necessary identifying information to the NAIC for permanent retention in a centralized repository. The purpose of such a centralized repository is to provide insurance commissioners with access to fingerprint records in order to perform criminal history record checks.

(g) The commissioner shall treat and maintain an applicant's fingerprints and any criminal history record information obtained under this section as confidential and shall apply security measures consistent with the Criminal Justice Information Services Division of the Federal Bureau of Investigation standards for the electronic storage of fingerprints and necessary identifying information and limit the use of records solely to the purposes authorized in this section. The fingerprints and any criminal history record information shall not be subject to subpoena, other than one issued in a criminal action or investigation, and shall be confidential.

Section 20. Rules.

(a) The commissioner may promulgate reasonable rules as are necessary or proper to carry out the purposes of this act in accordance with Chapter 2 of Title 27, Code of Alabama 1975.

(b) The commissioner, by rule, may provide for delayed enforcement dates of up to 24 months following the effective date of this act to allow for the implementation of the provisions of this act relating to fingerprinting, the prelicensing course and examination, and continuing education.

Section 21. Civil actions; liability.

The commissioner, the Attorney General, the district attorney of a county within which an alleged violation has occurred, or any person may bring a civil action against a person or business entity violating this act in the appropriate court in the county where the alleged violator resides or where the principal place of business of the alleged violator is located or in the county where the alleged violation occurred. Upon a proper showing of a violation, the court may temporarily, preliminarily, or permanently enjoin the defendant from violations of this act and award any other legal or equitable relief, including actual damages and punitive damages, as may be appropriate in light of the nature of the violation.Section 22. Section 27-4-2, Code of Alabama 1975, as amended by Act 2015-195, is amended to read as follows:

§27-4-2.

"(a) The Commissioner of Insurance shall collect in advance fees, licenses, and miscellaneous charges as follows:

"(1) Certificate of authority:

"a. Initial application for original certificate of authority, including the filing with the commissioner of all documents incidental thereto ..... $500

"b. Issuance of original certificate of authority ..... 500

"c. Annual continuation or renewal fee ..... 500

"d. Reinstatement fee ..... 500

"(2) Charter documents, filing with the commissioner amendment to articles of incorporation or of association, or of other charter documents or to bylaws ..... 25

"(3) Solicitation permit, filing application and issuance ..... 250

"(4) Annual statement of insurer, except when filed as part of application for original certificate of authority, filing ..... 25

"(5) Producer license (resident or nonresident):

"a. Individuals:

"1. Application fee (For filing of initial application for license) ..... 30

"2. License fee (For issuance of original license) ..... 50

"b. Business entities:

"1. Application fee (For filing of initial application for license) ..... 30

"2. License fee (For original license and each biennial renewal) ..... 100

"c. Examination fee (For producer examination or reexamination, each classification of examination), an amount set by the commissioner not to exceed ..... 100

"(6) Producer appointment fee:

"a. Filing notice of appointment ..... 40

"b. Annual continuation of appointment ..... 25

"c. Late fee, for failing to timely pay annual appointment continuation invoice .......... 250, plus an additional 250 for each additional month late

"(7) Reinsurance intermediary license:

"a. Filing application for license ..... 30

"b. Issuance of initial license ..... 140

"c. Annual continuation of license ..... 100

"(8) Managing general agent license:

"a. Application fee (For filing of initial application for license, each insurer) ..... 30

"b. Issuance of initial license, each insurer ..... 125

"c. Annual continuation of license, each insurer ..... 75

"(9) Service representative license:

"a. Application fee (For filing of initial application for license, each insurer) ..... 30

"b. Appointment fee, property and casualty, each insurer (For original appointment and each annual renewal) ..... 40

"(10) Surplus line broker:

"a. Application fee (For filing of initial application for license) ..... 30

"b. License fee (For original license and each annual renewal):

"1. Individuals ..... 200

"2. Business Entities ..... 500

"(11) Adjusters (independent and public; resident or nonresident):

"a. Application fee (For filing of initial application for license; individuals and business entities) ..... 30

"b. License fee (For original license and each biennial continuation):

"1. Individuals ..... 80

"2. Business Entities ..... 200

"c. Examination fee, an amount set by the commissioner not to exceed ..... 100

"(12) Miscellaneous services:

"a. For copies of documents, records on file in Insurance Department, per page ..... 1

"b. For each certificate under seal of the commissioner, other than licenses ..... 5

"(13) The commissioner shall collect a fee of fifty dollars ($50) when, in acting as agent for service of process for any insurance company, fraternal benefit society, mutual aid association, nonresident producer, nonresident independent or public adjuster, or nonresident surplus line broker, he or she accepts the service of legal process as provided by the laws of this state. The commissioner shall refuse to receive and file or serve any process unless the process is accompanied by the aforementioned fee, which shall be taxed as costs in the action.

"(b) The fees and licenses specified in subsection (a) shall be deposited in the State Treasury with 50 percent credited to the General Fund and 50 percent credited to the Insurance Department Fund."

Section 23. This act shall become effective on the first day of January next following its passage and approval by the Governor, or its otherwise becoming law.

Insurance Department

Insurance

Adjusters

Code Amended