AB 357 — Relating to: regulation of public adjusters and granting rule-making authority. (FE)

SECTION 5.

601.43 (1) (a) of the statutes is amended to read:

601.43 (1) (a) Insurers, other licensees and other persons subject to regulation.

Whenever the commissioner deems it necessary in order to inform himself or herself about any matter related to the enforcement of chs.

600 to 647, the commissioner may examine the affairs and condition of any licensee, registrant, or permittee under chs.

600 to 647 or applicant for a license, registration,ermit, of any person or organization of persons doing or in process of organizing to do an insurance business in this state, and of any advisory organization serving any of the foregoing in this state.

SECTION 6.

601.43 (1) (d) of the statutes is amended to read:

601.43(1) (d) Delivery of records to the office.

On order of the commissioner any licensee, registrant, or permittee under chs.

600 to 647 shall bring to the office for examination such records as the order reasonably requires.

SECTION 7.

Chapter 629 of the statutes is created to read:

CHAPTER 629 PUBLIC ADJUSTERS 629.01 Definitions.

In this chapter:

(1) “Adjusting service” means an act to assist an insured, in exchange for compensation, with the preparation, completion, or filing of a first-party claim, including by negotiating values, damages, or depreciation or by applying the loss circumstances to insurance policy provisions.

(2) “Compensation” means anything of value received directly or indirectly in return for the performance of an adjusting service.

- 2020 Legislature - 4 - LRB-3744/1 EKL:ahe&wlj ASSEMBLY BILL 357 SECTION 7 (3) “First-party claim” means a claim for damage or loss to real or personal property located in this state that is filed by an insured.

(4) “Insured” means a person whose real or personal property is insured under an insurance policy against which a claim is or will be made.

(5) “Public adjuster” means an individual who is registered with the commissioner under s.

629.02.

629.02 Registration.

(1) R EQUIREMENT TO REGISTER.

(a) No individual may engage in any of the following activities unless the individual is registered as a public adjuster under this section:

PagePerform, 1,offer lineto 3:perform, or publicly represent himself or herself as performing an adjusting service with respect to a first-party claim.

delete the material beginning with “and" and ending with “authority" on line 4.

PageDirectly 2,or lineindirectly 6:solicit business, investigate or adjust losses, or advise an insured about a first-party claim for a person engaged in the business of providing an adjusting service.

delete(b) “anNo amountperson tomay beutilize setthe byadjusting services of an individual if the commissionerperson byknows, rule"or andshould substituteknow, “$50".that the individual is not registered under this section.

3.(c) A contract entered into in violation of this subsection is void.

Page(2) 2,APPLICATION.An lineindividual 9:may apply for the registration required under sub.

delete(1) “anby amountcompleting toa beform setprescribed by the commissionercommissioner. by rule" and substitute “$50".

4.The form shall require the individual to provide the individual's social security number and all documentation the commissioner determines is necessary and appropriate.

PageThe 3,commissioner lineshall 2:approve the individual's registration application if the commissioner determines the individual satisfies all the following conditions:

delete(a) “anThe amountindividual tohas benot setcommitted byany act that warrants the commissionerdenial, bysuspension, rule"revocation, andor substitutenonrenewal “$50".of a registration under s.

5.629.13.

PageLRB-3744/1 8,- line2020 2:Legislature - 5 - EKL:ahe&wlj SECTION 7 ASSEMBLY BILL 357 (b) The individual provides proof that he or she is trustworthy, reliable, financially responsible, and of good reputation.

delete(c) theThe materialindividual beginningpays withthe “,fee except"under ands. ending with “occurrence" on line 5.

LRBa0610/1601.31 -(1) 2020(z). Legislature - 2 - EKL:amn 6.

Page(d) 9,The lineindividual 2:maintains a home office in the individual's state of residence and is available to the public at that office through reasonable appointment hours or regular business hours.

delete(e) theThe materialindividual beginningis withat “that"least and18 endingyears with “activities" on line 6 and substitute “for which the president of theage. United States or the governor has declared a state of emergency”.

7.(f) The individual meets the requirement of s.

Page629.03. 9, line 24:

delete(g) The individual supplies a bond that meets specifications established by the materialcommissioner beginningto withguarantee “unless"faithful andperformance endingof withthe “person"individual's onduties pageand 10,obligations lineas 5.a public adjuster.

8.(h) If the individual is not a resident of this state, the individual agrees to be subject to the jurisdiction of the commissioner and the courts of this state and to the commissioner's rules and orders with service of process as provided under ss.

Page601.72 11,and line601.73. 12:

delete(3) theE materialXCEPTIONS. beginning with “for" and ending with “s.

629.06"Subsection on(1) linedoes 13.not apply to any of the following individuals:

9.(a) An attorney admitted to practice in this state while acting in the professional capacity as an attorney.

Page(b) 11,An lineindividual 14:who negotiates or settles claims arising under a life or disability insurance policy or an annuity contract.

delete(c) “6An p.m."individual andemployed substitutesolely “8for p.m.the purpose of obtaining facts surrounding a loss or furnishing technical assistance to a public adjuster, including a photographer, estimator, private investigator, engineer, or handwriting expert.

during(d) theAn firstindividual 24who hourssettles aftersubrogation theclaims loss.".between insurers.

- 2020 Legislature - 6 - LRB-3744/1 EKL:ahe&wlj ASSEMBLY BILL 357 SECTION 7 (e) An individual who is licensed as an intermediary under s.

628.04 or 628.09 while acting in the professional capacity as an intermediary.

(4) R ENEWAL.

A registration under sub.

(2) shall remain in effect for 2 years from the date of issuance, unless it is revoked or suspended by the commissioner under s.

629.13.

An individual may renew a registration by submitting, prior to the registration's expiration date, a request for renewal to the commissioner in the form prescribed by the commissioner.

The request shall include evidence of compliance with s.

629.11 and payment of the fee under s.

601.31 (1) (zb).

An individual who fails to renew a registration prior to the expiration date may reapply for registration under sub.

(2).

629.03 Examination.

(1) Prior to the commissioner approving an individual's registration under s.

629.02 (2), the individual shall pass a written examination that tests knowledge of the duties and responsibilities of a public adjuster and the insurance laws and regulations of this state.

The examination shall be conducted as prescribed by the commissioner and require payment of the fee under s.

601.31 (1) (zc).

The commissioner may contract with an outside testing service for administering the examination and collecting the fee.

(2) An individual who is not a resident of this state and who is a licensed or registered public adjuster in the individual's state of residence and was required to pass a written examination to obtain that license or registration may request the commissioner to accept proof of the examination's passage as fulfilling the requirement under sub.

(1).

The commissioner may approve the request if the individual's license or registration in that state is in good standing.

629.04 Contract requirements.

(1) A public adjuster may not perform any adjusting service for an insured prior to entering into a contract with the insured.

LRB-3744/1 - 2020 Legislature - 7 - EKL:ahe&wlj SECTION 7 ASSEMBLY BILL 357 The contract shall be in writing, be titled “Public Adjuster Contract,” and be on a form filed with the commissioner under s.

631.20 (1m).

The contract shall include all of the following:

(a) The public adjuster's full name, state of residence, permanent principal business street address, telephone number, and registration number assigned by the commissioner.

(b) The insured's full name, street address, insurer name, and policy number.

(c) A description of the loss and its location.

(d) The date and time the contract was signed by the public adjuster and the insured.

(e) An attestation by the public adjuster that he or she is fully bonded pursuant to state law.

(f) A disclosure of the compensation the public adjuster is to receive in accordance with s.

629.05.

(g) A provision allowing the insured to void the contract in accordance with sub.

(3).

(h) A statement that the contract shall constitute the entire agreement between the public adjuster and the insured.

(2) A contract under sub.

(1) may not require the insured to do any of the following:

(a) Authorize an insurer to issue a check only in the name of the public adjuster.

(b) Pay collection costs or a late fee to the public adjuster.

(c) Limit the insured's right to pursue any civil remedy against the public adjuster.

- 2020 Legislature - 8 - LRB-3744/1 EKL:ahe&wlj ASSEMBLY BILL 357 S ECTION 7 (3) At the insured's option, the insured may void a contract under sub.

(1) no later than 5 business days after the contract's execution, except that the insured may void a contract no later than 10 business days after execution if the contract is executed no later than 5 business days after conclusion of the loss-producing occurrence.

The insured may void the contract by sending notice by registered or certified mail, return receipt requested, to the public adjuster at the address on the contract or by personally serving notice on the public adjuster at the place of business identified on the contract.

The public adjuster shall return anything of value provided under the contract by the insured no later than 15 business days following receipt of the notice.

Nothing in this subsection prevents an insured from pursuing any civil remedy against a public adjuster.

(4) A contract under sub.

(1) shall be executed in duplicate with an original provided to the public adjuster and to the insured.

The public adjuster shall make the contract available to the commissioner at all times for inspection without notice.

(5) A public adjuster shall include with the contract under sub.

(1) a notice of the insured's right to file a complaint with the commissioner about an insurance problem.

The notice shall be on a single piece of paper that is separate from the contract and shall include all of the following:

(a) The information described in sub.

(1) (a).

(b) A clear statement of the insured's right to file a complaint.

(c) Information on how the insured may obtain a complaint form by contacting the office of the commissioner or from the office's Internet site.

(d) The office of the commissioner's mailing address and phone numbers and the address of the office's Internet site.

LRB-3744/1 - 2020 Legislature - 9 - EKL:ahe&wlj SECTION 7 ASSEMBLY BILL 357 629.05 Compensation.

(1) In this section, “catastrophic disaster” means an event that results in large numbers of deaths and injuries, causes extensive damage or destruction of facilities that provide and sustain human needs, produces an overwhelming demand on state and local response resources, causes a severe long-term effect on general economic activity, and severely affects state, local, and private-sector capabilities to begin and sustain response activities.

(2) The contract under s.

629.04 shall clearly disclose the compensation the public adjuster is to receive from the insured.

(3) If an insurer pays, or commits in writing to pay, the policy limit no later than 5 business days after the date the loss is reported to the insurer, the only compensation a public adjuster may receive from the insured shall be compensation at a reasonable hourly rate for the time spent on the claim.

(4) A public adjuster may not demand compensation from the insured prior to the insured receiving payment from the insurer.

(5) If an insurer pays a claim in installments, the public adjuster shall receive the compensation in equal amounts prorated over the number of checks issued by the insurer and may not demand to be paid entirely from the first check issued.

(6) A public adjuster may not receive compensation in excess of 10 percent of an insured's actual recovery under the insurance policy if the claim is due to a catastrophic disaster.

629.06 Disclosure of additional compensation.

A public adjuster may not directly or indirectly accept compensation or anything else of value from an insured and a person who provides estimates for work or performs work in conjunction with damage or loss under a claim subject to a contract under s.

629.04 unless the public adjuster provides the insured with prior written notice.

The notice shall clearly and - 2020 Legislature - 10 - LRB-3744/1 EKL:ahe&wlj ASSEMBLY BILL 357 S ECTION 7 conspicuously disclose any direct or indirect financial interest that the public adjuster has in the other person and all amounts to be paid, directly or indirectly, by the other person to the public adjuster.

The notice shall be in the form prescribed by the commissioner and be provided prior to the date the insured incurs an obligation to make any payment under the contract or to the other person.

629.07 Assignment of proceeds prohibited.

(1) A public adjuster may not request or accept an assignment of insurance policy proceeds from an insured with whom the public adjuster has entered into a contract under s.

629.04.

An insurer may not be required to honor an assignment of insurance policy proceeds to a public adjuster.

(2) A public adjuster may request that an insurer include both the public adjuster and the insured on a check paying all or part of the proceeds of an insurance policy if the contract under s.

629.04 permits joint payment of proceeds.

629.08 Escrow of funds.

A public adjuster who, on behalf of an insured, receives, accepts, or holds any funds for the settlement of a first-party claim shall deposit the funds in a noninterest-bearing escrow account in a federally insured financial institution that is located in the state in which the insured resides or the loss occurred.

629.09 Contractors.

A public adjuster may not require an insured to use a particular contractor or vendor and may not take any action that vests the effective authority with the public adjuster to choose a person to perform work on the insured's claim.

A contract under s.

629.04 shall state that the insured may choose any contractor or vendor.

629.10 Prohibitions.

In addition to the other prohibitions in this chapter, a public adjuster may not engage in any of the following activities:

LRB-3744/1 - 2020 Legislature - 11 - EKL:ahe&wlj SECTION 7 ASSEMBLY BILL 357 (1) Solicit, or attempt to solicit, an insured during the progress of a loss-producing occurrence, as defined in the insured's insurance policy.

(2) Allow an unregistered employee or representative to perform an adjusting service for which registration is required under this chapter.

(3) Own a direct or indirect financial interest in any aspect of a claim, other than the compensation agreed to under s.

629.04 (1) (f), unless notification is provided to the insured under s.

629.06.

(4) Acquire an interest in salvage of the insured's property unless obtaining written permission from the insured after settlement of the claim.

(5) Refer the insured to a person in whom the public adjuster has a direct or indirect financial interest or from whom the public adjuster may directly or indirectly receive anything of value for the referral unless notification is provided to the insured under s.

629.06.

(6) Solicit an insured outside the hours of 9 a.m.

and 6 p.m.

(7) Undertake an adjusting service without being competent and knowledgeable about the terms and conditions of the insured's insurance coverage or if the loss or coverage exceeds the public adjuster's expertise.

(8) Knowingly make a false material statement regarding any person engaged in the business of insurance to a client or potential client.

(9) Act as an adjuster for an insurer or independent adjuster while registered under s.

629.02.

(10) Agree to a settlement without the insured's knowledge and written consent.

629.11 Continuing education.

(1) A public adjuster shall complete, on a biennial basis, a minimum of 15 credits of continuing education, including 3 credits - 2020 Legislature - 12 - LRB-3744/1 EKL:ahe&wlj ASSEMBLY BILL 357 S ECTION 7 of ethics.

Each credit shall consist of at least 50 minutes of instruction and shall be approved by the commissioner.

A public adjuster shall report the credits in conjunction with the registration renewal under s.

629.02 (4).

(2) An individual who is not a resident of this state and who is a licensed or registered public adjuster in the individual's state of residence and complies with continuing education requirements in that state that are substantially similar to the requirements under sub.

(1) may submit to the commissioner proof of compliance with that state's requirements.

If the individual's state of residence provides credit to the residents of this state on a reciprocal basis, the commissioner shall accept the proof of compliance as meeting the requirement under sub.

(1).

629.12 Reporting of administrative and criminal actions.

(1) A public adjuster shall report to the commissioner any administrative action related to the business of insurance that is taken against the public adjuster by a governmental agency or regulatory body.

The report shall be made no later than 30 days after the final disposition of the matter and shall include a copy of the order, consent to order, or similar document.

(2) A public adjuster shall report to the commissioner any criminal prosecution taken against the public adjuster in any jurisdiction.

The report shall be made no later then 30 days after the date of the initial pretrial hearing and shall include a copy of the complaint, the order from the hearing, and any other information required by the commissioner.

629.13 Denial, suspension, or revocation of registration.

The commissioner may, after a hearing, deny, suspend, revoke, or refuse to renew an individual's registration under s.

629.02 (2) or (4) or may levy a civil penalty, or both, upon a finding that the individual has done any of the following:

LRB-3744/1 - 2020 Legislature - 13 - EKL:ahe&wlj S ECTION 7 ASSEMBLY BILL 357 (1) Provided false, misleading, or incomplete information in the registration application.

(2) Failed to comply with any provision in this chapter.

(3) Violated any insurance law or rule or any subpoena or order of the commissioner or insurance regulatory body of another state.

(4) Obtained, or attempted to obtain, registration as a public adjuster through misrepresentation or fraud.

(5) Misappropriated or otherwise improperly handled money or property received in the course of doing business as a public adjuster.

(6) Intentionally misrepresented the terms of an insurance policy.

(7) Been convicted of a felony related to the duties and obligations of a public adjuster or the business of insurance.

(8) Admitted to committing, or is found to have committed, any insurance unfair trade practice or insurance fraud.

(9) Used fraudulent, coercive, or dishonest practices, or demonstrated incompetence, untrustworthiness, or financial irresponsibility, in the conduct of business in any jurisdiction.

(10) Had an intermediary license or public adjuster license or registration denied, suspended, or revoked in any jurisdiction.

(11) Cheated on an examination for a public adjuster license or registration.

(12) Misrepresented to a person that the individual represents or is employed by an insurer in any capacity, including as an independent adjuster.

(13) Failed to maintain evidence of financial responsibility as required by the commissioner.

SECTION 8.Effective date.

- 2020 Legislature - 14 - LRB-3744/1 EKL:ahe&wlj ASSEMBLY BILL 357 SECTION 8 (1) This act takes effect on the first day of the 4th month beginning after publication.