Lesson 1: Claims Adjuster Requirements

Question 1

Insurance Producers

Answer 1

An insurance producer is a licensed salesperson working for an insurance agency. The main goal of the insurance producer is to acquire new customers and cross-sell new policies to existing customers of the agency. Importantly the insurance producer works at an agency but represents the insurer.

Question 2

Insurance agent

Answer 2

a person who sells and services insurance policies, including 24-hour care coverage. An Insurance Agent collects, binds coverages, maintains records and starts the contractual process.

Question 3

Claims adjuster

Answer 3

a person other than a private investigator who, for any consideration whatsoever, engages in the business of making an investigation for the purpose of obtaining information in the course of adjusting or participating in the disposal of any claim in connection with a policy of insurance. Adjusters also engage in soliciting insurance adjustment business.

Inspects the damage claimed and estimates costs involved

Question 4

Field adjusters

Answer 4

work in the field visiting damaged property; Researches, details and substantiates each aspect of a claim, including building damage, contents, and extra living expense claims

Question 5

Sub-agent

Answer 5

Does not hold an agent license, typically manages daily office activities and serves as coordinator for the agents and adjusters. They typically provide customer service, operating as the first line of contact for the customer. Sub-agents can also provide insurance quotes if needed.

Question 6

Broker

Answer 6

Brokers are independent contractors who examine the insurance needs of their clients and “shop” for coverages

Question 7

Who must have a license?

Answer 7

Licensing exemptions apply to each of the following:

• Administrative employees of an insurance carrier
• Attorneys who are advising their clients on insurance matter
• A person applying for a temporary agents license

However, an agent’s employee who countersigns policies and collects premiums must have a license.

Question 8

Unfair trade practices: commingling

Answer 8

agents are not allowed to commingle insurance premiums with their personal funds. It is illegal to put funds intended for premiums into your account. The law states, “you shall not commingle.” Therefore, agents have a fiduciary responsibility to follow the law. In summary, all funds (for both premiums received and return premiums due to the insured) fall within the fiduciary responsibility of the agent. Money received must be placed in a separate bank account. When the funds are placed in the agent’s own account (business or personal) this is called commingling.

Question 9

UTP: misappropriation of funds

Answer 9

Misappropriation of funds is the intentional, illegal use of the funds of another person for one’s own use or other unauthorized purposes. Misappropriation of funds is deemed a felony or a misdemeanor by the courts based on the amount or value of property. Example: $24,999 or more in value is a felony carrying a 2-20 year jail term, while $1500 or less is a misdemeanor.

Question 10

UTP: material misrepresentation

Answer 10

Material misrepresentation is the act of intentional hiding or the fabrication of a material fact which, if known to the other party, could have terminated or significantly altered the basis of a contract, deal, or transaction.

Question 11

UTP: rebating

Answer 11

Rebating is selling an unauthorized inducement to the buyer for the purpose of gaining business. Example: Offering a new car every year.

Question 12

UTP: Controlled business

Answer 12

Controlled business provides insurance to a select group of people. Example: Only individuals from a certain company can purchase an insurance policy with that company.

Question 13

UTP: twisting

Answer 13

Insurance twisting is fraud, and in most states, it’s a crime. When an insurer twists a policy, they convince the policy owner to replace a current policy with one from another company that’s worse. Twisting hurts the policy owner financially, but it is beneficial to the insurer.

Question 14

UTP: churning

Answer 14

Churning occurs when an insurance agent replaces a policyholder’s insurance policy for another insurance policy. This is usually done without consulting the policyholder and often with no changes to the coverage itself. Agents who engage in churning do so to secure an additional commission for the new policy swapped.

Question 15

UTP: binding agreement

Answer 15

The binding agreement is a temporary, often verbal agreement, confirming insurance coverage until the policy issues. The Insurance Agent has the authority to issue an oral binder. However, a binder can only be extended up to 90 days without permission from the Insurance Commission.

Question 16

UTP: sharing commissions

Answer 16

No Insurers shall issue, make or place any insurance contract, indemnity, or suretyship covering risks or property located or having a situs in this state, or covering liability created by or arising under the laws of this state except through an agent or agents who are properly licensed. For shared commissions, you have to be licensed in the same line. For example, you can only share commissions in Property & Casualty if you are licensed in Property Casualty and not if you are only licensed in Life and Health.

Question 17

Controlled business premium

Answer 17

The premium for controlled business, which, a license is permitted to transact in any calendar year can only be up to 25% of your book of business. The licensee for a spouse or any relative up to the second degree of kinship cannot exceed 25% of your book business.

Question 18

Requirements to obtain GA license

Answer 18

18 years or older
HS Diploma/ GED
English language proficiency
GA resident 6 months (for resident claims adjuster/agent)

Pass state exam (within 3 attempts)

Complete 40-hour licensing course

Felony Free/Fingerprints

A $5000 bond for a GA Claims Adjuster is required.

Question 19

Maintaining License

Answer 19

1) notify commissioner of change of address w/in 30 days
2) must maintain business
3) keep license on hand
4) must be active and working under an ins co that has a Cert. of Authority
5) maintain continuing ed: 24 hours of instruction + 3 ethics
6) follow insurance code / moral code of conduct that doesn’t violate fair claim settlement practices or trade practices

Question 19

File and Record documentation

Answer 19

Maintain claim data for all open and closed files for the current year and 4 preceding years; record and file the date licensee received, processed, transmitted or mailed materials and documents in the file; maintain hard copy; provide sufficient documentation if licensee cannot provide files or data

Question 20

Insurer duties

Answer 20

1) representation of policy provisions and benefits;
2) training and certification;
3) fair and equitable settlements
4) duties upon receipt of communications
5) fair claims settlement practices regulations

Question 20

4) duties upon receipt of communications

Answer 20

• acknowledge receipt of notice to claimant unless payment made within that period of time
• provide forms, instructions, and reasonable assistance
• begin any necessary investigation of the claim

Insurer cannot require notice of claim be provided in writing unless such requirement is specified in the policy/endorsement.

Question 20

1) representation of policy provisions and benefits;

Answer 20

insurer cannot: misrepresent benefits, coverages, time limits or other provisions; deny a claim on the basis of a claimant’s failure to exhibit property; require a first party claimant under policy to give notification of a claim or proof of claim within a specified time; request a claimant sign a release that extends beyond subject matter; be precluded from including in any release; issue checks or drafts in partial settlement of a loss or claim that contain language releasing the insurer, insured, or principal from total liability; require a 1p claimant or beneficiary to submit duplicative proofs of claim where coverage may exist under more than one policy issued by that insurer

Question 20

2) training and certification;

Answer 20

Insurers shall:
- conduct investigations using written standards and processes
- not discriminate
- immediately accept or deny claim in no more than 40 days
- deny/reject first party claim in writing and provide references
- not disclose any info that could alert a claimant to the fact the subject claim is being investigated

Question 20

3) fair and equitable settlements

Answer 20

Discrimination by insurers is prohibited; claims must be accepted/denied on a timely basis. Denials must be in writing.

Question 21

5) fair claims settlement practices regulations

Answer 21

fire and extended cov type policies with replacement cost coverage are entitled not only to repair and replacement of damaged property but also to repair of any damage incurred in making such repairs or replacements. When items or parts are replaced, such items or parts should be of the same quality as those they’re replacing

Question 22

Commissioner duties

Answer 22

-4-year elected term; must post $15,000 bond
-comm’r has authority to deny license if candidate doesn’t pass exam or take license if agent violates the code; criminal acts; if candidate provides false or misleading info to obtain license; etc. Practicing w/o license carries fine of 500-10k.
Must represent ins co within 2 years or license goes inactive
-licenses active for 2 years; pay renewal fee
Continuing ed: agents and adjusters licensed must obtain continuing education credit biannually. Those licensed less than 20 years must complete 24 hours; over 20 years continually licensed must complete at least 20 hours. Of the required hours 3 hours of Ethics or legislative updates are required
-all insurance companies must have COA
-comm’r can hold hearings, must be announced w/ 10 days notice
- comm’r examines organizations at least every 5 years

Question 23

Emergency and temporary licenses

Answer 23

When a massive amount of adjusters are needed after a catastrophe or disaster, states can declare a “state of emergency,” allowing them to issue emergency licenses. An emergency adjuster license is temporary and can be extended as needed. These licenses are incredibly important after a disaster as they allow the state to quickly license out-of-state adjusters who otherwise wouldn’t qualify.