August 19, 2016
Carrier Adjuster Licensing Best Practices – Pt.2:
Understanding licensing and designated home state requirements
By: Jay Davis
One of the greatest difficulties in managing adjuster licensing is the complexities that come from a lack of uniformity between the states. Currently, only 34 states have adjuster licensing requirements for independent adjusters (if you include Puerto Rico and the Virgin Islands.) So, what does this mean for an adjuster who doesn't reside in one of those states?
This means that in order to adjust claims in a state that DOES license adjusters, the person needs a "designated home state" license, which works similarly to a resident state license for continuing education and reciprocity. But what state should the adjuster claim?
It might not be the nearest state to that adjuster, nor the top state that adjuster handles claims in, and especially not a random draw. A designated home state can be strategically selected to help make yours and your adjuster's lives easier in the future.
When we speak with customers regarding this topic, we explain that it depends on the adjuster license type, complexities of the state exams, and how many lines of insurance those exams cover. If you can answer those questions up front it can reduce the need to take multiple exams every time you're doing business in a new state.
Here's an example:
If an independent adjuster obtains a New Hampshire DHS license by taking the Property/Casualty excluding Workers Comp exam and wants to obtain an adjuster license in Mississippi, the adjuster would not be able to obtain the MS license off of reciprocity because the NH exam did not include workers comp. Therefore, the independent adjuster would have to take the MS adjuster exam which includes workers comp or take the NH exam including workers comp to obtain the MS license.
If a staff adjuster obtains a New Hampshire DHS license by taking the Property/Casualty excluding Workers Comp exam and wants to handle a claim in MS, the adjuster would be able to handle the MS claim without having to obtain a license because MS does not license staff adjusters.
So, you can see where it may be frustrating to have different compliance guidelines centered from the adjuster license type every time you need to do business in another state. This is where we advise our customers and their adjusters to strategically select a designated home state based off of the type of claims that they will be managing as some states have exams that cover a multitude of requirements across the board.
To help you better understand what requirements you should be looking for, here's a checklist of questions that we ask ourselves when working with workers comp adjusters, for example.
- Does the state require licensing for workers comp adjusters?
- Does the state recognize workers comp as a line of authority?
- Is a separate exam required for workers comp?
- If yes, which exam? General All Lines? Property/Casualty including workers comp?
- Does the state allow online exams? Or will the adjuster need to travel for training?
Although it may be more work up front, it is best to select a designated home state for your adjuster that says YES to a majority of these questions. Then, when the workers comp adjuster needs to do business in a new state, getting a license is that much easier.
Think you've got it down?
States are always updating their regulations to keep the consumers best interest in mind or to move towards uniformity. Here is a recent update from Wyoming for example:
The Wyoming DOI will not issue a license if the DHS state and the CE state are not the same. Therefore, if your DHS license is in Rhode Island and you were completing CE to meet Texas requirements, you would not be able to obtain a WY license until your DHS and CE state were the same. So, for your DHS Rhode Island adjusters with a different CE state, you will need to obtain a DHS license in a state that requires CE in order to obtain your WY license. But will it be that easy to switch your DHS or are there new action items that your adjusters must complete to become licensed?
When a law changes regarding adjuster licensing, our Licensing and Registration services team always asks themselves: how are my customers' adjusters effected? Does any action need to be taken? We then inform our customers about the change and any action items for the adjusters.
Do you have any questions about designated home states, adjuster licensing requirements, or managing law changes? We would love to help you and answer your direct questions! Click here to contact one of our experts.
Stay tuned next week where we'll discuss the next step in the process– education!
**Special thanks to Leila Darden from our LRS team for her input on content for this blog post!
Jay Davis is the Director of Customer Accounts for Vertafore Sircon solutions. Jay began his insurance career working for GEICO in Georgia where he served in a variety of roles including customer service, new business sales, sales management, property-casualty pre-licensing instruction for producers and adjuster's and producer licensing compliance. In late 2005 he relocated to GEICO's corporate headquarters in Washington, D.C., where he managed licensing operations for GEICO's four writing companies, the GEICO agency and a couple of other investment companies. In this capacity, he managed company, producer, and adjuster licensing along with corporate filings for the GEICO owned entities. During his tenure as Licensing Manager at GEICO, Jay, was able to automate 90+% of the producer/adjuster lifecycle by integrating GEICO's systems with Sircon provided web services. In 2011, Jay left GEICO and began serving as a Senior Product Manager for Sircon handling agency markets. After managing several software products for a number of years, he relocated to Indianapolis to manage Sircon's Licensing and Registration Services. He attended Shepherd University in West Virginia and also holds designations from the American Institute for Chartered Property Casualty Underwriters as an Accredited Advisor in Insurance (AAI) and an Associate in Insurance Services (AIS).