Virginia-Style Hurricane Relief: Occupational Licensing for Public Insurance Adjusters

Just in time for Hurricane Sandy, Virginia will require all public insurance adjusters to obtain licenses from the state starting January 1, 2013. Governor Bob McDonnell (R)—who launched an initiative to identify and eliminate unnecessary regulation last week—signed the bill, which passed both houses unanimously, into law in April.

When home and business owners make a claim, insurance companies send out adjusters to determine the extent of the loss. Property owners may hire their own adjusters to negotiate reimbursement with the insurance company. Virginia becomes the 45th state to license public adjusters.

Were consumers clamoring for the law? No. According to a legislative impact statement, there were “very few” consumer complaints about adjusters, but the measure “has the support of the insurance industry as well as the two associations representing public adjusters,” the American Association of Public Insurance Adjusters (AAPIA) and National Association of Public Insurance Adjusters (NAPIA). From a NAPIA newsletter:

“I fully support NAPIA’s efforts to rid our profession of those that work without licenses or have no regard for compliance….Companies that provide our services without proper licensing do nothing but hurt those most in need, and that is unacceptable to me. If you are aware of any unlicensed individuals or firms please bring it to…[my] attention.” – Ronald Reitz, NAPIA President

The law requires adjusters to pass an exam, pay a $250 fee, obtain yearly continuing education credits, and maintain a $50,000 surety bond. According to a NAPIA white paper, the unlicensed practice of public adjusting poses a grave threat to consumers, who might hire someone unscrupulous. The paper identifies precisely zero incidents of harm or fraud (other than operating without a license, to the extent that is fraud).

AAPIA and NAPIA also lobbied for a licensing bill in Alabama this year after an April 2011 tornado that caused more than $2.2 billion in damages and resulted in more than 117,000 claims. No consumers complained about public adjusters, however, and the bill died in committee.

According to a report by the Institute for Justice, a public interest law firm, Virginia has the eighth most burdensome and 11th most extensive licensing requirements in the country for low- and middle-income occupations.* According to the Dictionary of Occupation Titles, median wages for adjusters in 2011 was $59,320.

*Disclosure: I am a former employee of the Institute for Justice, and I worked on the report cited.

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  • Death Rock and Skull||

    "the American Association of Public Insurance Adjusters (AAPIA) and National Association of Public Insurance Adjusters (NAPIA)"

    Two of them? God damn.

  • Brian D||

    How else would they be able to have an annual All-Star game?

  • Scarcity||

    You would cry if you knew the ratio of actuarial organizations to actuaries. (I would too, I've never tried to count them.)

  • Translucent Chum||

    Insurance adjusters have to be licensed and complete CE in most of those same states along with the required insurance. And PAs are utter scumbags who don't generally defraud their 'customers', but most certainly defraud the insurance companies which affects everyone's premiums.

  • Adam330||

    Tip- never use a PA. You won't get any more from the insurance company, but you will lose a hefty share of it to pay the PA.

  • The Hammer||

    What is a PA?

  • Enough About Palin||

    A state (one of the thirteen original) bordered by Maryland, New Jersey, Delaware West Virginia and Ohio?

  • Christ on a Cracker||

    There apparently is no mechanism for the consumer to complain to the state about PA's. So, it any wonder there are no consumer complaints?

  • Raston Bot||

    Funny, the mechanism in place to complain about insurance companies is utterly worthless too.

  • R C Dean||

    State AGs are in the consumer fraud and complaint/grievance biz. Every state has, not just an enforcement agency, but a king-hell enforcement agency, for these things, replete with armed agents and hot-and-cold running subpoenas on tap.

  • Translucent Chum||

    Ha. You should see and hear what it's like in NY right now with the DFS. Did you know that SUPERSTORM SANDY!!!111!!1 wasn't even a hurricane?

  • Raston Bot||

    So if there's a fire and I file a claim for the damage, then my insurer sends out their adjuster who lowballs. Then I hire my own adjuster to counter. But b/c of this law, my options just decreased and I'm now going to pay more. So this law actually hurts consumers.

  • The Late P Brooks||

    the measure “has the support of the insurance industry as well as the two associations representing public adjusters,”

    [insert exclamation of shock and surprise]

  • ||

    According to a NAPIA white paper, the unlicensed practice of public adjusting poses a grave threat to consumers, who might hire someone unscrupulous.

    Reading between the lines...
    The unclicensed practice of adjusting poses a grave threat to the insurance industry, because consumer might hire adjusters that appriase damage at higher prices than the insurance industry would like to pay.

    It's so much easier when the customer is forced to use YOUR adjuster, and is positively discouraged from hiring anyone else.

  • The Original Jason||

    How can I get my profession licensed so that I can restrict the supply of people competing for the job I do?

  • R C Dean||

    Pay off the legislature.

    Duh.

  • tarran||

    Pay off the legislature.

    But I work in an unregulated field! How am I to amass the wealth needed to buy off the legislature, when my pay is kept low by competition with cheap Chinese IT professionals?

  • Sevo||

    Translucent Chum| 10.31.12 @ 2:01PM |#
    "Insurance adjusters have to be licensed and complete CE in most of those same states along with the required insurance. And PAs are utter scumbags who don't generally defraud their 'customers', but most certainly defraud the insurance companies which affects everyone's premiums."
    -or-
    Adam330| 10.31.12 @ 2:03PM |#
    "Tip- never use a PA. You won't get any more from the insurance company, but you will lose a hefty share of it to pay the PA."

    OK, one of you guys don't have your story straight.

  • tarran||

    No, the stories work out if Adam330 was dealing with an insurance co that is consumer friendly, and Translucent Chum is employed by one.

  • Translucent Chum||

    I am employed by one, but our comments don't negate each other. Hiring a PA is like hiring a lawyer. They take 10% of your final settlement. If you're heckling over contents, you may see a small difference in final RCV, but not enough to offset your fees. The PAs typically blanket inner city areas where limits are already low. Your house burned down, you have a $100,000 limit. You're getting $100k, but you may only get $90k with a PA.

  • tarran||

    TA, I wasn't arguing your comments negated each other, just that they would be consistent if you had inside knowledge from working at a good insurance co, while Adam had experience as a customer.

  • Rich||

    "Companies that provide our services without proper licensing do nothing but hurt those most in need,"

    namely hard-working NAPIA members.

  • LTC(ret) John||

    ^^^THIS^^^. F'ing rent seekers.

  • The Late P Brooks||

    If your doublewide burns down because you turned on the deep fryer to make cheeze balls and then fell asleep on the couch in the front yard, the insurance company should pay you enough to build a Craftsman bungalow to replace it. Anything less is unfair.

  • tarran||

    Ah, the 72nd Ammendment to the Earthican Constitution

  • Public Citizzen||

    Another idea from the WTH were you thinking file.
    The next big hurricane that hits Virginia, one that requires more adjuster than are currently licensed by the State of Virginia to asses and start the claims process, watch the politicians and their richeous indignation at how long the greedy insurance companies are taking to come to the aid of their insured.
    In the end who gets stuck with these additional licensing fees? The consumer who has to pay higher insurance premiums to cover the additional costs of licensing and wait longer to have a claim processed

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