Claims adjusters need training, background checks

A man surveys the charred debris of Glen Ellen home following a 2017 wildfire. (Photo: Rebecca Jane Call, via Shutterstock)

Recently Capitol Weekly printed an article by David Farber (“Don’t fix unbroken system for claims adjusters,” April 16) asserting that the California Department of Insurance (CDI) was advocating for a bill, SB 1291 by state Sen. Bill Dodd, which would, in Farber’s words, “create a shortage of claims professionals” in the aftermath of last year’s devastating wildfires.

Farber couldn’t be more wrong.

In fact, SB 1291 would significantly enhance consumer protections so that only claims adjusters who have gone through adequate training, education and background checks can help Californians recover from heartbreaking losses they experience from fires and other disasters.

First, some context.

While we agree with Farber that 2017 featured significant insured losses relating to natural disasters, Farber gets his facts wrong on the scope of the damage from 2017’s wildfires.

The wildfires and mudslides that followed the fires took the lives of 69 people. Statewide, insurers received nearly 45,000 claims totaling more than $12.3 billion dollars in insured losses for the wildfires and received over 2,000 claims totaling more than $421 million in losses from the mudslides that followed the wildfires.

Additionally, independent claims adjusters have a contract with an insurance company that is supposed to direct their efforts. This is important because while CDI worked closely with the survivors during the insurance claims process we had to notify insurers, licensed independent insurance adjusters, and others that some of the representations made by claims adjusters to consumers who had just lost everything were in conflict with California laws.

The inaccurate information provided by some claims adjusters was one of the factors that prompted the introduction of SB 1291 by Sen. Dodd. This bill responds to those issues and addresses a consumer protection shortcoming. While California typically has stronger consumer protections than other states, the licensing of independent insurance adjusters is one area where California’s consumer protections are much weaker than the other 34 states that license independent insurance adjusters.

The provisions in SB 1291 bridge an existing gap in the current California adjuster licensing system.

Specifically, California is the only state of the 35 states that license independent insurance adjusters that exempts independent insurance adjuster employees from the fingerprint-based background review and the education requirements that are a part of CDI’s licensing requirements —education that some claims adjusters were sorely lacking in that they provided incorrect information to policyholders in the wake of the 2017 fires.

SB 1291 doesn’t upend the current adjuster licensing system as Farber asserts. This bill fixes flaws in the current licensing system by requiring individual licensure for independent claims adjusters and catches California up with most other states. My department estimates there are approximately 30,000 unlicensed claims adjusters who have not gone through the education andfingerprint-based background check to meet CDI’s independent insurance licensing requirements.These requirementsprotect consumers from being put at risk during the handling of their claim by someone with a criminal record, particularly if the conviction is related to dishonesty or breach of trust. This alsowould ensure independent claims adjusters are familiar with California’s consumer protections.

SB 1291 is a proactive measure that requiresall individuals to be licensed and go throughCDI’s pre-licensing vetting process.That’s just fairness, common sense and sensible consumer protection. Claims adjusters and their employees will no longer be able to rely on an adjusting firm’s licensure alone to adjust insurance in California, just like in 70 percent of states.This bill will increase the standards and threshold requirements for an individual to adjust insurance in Californiaandprovide the protection that Californians deserve.

Ed’s Note: Dave Jones is the California Insurance Commissioner.

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