AB357: Bill Text

August 12, 2019 - Introduced by Representatives Steffen, Ohnstad, Bowen, Brooks, Dittrich, Doyle, Felzkowski, Fields, Goyke, Gundrum, Horlacher, Krug, Kulp, Nygren, Ramthun, Skowronski, Spreitzer, Stubbs, Stuck, C. Taylor, Vruwink, Duchow and Macco, cosponsored by Senators Feyen, Bewley, Erpenbach, Miller, Olsen, Petrowski and Schachtner. Referred to Committee on Insurance.

AB357,1,4 An Act to amend 45.44 (1) (a) 18., 601.43 (1) (a) and 601.43 (1) (d); and to create 601.31 (1) (z), 601.31 (1) (zb), 601.31 (1) (zc) and chapter 629 of the statutes; relating to: regulation of public adjusters and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This bill imposes registration and other requirements on an individual, known as a public adjuster, who assists an insured person with a claim against the person's insurance company for loss or damage to real or personal property that is located in this state.

Under the bill, an individual may not perform services or solicit business as a public adjuster unless he or she is registered with the Office of the Commissioner of Insurance. In order to register with the commissioner, the individual must complete an application that requires proof of good character and financial responsibility, pass a written examination, and pay a fee. If the commissioner approves the application, the registration is effective for two years and may be renewed if the individual fulfills continuing education requirements. The commissioner may deny, suspend, revoke, or refuse to renew a registration if the commissioner determines that the individual has engaged in behavior that warrants the denial, suspension, revocation, or refusal. Additionally, the commissioner may impose a civil penalty on the individual.

The bill requires a registered public adjuster to enter into a contract with the insured before providing services to the insured. The contract must contain certain provisions, including provisions that disclose the public adjuster's compensation and the circumstances under which the insured may void the contract. The bill prohibits the contract from containing provisions that impose collection costs and late fees on the insured, require the insured to authorize the insurer to issue a check solely in the public adjuster's name, or limit the insured's right to pursue civil remedies against the public adjuster.

Under the bill, the public adjuster may not be paid prior to the insured receiving payment from the insurer and, if the insurer pays the policy limit within five business days from the date the loss is reported, the public adjuster may only be paid a reasonable hourly rate for the time spent on the claim. Additionally, the public adjuster's compensation may not exceed 10 percent of an insured's actual recovery if the claim is due to a catastrophic disaster.

The bill imposes requirements on a public adjuster to address conflicts of interest that may arise while working for the insured, including a requirement to notify the insured if the public adjuster has a financial interest in, or may receive compensation from, an entity working on the claim, such as a repair shop. The bill also imposes other requirements and limitations on a public adjuster, including that he or she must have the insured's written consent to agree to a settlement, may solicit business only during certain hours of the day, and may not work as an adjuster for an insurer or as an independent adjuster while registered as a public adjuster.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB357,1 Section 1 . 45.44 (1) (a) 18. of the statutes is amended to read:

AB357,2,3 45.44 (1) (a) 18. A license, certificate, registration, or permit issued under chs. 601 to 655.

AB357,2 Section 2. 601.31 (1) (z) of the statutes is created to read:

AB357,2,6 601.31 (1) (z) For issuance of a registration as a public adjuster under s. 629.02 (2), an amount to be set by the commissioner by rule.

AB357,3 Section 3. 601.31 (1) (zb) of the statutes is created to read:

AB357,2,9 601.31 (1) (zb) For each renewal of a public adjuster registration under s. 629.02 (4), an amount to be set by the commissioner by rule.

AB357,4 Section 4. 601.31 (1) (zc) of the statutes is created to read:

AB357,3,2 601.31 (1) (zc) For registering for the public adjuster examination under s. 629.03 (1), an amount to be set by the commissioner by rule.

AB357,5 Section 5. 601.43 (1) (a) of the statutes is amended to read:

AB357,3,11 601.43 (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, or permit, 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.

AB357,6 Section 6 . 601.43 (1) (d) of the statutes is amended to read:

AB357,3,15 601.43 (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.

AB357,7 Section 7. Chapter 629 of the statutes is created to read:

AB357,3,17 chapter 629

AB357,3,18 Public adjusters

AB357,3,19 629.01 Definitions. In this chapter:

AB357,3,23 (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.

AB357,3,25 (2) “Compensation” means anything of value received directly or indirectly in return for the performance of an adjusting service.

AB357,4,2 (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.

AB357,4,4 (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.

AB357,4,6 (5) “Public adjuster” means an individual who is registered with the commissioner under s. 629.02.

AB357,4,9 629.02 Registration. (1) Requirement 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:

AB357,4,11 1. Perform, offer to perform, or publicly represent himself or herself as performing an adjusting service with respect to a first-party claim.

AB357,4,14 2. Directly or indirectly 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.

AB357,4,16 (b) No person may utilize the adjusting services of an individual if the person knows, or should know, that the individual is not registered under this section.

AB357,4,17 (c) A contract entered into in violation of this subsection is void.

AB357,4,23 (2) Application. An individual may apply for the registration required under sub. (1) by completing a form prescribed by the commissioner. The form shall require the individual to provide the individual's social security number and all documentation the commissioner determines is necessary and appropriate. The commissioner shall approve the individual's registration application if the commissioner determines the individual satisfies all the following conditions:

AB357,4,25 (a) The individual has not committed any act that warrants the denial, suspension, revocation, or nonrenewal of a registration under s. 629.13.

AB357,5,2 (b) The individual provides proof that he or she is trustworthy, reliable, financially responsible, and of good reputation.

AB357,5,3 (c) The individual pays the fee under s. 601.31 (1) (z).

AB357,5,6 (d) The individual 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.

AB357,5,7 (e) The individual is at least 18 years of age.

AB357,5,8 (f) The individual meets the requirement of s. 629.03.

AB357,5,11 (g) The individual supplies a bond that meets specifications established by the commissioner to guarantee faithful performance of the individual's duties and obligations as a public adjuster.

AB357,5,15 (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. 601.72 and 601.73.

AB357,5,17 (3) Exceptions. Subsection (1) does not apply to any of the following individuals:

AB357,5,19 (a) An attorney admitted to practice in this state while acting in the professional capacity as an attorney.

AB357,5,21 (b) An individual who negotiates or settles claims arising under a life or disability insurance policy or an annuity contract.

AB357,5,24 (c) An individual employed solely for 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.

AB357,5,25 (d) An individual who settles subrogation claims between insurers.

AB357,6,2 (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.

AB357,6,10 (4) Renewal. 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).

AB357,6,17 629.03 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.

AB357,6,23 (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.

AB357,7,3 629.04 Contract requirements. (1) A public adjuster may not perform any adjusting service for an insured prior to entering into a contract with the insured. 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:

AB357,7,6 (a) The public adjuster's full name, state of residence, permanent principal business street address, telephone number, and registration number assigned by the commissioner.

AB357,7,7 (b) The insured's full name, street address, insurer name, and policy number.

AB357,7,8 (c) A description of the loss and its location.

AB357,7,10 (d) The date and time the contract was signed by the public adjuster and the insured.

AB357,7,12 (e) An attestation by the public adjuster that he or she is fully bonded pursuant to state law.

AB357,7,14 (f) A disclosure of the compensation the public adjuster is to receive in accordance with s. 629.05.

AB357,7,16 (g) A provision allowing the insured to void the contract in accordance with sub. (3).

AB357,7,18 (h) A statement that the contract shall constitute the entire agreement between the public adjuster and the insured.

AB357,7,20 (2) A contract under sub. (1) may not require the insured to do any of the following:

AB357,7,21 (a) Authorize an insurer to issue a check only in the name of the public adjuster.

AB357,7,22 (b) Pay collection costs or a late fee to the public adjuster.

AB357,7,24 (c) Limit the insured's right to pursue any civil remedy against the public adjuster.

AB357,8,11 (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.

AB357,8,14 (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.

AB357,8,18 (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:

AB357,8,19 (a) The information described in sub. (1) (a).

AB357,8,20 (b) A clear statement of the insured's right to file a complaint.

AB357,8,22 (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.

AB357,8,24 (d) The office of the commissioner's mailing address and phone numbers and the address of the office's Internet site.

AB357,9,6 629.05 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.

AB357,9,8 (2) The contract under s. 629.04 shall clearly disclose the compensation the public adjuster is to receive from the insured.

AB357,9,12 (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.

AB357,9,14 (4) A public adjuster may not demand compensation from the insured prior to the insured receiving payment from the insurer.

AB357,9,17 (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.

AB357,9,20 (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.

AB357,9,25 629.06 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 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.

AB357,10,10 629.07 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.

AB357,10,13 (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.

AB357,10,18 629.08 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.

AB357,10,23 629.09 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.

AB357,10,25 629.10 Prohibitions. In addition to the other prohibitions in this chapter, a public adjuster may not engage in any of the following activities: