N.M. Admin. Code § 13.4.8.17

Current through Register Vol. 35, No. 17, September 10, 2024

Section 13.4.8.17 - POWERS AND RESPONSIBILITIES OF PUBLIC ADJUSTERS

A.General authority. A licensed public adjuster may adjust claims on behalf of insured clients for property claims, both real and personal, including loss of income. Although business entities can be licensed as a both public and independent adjuster, an individual adjuster that is licensed as a public adjuster shall not be licensed additionally as either a staff or independent adjuster.

B.Standards of conduct. In addition to the general standards of conduct that apply to all adjusters as set forth in 13.4.8.14 NMAC, public adjusters shall also adhere to the following legal and ethical requirements:

(1) All contracts for the services of a public adjuster and required disclosures shall be executed in writing and shall comply with the specific requirements set forth in Section 59A-13-15 NMSA 1978. A sample contract and sample disclosure form, which may be used by a public adjuster, are available on the OSI website. Use of the sample contract and disclosure will be accepted by the superintendent as compliance with this requirement.

(2) A public adjuster shall serve with objectivity and complete loyalty in the interest of the public adjuster's client alone and shall render to the client such information, counsel and service as will best serve the client's insurance claim needs and interest.

(3) A public adjuster shall not solicit, or attempt to solicit, a client during the progress of a loss-producing occurrence, as defined in the client's insurance contract.

(4) Unless disclosed to the client in writing, a public adjuster shall not refer or direct the client to get needed repairs or services in connection with a loss from any person:

(a) with whom the public adjuster has a financial interest; or

(b) from whom the public adjuster may receive direct or indirect compensation for the referral.

(5) Unless disclosed to the client in writing, a public adjuster shall not accept any compensation or anything of value in connection with a client's specific loss in exchange for the referral of a client to any third-party individual or firm, attorney, appraiser, umpire, construction company, contractor, or salvage company. Such disclosure shall include the source and amount of any such compensation.

(6) A public adjuster shall not agree to any settlement without the client's knowledge and consent.

(7) An individual public adjuster, while so licensed by the superintendent, shall not be licensed as a staff adjuster or an independent adjuster.

(8) The contract between the public adjuster and the client shall not be construed to prevent a client from pursuing any civil remedy after the three-business day revocation or cancellation period.

(9) A public adjuster shall not engage in the unauthorized practice of law.

C.Misrepresentation.

(1) A public adjuster shall not misrepresent to a claimant that he or she is an adjuster representing an insurer in any capacity, including acting as a staff adjuster employed by the insurer or acting as an independent adjuster.

(2) A public adjuster shall not make a misrepresentation, in violation of Insurance Code, to an insured or to an insurance company in the conduct of their actions as public adjusters.

D.Public adjuster fees.

(1) The public adjuster's contract shall disclose that the public adjuster is hired by and compensated by the insured to assist in preparation, presentation and settlement of the claim. The contract shall disclose that the public adjuster's fee or commission shall be paid by the insured from the proceeds of the settlement, and shall state whether the compensation is based on a percentage of the settlement.

(2) No public adjuster shall require, demand or accept any fee, retainer, compensation, deposit, or other thing of value prior to settlement of a claim and collection of money due to be paid by an insurance company. The public adjuster shall not collect the entire fee from the first check issued by an insurance company. Rather, the public adjuster's fees shall be paid as a percentage of each check issued by an insurance company.

(3) A public adjuster shall not pay a commission, service fee or other valuable consideration to a person for investigating or settling claims in this state if that person is required to be licensed pursuant to the Insurance Code and is not so licensed.

(4) A person shall not accept a commission, service fee or other valuable consideration for investigating or settling claims in this state if that person is required to be licensed pursuant to the Insurance Code and is not so licensed.

(5) In the event of a catastrophic disaster, there shall be limits on catastrophic fees that a public adjuster shall charge, agree to, or accept as compensation or reimbursement. Any payment, commission, fee, or other thing of value shall not exceed ten percent of any insurance settlement or proceeds.

E.Records of public adjusters. Records of public adjusters shall be maintained in compliance with Section 59A-13-17 NMSA 1978.

F.Fiduciary duties of public adjusters.

(1)Escrow or trust accounts. Public adjusters shall comply with the escrow and trust account requirements set forth in Section 59A-13-16 NMSA 1978.

(2)Handling of funds.

(a) All funds of others received by a public adjuster, including funds received as claim proceeds shall be received and held by the public adjuster in a fiduciary capacity. A public adjuster may not divert or appropriate fiduciary funds received or held. An adjuster who diverts or appropriates such funds for personal use or takes or secrets such funds with intent to embezzle without the consent of the person entitled to the funds is subject to fines and penalties set forth in the Insurance Code and is guilty of larceny.

(b) Subject to the terms of any agreement between an adjuster and the adjuster's principal or obligee, each adjuster who does not make immediate remittance of funds to the insured or other person entitled to them shall elect and follow one of the following methods:

(i) forward insurance funds received (less applicable compensation, if any) to the insured or person entitled thereto within 15 days after receipt; or

(ii) establish and maintain one or more fiduciary bank accounts separate from accounts holding personal, firm or corporate funds, and promptly deposit and retain therein all funds of others pending transmittal to the insured or person thereto entitled.

(c) The following exceptions to the prohibition against commingling of funds shall apply:

(i) Funds belonging to more than one principal may be deposited and held in the same account so long as the amount held for each principal is readily ascertainable from the records of the licensee.

(ii) A public adjuster may commingle with such fiduciary funds in a particular account such additional funds as the adjuster deems prudent for payment of claims or for other contingencies arising in the adjusting business.

(iii) A public adjuster may commingle with the adjuster own funds those funds of a particular principal who has expressly waived the segregation requirement in writing and in advance.

(iv) Permitted commingling of the funds of others with the adjuster's funds shall not alter the fiduciary duties of the adjuster as to the others' funds.

N.M. Admin. Code § 13.4.8.17

Adopted by New Mexico Register, Volume XXX, Issue 11, June 11, 2019, eff. 7/1/2019