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You are here: Home . rules . 2004 . 0618A-059
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Subchapter H. Licensing of Public Insurance Adjusters

28 TAC § 19.713

The Texas Department of Insurance proposes new §19.713, concerning the Public Insurance Adjusters´ Rules of Professional Conduct and Ethics. This proposal is required by Texas Insurance Code Article 21.07-5, §18(1). Article 21.07-5 was adopted pursuant to Senate Bill 127, during the 78th Legislature´s Regular Session. The proposed rule concisely states certain legal and ethical requirements that are of prime importance for public insurance adjusters´ professional conduct. Many additional laws, however, govern public insurance adjusters' conduct, including laws relating to matters of licensure, as well as those defining specific obligations of public insurance adjusters. Accordingly, while this proposal states certain requirements for the legal and ethical professional conduct of public insurance adjusters, it does not exhaust the legal or ethical requirements that govern their actions.

Proposed §19.713 is necessary to implement Article 21.07-5, §18(1) and further effective regulation of public insurance adjusters by providing public insurance adjusters with a statement of certain legal and ethical requirements that are of prime importance in the conduct of their business. This proposed rule is based upon the recommendations of the public insurance adjusters´ advisory committee, appointed by the commissioner pursuant to Insurance Code Article 21.07-5, §18(1), and reflects requirements found in existing law, as well as the National Association of Public Insurance Adjusters´ Rules of Professional Conduct and Ethics. The statement of these legal and ethical requirements in proposed §19.713 should result in enhanced protection for consumers and others interacting with public insurance adjusters by providing a concise point of reference for judging the conduct of public insurance adjusters.

Matt Ray, deputy commissioner, licensing division, has determined that for each year of the first five years the proposed section will be in effect there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the proposed rule. There will be no anticipated effect on local employment or the local economy as a result of the proposal.

Mr. Ray has determined that for each year of the first five years the proposed rule is in effect, the anticipated public benefit will be enhanced consumer protection, as well as improved public understanding of the role that public insurance adjusters play in the state´s insurance industry. Any economic costs to comply with the proposed rule result from the enactment of Insurance Code Article 21.07-5, §18(1), which requires the commissioner to adopt a code of ethics for public insurance adjusters, as well as the other provisions of Article 21.07-5 upon which the requirements of this proposed section are based and not as a result of the adoption, enforcement, or administration of the proposed section. There will be no difference in the cost of compliance between a large and small business as a result of the proposed rule. Based upon the cost of labor per hour, there is no disproportionate economic impact on small or micro businesses. Even if the proposed rule would have an adverse effect on small or micro businesses, it is neither legal nor feasible to waive the provisions of the proposed section for small or micro businesses, when the Insurance Code requires equal application of these provisions to all affected persons.

To be considered, written comments on the proposal must be submitted no later than 5 p.m. on August 2, 2004, to Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comments must be simultaneously submitted to Matt Ray, Deputy Commissioner, Licensing Division, Mail Code 107-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Any requests for a public hearing should be submitted separately to the Office of the Chief Clerk.

This section is proposed under the Insurance Code Article 21.07-5, §18(1) and §36.001. Article 21.07-5, §18(1) directs the commissioner to adopt a code of ethics for public insurance adjusters that governs their conduct. This proposal is based upon the following Insurance Code statutes relating to the conduct of public insurance adjusters. Article 21.07-5, §5(a)(4) requires that public insurance adjusters conduct their business "fairly and in good faith without detriment to the public." Article 21.07-5, §23(j) requires that public insurance adjusters refrain from improper solicitation. Article 21.07-5, §23(m)(1) requires that public insurance adjusters refrain from using misrepresentations in the conduct of their business. Article 21.07-5, §22 sets forth the fees and commissions that public insurance adjusters may charge. Article 21.07-5, §21(a) requires that public insurance adjusters complete continuing education. Article 21.07-5, §§5(8) and 15(a)(8) require that public insurance adjusters possess adequate knowledge and experience to handle their work appropriately. Article 21.07-5, §2 prohibits public insurance adjusters from engaging in the unauthorized practice of law. Article 21.07-5, §23(l) prohibits public insurance adjusters from engaging in activities that may be construed as presenting a conflict of interest or obtaining a financial interest in salvaged property that is the subject of a claim. Article 21.07-5, §§28 and 29 prohibit public insurance adjusters from using advertisements that violate the Insurance Code. Article 21.07-5, §23(d) requires that public insurance adjusters use contract forms that are approved by the commissioner. Finally, §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The following statute is affected by the proposal: Insurance Code Article 21.07-5

§19.713. Public Insurance Adjuster Rules of Professional Conduct and Ethics.

(a) This section states certain legal and ethical requirements that are of prime importance for public insurance adjusters´ professional conduct. This section does not exhaust the legal or ethical requirements that govern public insurance adjusters.

(b) All public insurance adjuster licensees shall comply with the following requirements :

(1) Licensees shall conduct business with their clients, insurance companies, and the public, in a spirit of fairness and justice.

(2) Licensees shall not employ any improper solicitation which would violate Insurance Code Article 21.07-5 or this subchapter.

(3) Licensees shall not make a misrepresentation, in violation of Insurance Code Article 21.07-5, §23 (m)(1), to an insured or to an insurance company in the conduct of their actions as a public insurance adjuster.

(4) Licensees shall charge only commissions and fees which are in compliance with the requirements set forth in Insurance Code Article 21.07-5 and this subchapter.

(5) Licensees shall complete continuing education as required by Insurance Code Article 21.07-5 and this subchapter.

(6) Licensees shall have appropriate knowledge and experience for the work they undertake and should obtain competent technical assistance, when necessary, to help handle claims and losses outside their area of expertise.

(7) Licensees shall not engage in the unauthorized practice of law.

(8) Licensees shall avoid situations of conflict of interest, including acquiring any interest in salvaged property or participating in any way, directly or indirectly in the reconstruction, repair or restoration of damaged property that is the subject of a claim adjusted by the licensee, except as allowed in Insurance Code Article 21.07-5 and this subchapter.

(9) Licensees shall not disseminate or use any form of agreement, advertising, or other communication, regardless, of format or medium, in this state that is harmful to the profession of public insurance adjusting and that does not comply with Insurance Code Article 21.07-5, this subchapter or other provisions of the Insurance Code.

(10) Licensees shall use only contracts that comply with Insurance Code Article 21.07-5 and this subchapter.



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