New Texas Law Affects Public Adjusters
Texas Senate Bill was passed by the legislature and recently signed into law by the Governor. The changes contained in this law are effective September 1, 2015. For a full copy of the bill click here.
The most important changes mandated by Senate Bill 1060 are as follows:
- Amends the Insurance Code to prohibit a licensed public insurance adjuster from entering into a contract with an insured and collecting a commission without the intent to actually perform the services customarily provided by a licensed public insurance adjuster for the insured.
- Expands the prohibition against a licensed public insurance adjuster accepting any payment that violates the requirement that all persons paying any proceeds of a policy of insurance or making any payment affecting an insured’s rights under a policy of insurance include the insured as a payee on the payment draft or check and require the written signature and endorsement of the insured on the payment draft or check to include in that prohibition the violation of any of the statutory provisions regarding commissions for services provided under the statutory provisions governing licensed public insurance adjusters. The bill provides that payment for a service performed under statutory provisions regarding commissions of a licensed public insurance adjuster that are performed before the bill’s effective date or that are performed after the bill’s effective date under a contract entered into before the bill’s effective date is governed by the law as it existed immediately before the bill’s effective date.
- Expands, for purposes of statutory provisions governing the prohibited conduct of licensed public insurance adjusters, the prohibition against an adjuster engaging in activities that may be reasonably construed as presenting a conflict of interest to include deriving any direct or indirect financial benefit from any salvage firm, repair firm, construction firm, or other firm that obtains business in connection with any claim the adjuster has a contract or agreement to adjust and includes a construction firm among the firms from which or in which an adjuster is prohibited from soliciting or accepting any remuneration or having a financial interest. The bill prohibits a licensed public insurance adjuster from directly or indirectly soliciting employment, as that term is described by Penal Code provisions relating to obstructing governmental operations, for an attorney or entering into a contract with an insured for the primary purpose of referring an insured to an attorney and without the intent to actually perform the services customarily provided by a licensed public insurance adjuster. The bill prohibits statutory provisions and bill provisions relating to licensed public insurance adjuster conflicts of interest from being construed to prohibit a licensed public insurance adjuster from recommending a particular attorney to an insured. The bill prohibits a licensed public insurance adjuster from acting on behalf of an attorney in having an insured sign an attorney representation agreement. The bill requires a licensed public insurance adjuster to become familiar with and at all times act in conformance with the criminal barratry statute set forth in the Penal Code.
- Revises the statutory provision prohibiting a licensed public insurance adjuster from paying, allowing, or giving or offering to pay, allow, or give a fee, commission, or other valuable consideration to a person who is not a licensed public insurance adjuster for the referral of an insured to that adjuster for the purposes of the insured entering into a contract with that adjuster by specifying that the prohibition is also applicable to a referral for any other purpose and by removing certain provisions to conform that statutory provision to that added specification.
- Prohibits a licensed public insurance adjuster from accepting a fee, commission, or other valuable consideration of any nature, regardless of form or amount, in exchange for the referral by a licensed public insurance adjuster of an insured to any third-party individual or firm, including an attorney, appraiser, umpire, construction company, contractor, or salvage company. The bill requires the commissioner of insurance to adopt rules necessary to implement and enforce the prohibition on the acceptance of referral payments.
- Repeals a statutory provision relating to the public insurance adjuster trainee registration program, which requires a public insurance adjuster trainee to register with the Texas Department of Insurance for a temporary certificate, and specifies that the repeal of this provision does not affect the authority of a person to act under such a temporary certificate issued before the bill’s effective date.
We encourage you to familiarize yourself with these new changes to the law. If you have any questions about how this law might affect you as a Texas public adjuster, reach out to our attorneys here at Daly & Black, P.C.