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Protection of the Arizona Insurance Consumer

American Family Insurance operating in Arizona has been under attack for using the title of “adjuster” when their employees are not actually licensed. It is appropriate for employees of insurance companies to adjust claims without a license but it is a violation of the law for anyone to claim the title of “adjuster” when they have not passed an examination for a license and met certain criteria to quality for the title.

No other major insurance company calls its employees “adjuster” but instead use such titles as “claim representative” or a similar title to designate employees who can adjust claims.

Several years ago it was alleged that American Family was committing consumer fraud by using “adjuster” titles and American Family was able to convince the ADOI (Arizona Department of Insurance) to change the definition of adjuster on the ADOI website to include the employees of insurance companies. The lawsuit that included this allegation was settled several years ago. Subsequently the Department of Insurance has been criticized for this action.

With the election of Governor Doug Ducey the ADOI has undertaken changes that include addressing nagging insurance consumer issues one of which is the fact that a major insurance company has been able to “call the shots” in telling the ADOI how to handle this issue.

A nurse can work in the medical field but when the nurse has not earned the title of “attorney” A paralegal can do legal work but has not earned the title of “attorney”. An employee of an insurer can adjust claims but has not earned the title of “adjuster”. In order to bring American Family into compliance with the law, American Family needs to cease calling its claim representatives “adjuster” or the law has to be changed.

A law has now been introduced into the Arizona Legislature to address this issue. However, the bill, Known as House Bill 2342 would remove the requirement of ANY insurance adjuster to be licensed and would alolw anyone except an adjuster who represents the insured (a “public” adjuster) to enter the insurance adjusting field with absolutely no experience or educational requirement having ever been met.

Introduced by Republicans Karen Fann and David Livingston, the bill will deeply impact insurance adjusters who are currently licensed and have earned their license through experience and education. It will, in fact, render that licensing meaningless.

While insurance agents must participate in continuing education in Arizona, there is no continuing education requirement for insurance adjusters. Arizona also has no experience requirement before someone can take an examination to become an insurance adjuster. To allow insurance adjusters to enter the field of adjusting without any educational requirements and with no evidence of passing an examination as is now required, goes against what we know is logical.

This law as proposed is anathema to a society concerned with protection of the public. Hair dressers and cosmetologists have to be licensed. Private investigators have to be licensed. Property managers have to be licensed. It goes against every ounce of consumer protection concern in our society to allow insurance adjusters to enter the field of adjusting with no experience or education.

Please join me and members of our association in protesting this proposed law.

American Family should work to get its claim representatives licensed or drop the practice of awarding them the title “adjuster”. The law does not need to be changed.

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