Louisiana Insurance Commissioner Jim Donelon has published Advisory Letter 2022-01, to provide guidance to public adjusters regarding statutory duties and restrictions placed on public adjusters, specifically in regards to the unauthorized practice of law.
The law, codified in La. R. S. 22:1691 et seq. specifies the duties of and restrictions on public adjusters, including limiting their authority in assisting insureds in first-party claims to avoid the unauthorized practice of law.
The advisory letter quotes the law in outlining the appropriate standard of conduct of public adjusters. Commissioner Donelon adds a note that public adjusters may not undertake activities that otherwise constitute the practice of law, including engaging the policyholder in a contingency-based fee arrangement, rendering legal advice regarding policy provisions or coverage issues, advising insureds of issues and rights concerning the redress of legal wrongs under the insurance policies, and negotiating settlements and directly containing insurers to discuss and evaluate the merits of the client’s insurance claims.
Recently the Louisiana Department of Insurance has seen an uptick in public adjusters practicing law, which has resulted in an increase in fines issued and Cease and Desist Orders. Public adjusters have reportedly been cited for having websites that mention the word “negotiate,” or in any way purport to offer any services that would violate the law, such as representing the interests of insureds, presenting the claim to the carrier, or offering “no recovery, no fee,” a level of scrutiny that is unexpected by many public adjusters.
A prudent adjuster, even one not in Louisiana, would change any websites to specify that any questionable services offered are not available in Louisiana, and would specify in communications with insurers that the adjuster has communicated with the insured and the insured expressed that they wanted the adjuster to convey the messages to the insurer. If the conduct is questionable, err on the side of caution as to avoid any action against you by the Department of Insurance.
In an email to public adjusters, the Louisiana Department of Insurance Office of Consumer Advocacy expressed concerns as to how this would affect public adjusters. The letter pointed out that adjusters are required by statute (La. R.S. § 22:1704) to send the insurer a notification letter advising that the insured and the adjuster have a contract. The letter must be signed by the insured, and the letter does not preclude the insured from discussing the claim with the insurer.
The email listed certain steps adjusters may want to take in order to ensure compliance with the order as follows:
The Office of Consumer Advocacy is planning a panel discussion to address these issues and how to handle them.
