Rep. John A. Fritchey

Filed: 3/23/2010

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 660

2     AMENDMENT NO. ______. Amend Senate Bill 660 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 5. The Illinois Insurance Code is amended by
5 adding Article XLV as follows:
 
6     (215 ILCS 5/Art. XLV heading new)
7
ARTICLE XLV. PUBLIC ADJUSTERS

 
8     (215 ILCS 5/1501 new)
9     Sec. 1501. Short title. This Article may be cited as the
10 Public Adjusters Law.
 
11     (215 ILCS 5/1505 new)
12     Sec. 1505. Purpose and scope. This Article governs the
13 qualifications and procedures for the licensing of public
14 adjusters. It specifies the duties of and restrictions on

 

 

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1 public adjusters, which include limiting their licensure to
2 assisting insureds in first party claims.
 
3     (215 ILCS 5/1510 new)
4     Sec. 1510. Definitions. In this Article:
5     "Adjusting a claim for loss or damage covered by an
6 insurance contract" means negotiating values, damages, or
7 depreciation or applying the loss circumstances to insurance
8 policy provisions.
9     "Business entity" means a corporation, association,
10 partnership, limited liability company, limited liability
11 partnership, or other legal entity.
12     "Department" means the Department of Insurance.
13     "Director" means the Director of Insurance.
14     "Fingerprints" means an impression of the lines on the
15 finger taken for the purpose of identification. The impression
16 may be electronic or in ink converted to electronic format.
17     "Home state" means the District of Columbia and any state
18 or territory of the United States where the public adjuster's
19 principal place of residence or principal place of business is
20 located. If neither the state in which the public adjuster
21 maintains the principal place of residence nor the state in
22 which the public adjuster maintains the principal place of
23 business has a substantially similar law governing public
24 adjusters, the public adjuster may declare another state in
25 which it becomes licensed and acts as a public adjuster to be

 

 

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1 the home state.
2     "Individual" means a natural person.
3     "Person" means an individual or a business entity.
4     "Public adjuster" means any person who, for compensation or
5 any other thing of value on behalf of the insured:
6         (i) acts or aids, solely in relation to first party
7     claims arising under insurance contracts that insure the
8     real or personal property of the insured, on behalf of an
9     insured in adjusting a claim for loss or damage covered by
10     an insurance contract;
11         (ii) advertises for employment as an public adjuster of
12     insurance claims or solicits business or represents
13     himself or herself to the public as an public adjuster of
14     first party insurance claims for losses or damages arising
15     out of policies of insurance that insure real or personal
16     property; or
17         (iii) directly or indirectly solicits business,
18     investigates or adjusts losses, or advises an insured about
19     first party claims for losses or damages arising out of
20     policies of insurance that insure real or personal property
21     for another person engaged in the business of adjusting
22     losses or damages covered by an insurance policy for the
23     insured.
24     "Uniform individual application" means the current version
25 of the National Association of Directors (NAIC) Uniform
26 Individual Application for resident and nonresident

 

 

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1 individuals.
2     "Uniform business entity application" means the current
3 version of the National Association of Insurance Commissioners
4 (NAIC) Uniform Business Entity Application for resident and
5 nonresident business entities.
 
6     (215 ILCS 5/1515 new)
7     Sec. 1515. License required.
8     (a) A person shall not act, advertise, solicit, or hold
9 himself out as a public adjuster or to be in the business of
10 adjusting insurance claims in this State, nor attempt to obtain
11 a contract for public adjusting services, unless the person is
12 licensed as a public adjuster in accordance with this Article.
13     (b) A person licensed as a public adjuster shall not
14 misrepresent to a claimant that he or she is an adjuster
15 representing an insurer in any capacity, including acting as an
16 employee of the insurer or acting as an independent adjuster
17 unless so appointed by an insurer in writing to act on the
18 insurer's behalf for that specific claim or purpose. A licensed
19 public adjuster is prohibited from charging that specific
20 claimant a fee when appointed by the insurer and the
21 appointment is accepted by the public adjuster.
22     (c) A business entity acting as a public adjuster is
23 required to obtain a public adjuster license. Application shall
24 be made using the Uniform Business Entity Application. Before
25 approving the application, the Director shall find that:

 

 

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1         (1) the business entity has paid the required fees to
2     be registered as a business entity in this State; and
3         (2) all officers, shareholders, and persons with
4     ownership interests in the business entity are licensed
5     public adjusters responsible for the business entity's
6     compliance with the insurance laws, rules, and regulations
7     of this State.
8     (d) Notwithstanding subsections (a) through (c) of this
9 Section, a license as a public adjuster shall not be required
10 of the following:
11         (1) an attorney admitted to practice in this State,
12     when acting in his or her professional capacity as an
13     attorney;
14         (2) a person who negotiates or settles claims arising
15     under a life or health insurance policy or an annuity
16     contract;
17         (3) a person employed only for the purpose of obtaining
18     facts surrounding a loss or furnishing technical
19     assistance to a licensed public adjuster, including
20     photographers, estimators, private investigators,
21     engineers, and handwriting experts;
22         (4) a licensed health care provider, or employee of a
23     licensed health care provider, who prepares or files a
24     health claim form on behalf of a patient; or
25         (5) a person who settles subrogation claims between
26     insurers.
 

 

 

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1     (215 ILCS 5/1520 new)
2     Sec. 1520. Application for license.
3     (a) A person applying for a public adjuster license shall
4 make application to the Director on the appropriate uniform
5 application or other application prescribed by the Director.
6     (b) The applicant shall declare under penalty of perjury
7 and under penalty of refusal, suspension, or revocation of the
8 license that the statements made in the application are true,
9 correct, and complete to the best of the applicant's knowledge
10 and belief.
11     (c) In order to make a determination of license
12 eligibility, the Director is authorized to require
13 fingerprints of applicants and submit such fingerprints and the
14 fee required to perform the criminal history record checks to
15 the Illinois State Police and the Federal Bureau of
16 Investigation (FBI) for State and national criminal history
17 record checks.
18     (d) The Director may adopt rules to establish procedures
19 necessary to carry out the requirements of subsection (c) of
20 this Section.
21     (e) The Director is authorized to submit electronic
22 fingerprint records and necessary identifying information to
23 the NAIC, its affiliates, or subsidiaries for permanent
24 retention in a centralized repository. The purpose of such a
25 centralized repository is to provide Directors with access to

 

 

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1 fingerprint records in order to perform criminal history record
2 checks.
3     (f) Until such time as the Director can obtain and receive
4 national criminal history records, the applicant shall obtain a
5 copy of his or her fingerprints and complete criminal history
6 record from the FBI Criminal Justice Information Services
7 Division and the Illinois State Police and provide such
8 information to the Department of Insurance.
 
9     (215 ILCS 5/1525 new)
10     Sec. 1525. Resident license.
11     (a) Before issuing a public adjuster license to an
12 applicant under this Section, the Director shall find that the
13 applicant:
14         (1) is eligible to designate this State as his or her
15     home state or is a nonresident who is not eligible for a
16     license under Section 1540;
17         (2) has not committed any act that is a ground for
18     denial, suspension, or revocation of a license as set forth
19     in Section 1555;
20         (3) is trustworthy, reliable, competent, and of good
21     reputation, evidence of which may be determined by the
22     Director;
23         (4) is financially responsible to exercise the license
24     and has provided proof of financial responsibility as
25     required in Section 1560 of this Article; and

 

 

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1         (5) maintains an office in the home state of residence
2     with public access by reasonable appointment or regular
3     business hours. This includes a designated office within a
4     home state of residence.
5     (b) In addition to satisfying the requirements of
6 subsection (a) of this Section, an individual shall
7         (1) be at least 18 years of age;
8         (2) have successfully passed the public adjuster
9     examination;
10         (3) designate a licensed individual public adjuster
11     responsible for the business entity's compliance with the
12     insurance laws, rules, and regulations of this State; and
13         (4) designate only licensed individual public
14     adjusters to exercise the business entity's license.
15     (c) The Director may require any documents reasonably
16 necessary to verify the information contained in the
17 application.
 
18     (215 ILCS 5/1530 new)
19     Sec. 1530. Examination.
20     (a) An individual applying for a public adjuster license
21 under this Article must pass a written examination unless he or
22 she is exempt pursuant to Section 1535 of this Article. The
23 examination shall test the knowledge of the individual
24 concerning the duties and responsibilities of a public adjuster
25 and the insurance laws and regulations of this State.

 

 

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1 Examinations required by this Section shall be developed and
2 conducted under rules and regulations prescribed by the
3 Director.
4     (b) The Director may make arrangements, including
5 contracting with an outside testing service, for administering
6 examinations and collecting the nonrefundable fee. Each
7 individual applying for an examination shall remit a
8 nonrefundable fee as prescribed by the Director. An individual
9 who fails to appear for the examination as scheduled or fails
10 to pass the examination shall reapply for an examination and
11 remit all required fees and forms before being rescheduled for
12 another examination. An individual who fails to pass the
13 examination must wait 90 days prior to rescheduling an
14 examination.
 
15     (215 ILCS 5/1535 new)
16     Sec. 1535. Exemptions from examination.
17     (a) An individual who applies for a public adjuster license
18 in this State who was previously licensed as a public adjuster
19 in another state based on an public adjuster examination shall
20 not be required to complete any prelicensing education. This
21 exemption is only available if (i) the person is currently
22 licensed in that state or if the application is received within
23 12 months of the cancellation of the applicant's previous
24 license; and (ii) if the prior state issues a certification
25 that, at the time of cancellation, the applicant was in good

 

 

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1 standing in that state or the state's producer database records
2 or records maintained by the NAIC, its affiliates, or
3 subsidiaries, indicate that the public adjuster is or was
4 licensed in good standing.
5     (b) A person licensed as a public adjuster in another state
6 based on a public adjuster examination who moves to this State
7 shall submit an application within 90 days of establishing
8 legal residence to become a resident licensee pursuant to
9 Section 1525 of this Article. No prelicensing examination shall
10 be required of that person to obtain a public adjuster license.
11     (c) An individual who applies for a public adjuster license
12 in this State who was previously licensed as a public adjuster
13 in this State shall not be required to complete any
14 prelicensing examination. This exemption is only available if
15 the application is received within 12 months of the
16 cancellation of the applicant's previous license in this State
17 and if, at the time of cancellation, the applicant was in good
18 standing in this State.
 
19     (215 ILCS 5/1540 new)
20     Sec. 1540. Nonresident license reciprocity.
21     (a) Unless denied licensure pursuant to Section 1555 of
22 this Article, a nonresident person shall receive a nonresident
23 public adjuster license if:
24         (1) the person is currently licensed as a resident
25     public adjuster and in good standing in his or her home

 

 

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1     state;
2         (2) the person has submitted the proper request for
3     licensure and has provided proof of financial
4     responsibility as required in Section 1560 of this Article;
5         (3) the person has submitted or transmitted to the
6     Director the appropriate completed application for
7     licensure; and
8         (4) the person's home state awards nonresident public
9     adjuster licenses to residents of this State on the same
10     basis.
11     (b) The Director may verify the public adjuster's licensing
12 status through the producer database maintained by the NAIC,
13 its affiliates, or subsidiaries.
14     (c) As a condition to continuation of a public adjuster
15 license issued under this Section, the licensee shall maintain
16 a resident public adjuster license in his or her home state.
17 The nonresident public adjuster license issued under this
18 Section shall terminate and be surrendered immediately to the
19 Director if the home state public adjuster license terminates
20 for any reason, unless the public adjuster has been issued a
21 license as a resident public adjuster in his or her new home
22 state. Notification to the state or states where the
23 nonresident license is issued must be made as soon as possible,
24 yet no later that 30 days of change in new state resident
25 license. The licensee shall include his or her new and old
26 address on the notification. A new state resident license is

 

 

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1 required for nonresident licenses to remain valid. The new
2 state resident license must have reciprocity with the licensing
3 nonresident state or states for the nonresident license not to
4 terminate.
 
5     (215 ILCS 5/1545 new)
6     Sec. 1545. License.
7     (a) Unless denied licensure under this Article, persons who
8 have met the requirements of this Article shall be issued a
9 public adjuster license.
10     (b) A public adjuster license shall remain in effect unless
11 revoked, terminated, or suspended as long as the requirements
12 for license renewal are met by the due date.
13     (c) The licensee shall inform the Director by any means
14 acceptable to the Director of a change of address, change of
15 legal name, or change of information submitted on the
16 application within 30 days of the change.
17     (d) A licensed public adjuster shall be subject to Article
18 XXVI of this Code.
19     (e) A public adjuster who allows his or her license to
20 lapse may, within 12 months from the due date of the renewal,
21 be issued a new public adjuster license without necessity of
22 passing a written examination. However, a penalty in the amount
23 of double the unpaid renewal fee shall be required for the
24 issue of the new public adjuster license.
25     (f) A licensed public adjuster that is unable to comply

 

 

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1 with license renewal procedures due to military service or a
2 long-term medical disability may request a waiver of the
3 procedures in subsection (e) of this Section. The public
4 adjuster may also request a waiver of any examination
5 requirement, fine, or other sanction imposed for failure to
6 comply with renewal procedures.
7     (g) The license shall contain the licensee's name, city and
8 state of business address, personal identification number, the
9 date of issuance, the expiration date, and any other
10 information the Director deems necessary.
11     (h) In order to assist in the performance of the Director's
12 duties, the Director may contract with non-governmental
13 entities, including the NAIC or any affiliates or subsidiaries
14 that the NAIC oversees, to perform any ministerial functions,
15 including the collection of fees and data, related to licensing
16 that the Director may deem appropriate.
 
17     (215 ILCS 5/1555 new)
18     Sec. 1555. License denial, nonrenewal, or revocation.
19     (a) The Director may place on probation, suspend, revoke,
20 deny, or refuse to issue or renew a public adjuster's license
21 or may levy a civil penalty or any combination of actions, for
22 any one or more of the following causes:
23         (1) providing incorrect, misleading, incomplete, or
24     materially untrue information in the license application;
25         (2) violating any insurance laws, or violating any

 

 

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1     regulation, subpoena, or order of the Director or of
2     another state's Director;
3         (3) obtaining or attempting to obtain a license through
4     misrepresentation or fraud;
5         (4) improperly withholding, misappropriating, or
6     converting any monies or properties received in the course
7     of doing insurance business;
8         (5) intentionally misrepresenting the terms of an
9     actual or proposed insurance contract or application for
10     insurance;
11         (6) having been convicted of a felony or misdemeanor
12     involving dishonesty or fraud, unless the individual
13     demonstrates to the Director sufficient rehabilitation to
14     warrant the public trust;
15         (7) having admitted or been found to have committed any
16     insurance unfair trade practice or insurance fraud;
17         (8) using fraudulent, coercive, or dishonest
18     practices; or demonstrating incompetence,
19     untrustworthiness, or financial irresponsibility in the
20     conduct of business in this State or elsewhere;
21         (9) having an insurance license or public adjuster
22     license or its equivalent, denied, suspended, or revoked in
23     any other state, province, district, or territory;
24         (10) forging another's name to an application for
25     insurance or to any document related to an insurance
26     transaction;

 

 

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1         (11) cheating, including improperly using notes or any
2     other reference material, to complete an examination for an
3     insurance license or public adjuster license;
4         (12) knowingly accepting insurance business from or
5     transacting business with an individual who is not licensed
6     but who is required to be licensed by the Director;
7         (13) failing to comply with an administrative or court
8     order imposing a child support obligation;
9         (14) failing to pay State income tax or comply with any
10     administrative or court order directing payment of State
11     income tax;
12         (15) failing to comply with or having violated any of
13     the standards set forth in Section 1590 of this Law; or
14         (16) failing to maintain the records required by
15     Section 1585 of this Law.
16     (b) If the action by the Director is to nonrenew, suspend,
17 or revoke a license or to deny an application for a license,
18 the Director shall notify the applicant or licensee and advise,
19 in writing, the applicant or licensee of the reason for the
20 suspension, revocation, denial, or nonrenewal of the
21 applicant's or licensee's license. The applicant or licensee
22 may make written demand upon the Director within 30 days after
23 the date of mailing for a hearing before the Director to
24 determine the reasonableness of the Director's action. The
25 hearing must be held within not fewer than 20 days nor more
26 than 30 days after the mailing of the notice of hearing and

 

 

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1 shall be held pursuant to 50 Ill. Adm. Code 2402.
2     (c) The license of a business entity may be suspended,
3 revoked, or refused if the Director finds, after hearing, that
4 an individual licensee's violation was known or should have
5 been known by one or more of the partners, officers, or
6 managers acting on behalf of the business entity and the
7 violation was neither reported to the Director, nor corrective
8 action taken.
9     (d) In addition to or in lieu of any applicable denial,
10 suspension or revocation of a license, a person may, after
11 hearing, be subject to a civil penalty. In addition to or
12 instead of any applicable denial, suspension, or revocation of
13 a license, a person may, after hearing, be subject to a civil
14 penalty of up to $10,000 for each cause for denial, suspension,
15 or revocation, however, the civil penalty may total no more
16 than $100,000.
17     (e) The Director shall retain the authority to enforce the
18 provisions of and impose any penalty or remedy authorized by
19 this Article against any person who is under investigation for
20 or charged with a violation of this Article even if the
21 person's license or registration has been surrendered or has
22 lapsed by operation of law.
23     (f) Any individual whose public adjuster's license is
24 revoked or whose application is denied pursuant to this Section
25 shall be ineligible to apply for a public adjuster's license
26 for 5 years. A suspension pursuant to this Section may be for

 

 

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1 any period of time up to 5 years.
 
2     (215 ILCS 5/1560 new)
3     Sec. 1560. Bond or letter of credit.
4     (a) Prior to the issuance of a license as a public adjuster
5 and for the duration of the license, the applicant shall secure
6 evidence of financial responsibility in a format prescribed by
7 the Director through a surety bond or irrevocable letter of
8 credit, subject to all of the following requirements:
9         (1) A surety bond executed and issued by an insurer
10     authorized to issue surety bonds in this State, which bond:
11             (A) shall be in the minimum amount of $20,000;
12             (B) shall be in favor of this State and shall
13         specifically authorize recovery by the Director on
14         behalf of any person in this State who sustained
15         damages as the result of erroneous acts, failure to
16         act, conviction of fraud, or conviction of unfair
17         practices in his or her capacity as a public adjuster;
18         and
19             (C) shall not be terminated unless at least 30
20         days' prior written notice will have been filed with
21         the Director and given to the licensee; and
22         (2) An irrevocable letter of credit issued by a
23     qualified financial institution, which letter of credit
24             (A) shall be in the minimum amount of $20,000;
25             (B) shall be to an account to the Director and

 

 

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1         subject to lawful levy of execution on behalf of any
2         person to whom the public adjuster has been found to be
3         legally liable as the result of erroneous acts, failure
4         to act, fraudulent acts, or unfair practices in his or
5         her capacity as a public adjuster; and
6             (C) shall not be terminated unless at least 30
7         days' prior written notice will have been filed with
8         the and given to the licensee.
9     (b) The issuer of the evidence of financial responsibility
10 shall notify the Director upon termination of the bond or
11 letter of credit, unless otherwise directed by the Director.
12     (c) The Director may ask for the evidence of financial
13 responsibility at any time he or she deems relevant.
14     (d) The authority to act as a public adjuster shall
15 automatically terminate if the evidence of financial
16 responsibility terminates or becomes impaired.
 
17     (215 ILCS 5/1563 new)
18     Sec. 1563. Fees.
19     (a) The fees required by this Article are as follows:
20         (1) Public adjuster license fee of $250, payable once
21     every 2 years.
22         (2) Business entity license fee of $250, payable once
23     every 2 years.
24         (3) Application fee of $50 for processing each request
25     to take the written examination for a public adjuster

 

 

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1     license.
 
2     (215 ILCS 5/1565 new)
3     Sec. 1565. Continuing education.
4     (a) An individual who holds a public adjuster license and
5 who is not exempt under subsection (b) of this Section shall
6 satisfactorily complete a minimum of 24 hours of continuing
7 education courses, including 3 hours of classroom ethics
8 instruction, reported on a biennial basis in conjunction with
9 the license renewal cycle.
10     The Director may not approve a course of study unless the
11 course provides for classroom, seminar, or self-study
12 instruction methods. A course given in a combination
13 instruction method of classroom or seminar and self-study shall
14 be deemed to be a self-study course unless the classroom or
15 seminar certified hours meets or exceeds two-thirds of the
16 total hours certified for the course. The self-study material
17 used in the combination course must be directly related to and
18 complement the classroom portion of the course in order to be
19 considered for credit. An instruction method other than
20 classroom or seminar shall be considered as self-study
21 methodology. Self-study credit hours require the successful
22 completion of an examination covering the self-study material.
23 The examination may not be self-evaluated. However, if the
24 self-study material is completed through the use of an approved
25 computerized interactive format whereby the computer validates

 

 

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1 the successful completion of the self-study material, no
2 additional examination is required. The self-study credit
3 hours contained in a certified course shall be considered
4 classroom hours when at least two-thirds of the hours are given
5 as classroom or seminar instruction.
6     The public adjuster must complete the course in advance of
7 the renewal date to allow the education provider time to report
8 the credit to the Department.
9     (b) This Section shall not apply to:
10         (1) licensees not licensed for one full year prior to
11     the end of the applicable continuing education biennium; or
12         (2) licensees holding nonresident public adjuster
13     licenses who have met the continuing education
14     requirements of their home state and whose home state gives
15     credit to residents of this State on the same basis.
16     (c) Only continuing education courses approved by the
17 Director shall be used to satisfy the continuing education
18 requirement of subsection (a) of this Section.
 
19     (215 ILCS 5/1570 new)
20     Sec. 1570. Public adjuster fees.
21     (a) A public adjuster shall not pay a commission, service
22 fee, or other valuable consideration to a person for
23 investigating or settling claims in this State if that person
24 is required to be licensed under this Article and is not so
25 licensed.

 

 

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1     (b) A person shall not accept a commission, service fee, or
2 other valuable consideration for investigating or settling
3 claims in this State if that person is required to be licensed
4 under this Article and is not so licensed.
5     (c) A public adjuster may pay or assign commission, service
6 fees, or other valuable consideration to persons who do not
7 investigate or settle claims in this State, unless the payment
8 would violate State law.
 
9     (215 ILCS 5/1575 new)
10     Sec. 1575. Contract between public adjuster and insured.
11     (a) Public adjusters shall ensure that all contracts for
12 their services are in writing and contain the following terms:
13         (1) legible full name of the adjuster signing the
14     contract, as specified in Department records;
15         (2) permanent home state business address and phone
16     number;
17         (3) license number;
18         (4) title of "Public Adjuster Contract";
19         (5) the insured's full name, street address, insurance
20     company name, and policy number, if known or upon
21     notification;
22         (6) a description of the loss and its location, if
23     applicable;
24         (7) description of services to be provided to the
25     insured;

 

 

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1         (8) signatures of the public adjuster and the insured;
2         (9) date and time the contract was signed by the public
3     adjuster and date and time the contract was signed by the
4     insured;
5         (10) attestation language stating that the public
6     adjuster is fully bonded pursuant to State law; and
7         (11) full salary, fee, commission, compensation, or
8     other considerations the public adjuster is to receive for
9     services.
10     (b) The contract may specify that the public adjuster shall
11 be named as a co-payee on an insurer's payment of a claim.
12         (1) If the compensation is based on a share of the
13     insurance settlement, the exact percentage shall be
14     specified.
15         (2) Initial expenses to be reimbursed to the public
16     adjuster from the proceeds of the claim payment shall be
17     specified by type, with dollar estimates set forth in the
18     contract and with any additional expenses first approved by
19     the insured.
20         (3) Compensation provisions in a public adjusting
21     contract shall not be redacted in any copy of the contract
22     provided to the Director.
23     (c) If the insurer, not later than 5 business days after
24 the date on which the loss is reported to the insurer, either
25 pays or commits in writing to pay to the insured the policy
26 limit of the insurance policy, the public adjuster shall:

 

 

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1         (1) not receive a commission consisting of a percentage
2     of the total amount paid by an insurer to resolve a claim;
3         (2) inform the insured that loss recovery amount might
4     not be increased by insurer; and
5         (3) be entitled only to reasonable compensation from
6     the insured for services provided by the public adjuster on
7     behalf of the insured, based on the time spent on a claim
8     and expenses incurred by the public adjuster, until the
9     claim is paid or the insured receives a written commitment
10     to pay from the insurer.
11     (d) A public adjuster shall provide the insured a written
12 disclosure concerning any direct or indirect financial
13 interest that the public adjuster has with any other party who
14 is involved in any aspect of the claim, other than the salary,
15 fee, commission, or other consideration established in the
16 written contract with the insured, including, but not limited
17 to, any ownership of or any compensation expected to be
18 received from, any construction firm, salvage firm, building
19 appraisal firm, board-up company, or any other firm which that
20 provides estimates for work, or that performs any work, in
21 conjunction with damages caused by the insured loss on which
22 the public adjuster is engaged. The word "firm" shall include
23 any corporation, partnership, association, joint-stock
24 company, or person.
25     (e) A public adjuster contract may not contain any contract
26 term that:

 

 

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1         (1) allows the public adjuster's percentage fee to be
2     collected when money is due from an insurance company, but
3     not paid, or that allows a public adjuster to collect the
4     entire fee from the first check issued by an insurance
5     company, rather than as percentage of each check issued by
6     an insurance company;
7         (2) requires the insured to authorize an insurance
8     company to issue a check only in the name of the public
9     adjuster;
10         (3) precludes a public adjuster or an insured from
11     pursuing civil remedies;
12         (4) includes any hold harmless agreement that provides
13     indemnification to the public adjuster by the insured for
14     liability resulting from the public adjuster's negligence;
15     or
16         (5) provides power of attorney by which the public
17     adjuster can act in the place and instead of the insured.
18     (f) The following provisions apply to a contract between a
19 public adjuster and an insured:
20         (1) Prior to the signing of the contract, the public
21     adjuster shall provide the insured with a separate signed
22     and dated disclosure document regarding the claim process
23     that states:
24     "Property insurance policies obligate the insured to
25     present a claim to his or her insurance company for
26     consideration. There are 3 types of adjusters that could be

 

 

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1     involved in that process. The definitions of the 3 types
2     are as follows:
3             (A) "Company adjuster" means the insurance
4         adjusters who are employees of an insurance company.
5         They represent the interest of the insurance company
6         and are paid by the insurance company. They will not
7         charge you a fee.
8             (B) "Independent adjuster" means the insurance
9         adjusters who are hired on a contract basis by an
10         insurance company to represent the insurance company's
11         interest in the settlement of the claim. They are paid
12         by your insurance company. They will not charge you a
13         fee.
14             (C) "Public adjuster" means the insurance
15         adjusters who do not work for any insurance company.
16         They work for the insured to assist in the preparation,
17         presentation and settlement of the claim. The insured
18         hires them by signing a contract agreeing to pay them a
19         fee or commission based on a percentage of the
20         settlement, or other method of compensation.".
21         (2) The insured is not required to hire a public
22     adjuster to help the insured meet his or her obligations
23     under the policy, but has the right to do so.
24         (3) The public adjuster is not a representative or
25     employee of the insurer.
26         (4) The salary, fee, commission, or other

 

 

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1     consideration is the obligation of the insured, not the
2     insurer, except when rights have been assigned to the
3     public adjuster by the insured.
4     (g) The contracts shall be executed in duplicate to provide
5 an original contract to the public adjuster, and an original
6 contract to the insured. The public adjuster's original
7 contract shall be available at all times for inspection without
8 notice by the Director.
9     (h) The public adjuster shall provide the insurer with an
10 exact copy of the contract by the insured, authorizing the
11 public adjuster to represent the insured's interest.
12     (i) The public adjuster shall give the insured written
13 notice of the insured's rights as a consumer under the law of
14 this State.
15     (j) A public adjuster shall not provide services until a
16 written contract with the insured has been executed, on a form
17 filed with and approved by the Director. At the option of the
18 insured, any such contract shall be voidable for 5 business
19 days after execution. The insured may void the contract by
20 notifying the public adjuster in writing by (i) registered or
21 certified mail, return receipt requested, to the address shown
22 on the contract or (ii) personally serving the notice on the
23 public adjuster.
24     (k) If the insured exercises the right to rescind the
25 contract, anything of value given by the insured under the
26 contract will be returned to the insured within 15 business

 

 

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1 days following the receipt by the public adjuster of the
2 cancellation notice.
 
3     (215 ILCS 5/1580 new)
4     Sec. 1580. Escrow or trust accounts. A public adjuster who
5 receives, accepts, or holds any funds on behalf of an insured
6 towards the settlement of a claim for loss or damage shall
7 deposit the funds in a non-interest bearing escrow or trust
8 account in a financial institution that is insured by an agency
9 of the federal government in the public adjuster's home state
10 or where the loss occurred.
 
11     (215 ILCS 5/1585 new)
12     Sec. 1585. Record retention.
13     (a) A public adjuster shall maintain a complete record of
14 each transaction as a public adjuster. The records required by
15 this Section shall include the following:
16         (1) name of the insured;
17         (2) date, location and amount of the loss;
18         (3) a copy of the contract between the public adjuster
19     and insured and a copy of the separate disclosure document;
20         (4) name of the insurer, amount, expiration date and
21     number of each policy carried with respect to the loss;
22         (5) itemized statement of the insured's recoveries;
23         (6) itemized statement of all compensation received by
24     the public adjuster, from any source whatsoever, in

 

 

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1     connection with the loss;
2         (7) a register of all monies received, deposited,
3     disbursed, or withdrawn in connection with a transaction
4     with an insured, including fees transfers and
5     disbursements from a trust account and all transactions
6     concerning all interest bearing accounts;
7         (8) name of public adjuster who executed the contract;
8         (9) name of the attorney representing the insured, if
9     applicable, and the name of the claims representatives of
10     the insurance company; and
11         (10) evidence of financial responsibility in a format
12     prescribed by the Director.
13     (b) Records shall be maintained for at least 7 years after
14 the termination of the transaction with an insured and shall be
15 open to examination by the Director at all times.
16     (c) Records submitted to the Director in accordance with
17 this Section that contain information identified in writing as
18 proprietary by the public adjuster shall be treated as
19 confidential by the Director and shall not be subject to the
20 Freedom of Information Act.
 
21     (215 ILCS 5/1590 new)
22     Sec. 1590. Standards of conduct of public adjuster.
23     (a) A public adjuster is obligated, under his or her
24 license, to serve with objectivity and complete loyalty for the
25 interests of his client alone, and to render to the insured

 

 

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1 such information, counsel, and service, as within the
2 knowledge, understanding, and opinion in good faith of the
3 licensee, as will best serve the insured's insurance claim
4 needs and interest.
5     (b) A public adjuster may not propose or attempt to propose
6 to any person that the public adjuster represent that person
7 while a loss-producing occurrence is continuing, nor while the
8 fire department or its representatives are engaged at the
9 damaged premises, nor between the hours of 7:00 p.m. and 8:00
10 a.m.
11     (c) A public adjuster shall not permit an unlicensed
12 employee or representative of the public adjuster to conduct
13 business for which a license is required under this Article.
14     (d) A public adjuster shall not have a direct or indirect
15 financial interest in any aspect of the claim, other than the
16 salary, fee, commission, or other consideration established in
17 the written contract with the insured, unless full written
18 disclosure has been made to the insured as set forth in
19 subsection (g) of Section 1575.
20     (e) A public adjuster shall not acquire any interest in the
21 salvage of property subject to the contract with the insured
22 unless the public adjuster obtains written permission from the
23 insured after settlement of the claim with the insurer as set
24 forth in subsection (g) of Section 1575 of this Article.
25     (f) The public adjuster shall abstain from referring or
26 directing the insured to get needed repairs or services in

 

 

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1 connection with a loss from any person, unless disclosed to the
2 insured:
3         (1) with whom the public adjuster has a financial
4     interest; or
5         (2) from whom the public adjuster may receive direct or
6     indirect compensation for the referral.
7     (g) The public adjuster shall disclose to an insured if he
8 or she has any interest or will be compensated by any
9 construction firm, salvage firm, building appraisal firm,
10 board-up company, or any other firm that performs any work in
11 conjunction with damages caused by the insured loss. The word
12 "firm" shall include any corporation, partnership,
13 association, joint-stock company or individual as set forth in
14 Section 1575 of this Article.
15     (h) Any compensation or anything of value in connection
16 with an insured's specific loss that will be received by a
17 public adjuster shall be disclosed by the public adjuster to
18 the insured in writing including the source and amount of any
19 such compensation.
20     (i) In all cases where the loss giving rise to the claim
21 for which the public adjuster was retained arise from damage to
22 a personal residence, the insurance proceeds shall be delivered
23 to the named insured or his or her designee. Where proceeds
24 paid by an insurance company are paid jointly to the insured
25 and the public adjuster, the insured shall release such portion
26 of the proceeds that are due the public adjuster within 30

 

 

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1 calendar days after the insured's receipt of the insurance
2 company's check, money order, draft, or release of funds. If
3 the proceeds are not so released to the public adjuster within
4 30 calendar days, the insured shall provide the public adjuster
5 with a written explanation of the reason for the delay.
6     (j) Public adjusters shall adhere to the following general
7 ethical requirements:
8         (1) a public adjuster shall not undertake the
9     adjustment of any claim if the public adjuster is not
10     competent and knowledgeable as to the terms and conditions
11     of the insurance coverage, or which otherwise exceeds the
12     public adjuster's current expertise;
13         (2) a public adjuster shall not knowingly make any oral
14     or written material misrepresentations or statements which
15     are false or maliciously critical and intended to injure
16     any person engaged in the business of insurance to any
17     insured client or potential insured client;
18         (3) no public adjuster, while so licensed by the
19     Department, may represent or act as a company adjuster or
20     independent adjuster on the same claim;
21         (4) the contract shall not be construed to prevent an
22     insured from pursuing any civil remedy after the 5-business
23     day revocation or cancellation period;
24         (5) a public adjuster shall not enter into a contract
25     or accept a power of attorney that vests in the public
26     adjuster the effective authority to choose the persons who

 

 

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1     shall perform repair work;
2         (6) a public adjuster shall ensure that all contracts
3     for the public adjuster's services are in writing and set
4     forth all terms and conditions of the engagement; and
5         (7) a public adjuster shall not advance money or any
6     valuable consideration, except emergency services to an
7     insured pending adjustment of a claim.
8     (k) A public adjuster may not agree to any loss settlement
9 without the insured's knowledge and consent and shall, upon the
10 insured's request, provide the insured with a document setting
11 forth the scope, amount, and value of the damages prior to
12 request by the insured for authority to settle the loss.
13     (l) A public adjuster shall not provide legal advice or
14 representation to the insured or engage in the unauthorized
15 practice of law.
16     (m) A public adjuster shall not represent that he or she is
17 a representative of an insurance company, a fire department, or
18 the State of Illinois, that he or she is a fire investigator,
19 that his or her services are required for the insured to submit
20 a claim to the insured's insurance company, or that he or she
21 may provide legal advice or representation to the insured. A
22 public adjuster may represent that he or she has been licensed
23 by the State of Illinois.
 
24     (215 ILCS 5/1595 new)
25     Sec. 1595. Reporting of actions.

 

 

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1     (a) The public adjuster shall report to the Director any
2 administrative action taken against the public adjuster in
3 another jurisdiction or by another governmental agency in this
4 State within 30 days of the final disposition of the matter.
5 This report shall include a copy of the order, consent to
6 order, or other relevant legal documents.
7     (b) Within 30 days of the initial pretrial hearing date,
8 the public adjuster shall report to the Director any criminal
9 prosecution of the public adjuster taken in any jurisdiction.
10 The report shall include a copy of the initial complaint filed,
11 the order resulting from the hearing, and any other relevant
12 legal documents.
 
13     (215 ILCS 5/1600 new)
14     Sec. 1600. Examinations.
15     (a) The Director shall have the power to examine any
16 applicant or any person licensed or registered pursuant to this
17 Article.
18     (b) Every person being examined and its officers,
19 directors, and members must provide to the Director convenient
20 and free access, at all reasonable hours, to all books,
21 records, documents, and other papers relating to its public
22 adjusting affairs. The officers, directors, members, and
23 employees must facilitate and aid in such examinations so far
24 as it is in their power to do so.
25     (c) Examiners may be designated by the Director. Such

 

 

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1 examiners shall make their reports to the Director pursuant to
2 this Section. Any report alleging substantive violations shall
3 be in writing and shall be based upon the facts ascertained
4 from the books, records, documents, papers, and other evidence
5 obtained by the examiners or ascertained from the testimony of
6 the officers, directors, members, or other individuals
7 examined under oath or ascertained by notarized affidavits
8 received by the examiners. The reports shall be verified by the
9 examiners.
 
10     (215 ILCS 5/1605 new)
11     Sec. 1605. Injunctive relief. Any person who acts as or
12 holds himself out to be a public adjuster without holding a
13 valid and current license to do so is hereby declared to be
14 inimical to the public welfare and to constitute a public
15 nuisance. The Director may report such practice to the Attorney
16 General of the State of Illinois whose duty it is to apply
17 forthwith by complaint on relation of the Director in the name
18 of the people of the State of Illinois, as plaintiff, for
19 injunctive relief in the circuit court of the county where such
20 practice occurred to enjoin the person from engaging in such
21 practice; and upon the filing of a verified petition in such
22 court, the court, if satisfied by affidavit or otherwise that
23 the person has been engaged in such practice without a valid
24 and current license to do so, may enter a temporary restraining
25 order without notice or bond enjoining the defendant from such

 

 

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1 further practice. A copy of the verified complaint shall be
2 served upon the defendant and the proceedings shall thereafter
3 be conducted as in other civil cases. If it is established that
4 the defendant has been or is engaged in such unlawful practice,
5 then the court may enter an order or judgment perpetually
6 enjoining the defendant from such further practice. In all
7 proceedings hereunder, the court, in its discretion, may
8 apportion the costs among the parties interested in the action,
9 including the costs of filing the complaint, service of
10 process, witness fees and expenses, court reporter charges, and
11 reasonable attorney fees. In case of violation of any
12 injunctive order entered under the provisions of this Section,
13 the court may try and punish the offender for contempt of
14 court. Such injunction proceedings shall be in addition to, and
15 not in lieu of, all penalties and other remedies.
 
16     (215 ILCS 5/1610 new)
17     Sec. 1610. Additional penalties. In addition to any other
18 penalty set forth in this Article, any person violating Section
19 1605 of this Code shall be guilty of a Class A misdemeanor and
20 any person misappropriating or converting any monies collected
21 as a public adjuster, whether licensed or not, shall be guilty
22 of a Class 4 felony.
 
23     (215 ILCS 5/1615 new)
24     Sec. 1615. Rules. The Director shall promulgate reasonable

 

 

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1 rules as are necessary or proper to carry out the purposes of
2 this Article.
 
3     (215 ILCS 5/500-75 rep.)
4     Section 910. The Illinois Insurance Code is amended by
5 repealing Section 500-75.
 
6     Section 997. Severability. The provisions of this Act are
7 severable under Section 1.31 of the Statute on Statutes.".