Consumer protection improved with Governor Brown’s approval of public adjuster reform bill
News: 2016 Press Release
SACRAMENTO, Calif. — Senate Bill 488, authored by Senator Marty Block (D–San Diego), was signed into law Thursday by Governor Brown. Sponsored by Insurance Commissioner Dave Jones, the bill establishes fair practices standards for public insurance adjusters (PAs) and enhances consumer protections.
After filing a claim, homeowners have the option of working with their insurance company's adjuster or hiring their own public adjuster. PAs are customarily compensated by receiving a percentage of the settled claim amount.
SB 488 clarifies several provisions in the PA statutes, most of which came directly from cases and complaints handled by California Department of Insurance investigators. Three significant issues that were revealed through these investigations demonstrated that some public adjusters were unfairly charging consumers when taking over partially settled claims, entering disaster areas prematurely to solicit work from homeowners, and inappropriately using high-pressure tactics to coerce distraught consumers to enter into contracts.
"I'd like to thank Governor Brown for signing this consumer protection measure," Commissioner Jones stated. "These reforms enhance public protection so consumers using a public adjuster can feel confident that their best interests will be protected and that fair practices will be adhered to. We have worked on some recent cases that highlighted the need for additional protections. I'd also like to thank Senator Block for authoring this bill in his last year in the Legislature."
In order to address these issues and provide further protection to these often vulnerable consumers, SB 488 has an added value provision that would prohibit public adjusters from charging a fee that would result in the consumer receiving anything less than the amount previously paid to them by the insurer prior to the involvement of the public adjuster.
In addition, in responding to complaints regarding unlawful practices by public adjusters, CDI determined that consumers devastated by California wildfires were contacted by either an unlicensed individual working for a licensed PA or by an attorney to solicit a PA contract. Some consumers discovered, weeks after signing a contract, that the public adjusters were unlicensed, were providing inaccurate information, and were not handling claims in a satisfactory or timely manner. These practices resulted in multiple consumer and insurer complaints to CDI.
One recent case involved a public adjuster, Jose Manuel Villa, of San Clemente. Villa is a formerly licensed public adjuster who allegedly forged claim checks from insurers and stole the proceeds, meant to rebuild fire victims' homes, from several homeowners and pocketed the money for his own use. One of Villa's victims was left homeless and living in a trailer while they struggled to rebuild their home.
SB 488 also increases consumer protections by:
- Requiring public adjuster license applicants to complete pre-licensing education, pass a qualifying examination, and pass a fingerprint-based background review.
- Allowing California to be reciprocal with other states by streamlining the process for non-residents to obtain public adjuster licenses.
- Prohibiting a public adjuster from contacting or soliciting a consumer during a disaster if:
(a) the emergency is still present;
(b) emergency responders are still present and/or
(c) an evacuation order is still in effect.
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Tips for hiring a public adjuster can be found on the California Department of Insurance website.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.