Insurance regulation in a nutshell

Section VI.7.Third Party Administrators

The NAIC Third Party Administrator Statute defines an “administrator” or “third party administrator” or “TPA” as follows:
a person who directly or indirectly underwrites, collects charges or premiums from, or adjusts or settles claims on residents of this state, in connection with life, annuity or health coverage offered or provided by an insurer¹⁰³
There are many exceptions, including an exception for an insurer that is authorized to transact insurance in the state and an exception for an MGA.¹⁰⁴
Licensing is required in all states in which the TPA acts. TPA licensing is required in many, but not all states.

Section VI.8.Adjusters

Until 2005, there was no NAIC model law on the regulation of adjusters. In 2005, the NAIC adopted its Public Adjusters Licensing Model Act and commenced drafting an independent adjuster licensing guideline. Not all states regulate and require licensing of adjusters. There are usually two kinds of adjusters that are regulated – public adjusters that are hired by insureds that have property loss (the adjuster negotiates on behalf of the insured with the insurer) and independent adjusters that act for one or more insurers in adjusting claims for the insurers.¹⁰⁵
The NAIC Public Adjusters Licensing Model Act defines a “public adjuster” as follows:
any person who, for compensation or any other thing of value on behalf of the insured:
(1) Acts or aids, solely in relation to first party claims arising under insurance contracts that insure the real or personal property of the insured, on behalf of an insured in negotiating for, or effecting the settlement of, a claim for loss or damage covered by an insurance contract;
(2) Advertises for employment as an public adjuster of insurance claims or solicits business or represents himself or herself to the public as an public adjuster of first party insurance claims for losses or damages arising out of policies of insurance that insure real or personal property; or
(3) Directly or indirectly solicits business, investigates or adjusts losses, or advises an insured about first party claims for losses or damages arising out of policies of insurance that insure real or personal property for another person engaged in the business of adjusting losses or damages covered by an insurance policy, for the insured.¹⁰⁶
If a person acts as a TPA in a state and adjusts life, health or annuity claims but the state’s law does not require licensing as a TPA, the person may have to be licensed as an adjuster – New York law requires this, at least for health insurance.¹⁰⁷