Bill
HB 5521
Requires licensure, exams, financial responsibility, and strict contracts for public adjusters to improve transparency, ethics, and consumer protection.
HB 5521 (West Virginia, 2026) – Public Adjusters
Overview
- Purpose: Establish comprehensive licensure, examination, and conduct standards for public adjusters; create contract and fiduciary rules governing their relationships with insureds; and enhance accountability and transparency in public adjusting activities.
Key Provisions and Changes
- Definitions and scope (Article 12B, §33-12B-1):
- Introduces standardized terms for public adjusters and related actors (e.g., independent, company, emergency adjusters) and for concepts like automated claims adjudication systems.
- Defines “home state,” “emergency adjuster,” “public adjuster,” and related terms to align licensing with multistate practice and catastrophe responses.
- Licensure framework (§33-12B-2, §33-12B-3, and new sections 5a–5g, 16–21):
- Requires licensure for public adjusters; prohibits representing insureds and insurers on the same claim without written insurer appointment.
- Establishes exemptions (e.g., attorneys, certain administrative roles, subrogation specialists) but narrows exemptions for public adjusters compared with current practice.
- Adds a multi-part licensure regime for resident and nonresident public adjusters, including home-state reciprocity, financial responsibility requirements, and ongoing renewals.
- Resident and nonresident licensure; examination (§33-12B-5b, §33-12B-5c, §33-12B-5d, §33-12B-5e):
- Public adjuster applicants must pass a written exam (with specific exemptions on certain jurisdictions or prior licenses).
- Examinations and fees: nonrefundable exam fees (administration may be outsourced), with allowance for waivers/exemptions for previously licensed adjusters from other states under specified timelines and good-standing evidence.
- Reciprocity for nonresidents: nonresident licenses available to residents of home states with equivalent reciprocity; ongoing requirement to maintain home-state license for continuity.
- License maintenance and fees (§33-12B-5f, §33-12B-5g):
- Licenses expire and require renewal with fees; penalties for lapses; late renewal procedures and potential reinstatement timelines.
- Requires proof of financial responsibility (bond or irrevocable letter of credit) minimum $20,000, to be maintained during licensure.
- May contract with NAIC or related entities to support licensing/licensing data functions.
- Fees, commissions, and fee limits (§33-12B-16):
- Prohibits paying or receiving commissions or similar fees to unlicensed individuals.
- Caps overall fees/compensation for claims at 10% of the settlement.
- Allows certain payments to non-claim-investigating personnel, subject to rules.
- Contracts with insureds (§33-12B-17):
- All contracts must be in writing and include extensive details: adjuster identity, license info, insured and loss details, service descriptions, signatures, fee structure, and a choice-of-law clause (WV).
- Allows co-payee arrangements and specifies detailed disclosure of expenses and reimbursements; prohibits certain abusive terms (e.g., upfront full-fee collection, directing funds solely to the adjuster, or onerous collection terms).
- Mandates a separate claim-process disclosure document, explains the three types of adjusters (company, independent, public), and confirms that the insured is not required to hire a public adjuster.
- Provides a 3-business-day rescission window for signed contracts; outlines return of any value within 15 business days if rescission occurs.
- Addresses assignment issues and prohibits public adjusters from securing power of attorney to direct repairs.
- Recordkeeping and confidentiality (§33-12B-19):
- Requires comprehensive records for each transaction (loss details, contracts, insurers, recoveries, compensation, trust accounts, etc.).
- Minimum retention of 5 years; records open for commissioner inspection; proprietary information treated as confidential.
- Standards of conduct (§33-12B-20):
- Obligates objectivity and loyalty to the insured; prohibits solicitations during ongoing losses; prohibits misrepresentation; prohibits unlicensed employees acting on behalf of the public adjuster; requires disclosure of compensation and prohibitions on conflicts of interest; general ethical guidelines for competence and fair dealing.
- Reporting and enforcement (§33-12B-21):
- Public adjusters must report disciplinary actions in other jurisdictions within 30 days; must report criminal prosecutions within 30 days of pretrial dates; requires prompt disclosure to insured of all monetary transactions related to a claim.
Who Is Affected
- Public adjusters (new licensees and existing practitioners, with transition considerations for those licensed in other states).
- Insurance companies, claimants (insureds), and associated claims personnel who engage public adjusters.
- Entities employing or contracting public adjusters (business entities acting as public adjusters must obtain licenses and designate responsible individuals).
- Regulators and the NAIC network (contracting for administrative/licensing functions).
Timeline and Procedural Notes
- Introduced February 13, 2026; referred to Finance (with companion action in Banking and Insurance).
- Bill includes phased licensing requirements, examinations, and renewal procedures that would take effect upon enactment, with transition allowances for those licensed in other jurisdictions under reciprocal rules.
- Explicit inspection and recordkeeping mandates give the state broad oversight and enforcement capacity.
Impact Considerations
- Strengthens consumer protection by standardizing licensure, examination, and ethics for public adjusters.
- Improves transparency around fees, conflicts of interest, and contract terms.
- Introduces significant compliance requirements (bond/LC, financial responsibility, detailed records, and post-transaction disclosures) for public adjusters and affiliated entities.
- Could affect cost structures for claim handling and potentially reduce unfair practices in first-party property claims.
Compiled from official sources — confirm details with the bill’s official record.
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