“Continuing education, what a nightmare!” was what one claimmanager said when he learned for the first time that adjusters inhis newly formed national claim operation had to be licensed in 16states (soon to be 17) and comply with continuing-educationrequirements in seven.

“Different states, different credit requirements, different CEcompliance periods, different administration requirements! How muchis this going to cost? What will be the impact on my budget? Thisis just another headache to worry about in the claim servicedelivery process!”

Four other issues were wrapped up in his statement:

1. The trend to centralize claim operations. Adjusters routinelyhandle claims in numerous states. The days of having part of astate as an adjuster's territory are gone and will not be returninganytime soon.
2. Licensing issues. Licensing becomes extremely difficult whenyour centralized claim operation is located in a non-licensingstate. Telling adjusters that they must be licensed and meet CErequirements in numerous states as part of their job requirement isa hard sell at best. Why stay with an employer who makes you handlelicensing on your own? Affected adjusters tend to seek employmentelsewhere, adding themselves to the industry's 20-25 percent annualturnover rate.
3. Outsourcing to avoid adding to headcount. Claim managers notonly have to worry about their direct reporting staffs beingcompliant with licensing laws, but also the firms that handle theclaims they outsouce. Independent adjusters have to be licensed inmore states and have more CE requirements than staffadjusters.
4. Penalties if you don't comply. The fines are really big — inmany cases hundreds of thousands of dollars. State insurancedepartments are cracking down, and licensing issues are a routinepart of market conduct examinations.

This article examines states' requirements for staff adjusters'continuing education and current compliance issues. Informationcontained is the result of a survey of 28 property and casualtyinsurance companies throughout the U.S. Some of the findings areunexpected and surprising.

State CE Requirements

State governments regulate the property-casualty insuranceindustry; federal regulation is virtually non-existent. Thisresults in a lack of uniformity between the states and theirapproaches to adjuster licensing and continuing education. Somestates require licensing, while others do not. Some states thatrequire licensing also mandate continuing education, but not all.Some states that require continuing education have reciprocity withsome states, others don't. Licensing and continuing educationrequirements also differ by state for various types of adjusters.Generally, state regulations categorize the adjusting profession bypublic adjusters, independent adjusters, and staff claims.Understanding staff adjuster licensing and continuing educationrequirements is truly as complex as it is confusing.

In early 2006, HB1056, the Louisiana Claim Adjuster Act, wassigned into law in the state and requires adjusters, includingthose employed by an insurance company to obtain a license inLouisiana prior to adjusting claims in the state. While this lawdoes allow for a 180-day exemption from the licensing requirementafter a catastrophe or emergency, adjusters still will be requiredto register with the Department of Insurance.

Of the states that require licensing for staff adjusters, sevenhave continuing education requirements. Great variation existsbetween the states requiring continuing education as to the amountcontinuing education credit that is needed to maintain a licenseand the duration of time allowed to obtain the continuing educationcredit. For example, North Carolina requires 12 credits everycalendar year, while Florida requires 24 credits every two-yearlicensing compliance period. Florida also requires specific creditbreakdowns within its requirements. In addition, the Floridalicensing compliance period ends on the last day of the birth monthof the licensee on either an odd or even year.

When determining if a staff adjuster should be licensed, the lawof the state where the adjuster works and the law of the statewhere claims are being adjusted should also be considered.

For example, a staff claim adjuster's office may be located inSouth Carolina (a state that does not require continuingeducation), but handle homeowners' claims for residents of NorthCarolina and Florida. North Carolina and Florida have continuingeducation requirements, therefore, the staff claim adjuster mustcomply with North Carolina and Florida's requirements, even thoughthere are none for South Carolina.

No two states continuing requirements are the same. Delawareonly requires resident adjusters to comply with continuingeducation requirements. New Hampshire exempts non-residentadjusters from their continuing education requirements only whenthe non-resident adjuster resides in a state that requirescontinuing education and the non-resident adjuster has compliedwith his resident states' requirements.

All seven states, however, require approval of the courses takenfor continuing education credit. Each state's approval processvaries in submission content and time frame. Only Wyoming allowsfor submission after the course has been completed. Delaware,Florida, North Carolina, and Oklahoma require the course providerto give notification before the course takes place. These statesperform audits by randomly attending selected courses.

Fees charged for course approval by various insurancedepartments also vary. Some states charge by the length of thecourse to be approved (Texas charges $10 per approved credit hour);others charge a flat fee per course (North Carolina and Floridacharge $100 per course regardless of its length). The approvalprocess is completed by the Department of Insurance or by itscontracted vendor.

Two states charge for banking CE credits after completion of acourse. New Hampshire charges two dollars per credit hour/perstudent, and North Carolina charges one dollar per credit hour/perstudent.

The same course can be filed for CE credits with multiplestates. Thus, an adjuster who must have CE in four states can takeone course and receive credits in all four states provided thecourse is properly filed and approved in all four states. Withproper planning efficiencies it can be created.

Claims CE Education Practices

A voluntary survey of claim managers representing 28 companiesconcerning their continuing education practices recently wasconducted. The claim managers responded to questions about theircurrent practices, tracking methods, scope of responsibilities,allocated and unallocated continuing education costs, and theirpreferred mode of obtaining continuing education. The survey alsoasked the claim managers how they viewed the perceived benefits,obstacles, and constraints of being compliant. The findings of thesurvey are summarized below.

Continuing Education Concerns

Continuing education training availability and applicability wasthe most frequent concern, while cost issues ranked the least.

The claim managers were asked to list their three most criticalconcerns regarding adjusters obtaining and maintaining staterequired continuing education credits and rank them in order ofimportance. The critical concerns identified were divided into fivecategories: Cost, Obtaining CE Credit, Record Keeping, StateRegulations, and Training. A weighted value was assigned to eachrank based on the respondent's order of importance. The concernsthat were the same or similar were placed in a category. Withineach category the assigned weight to each concern wascalculated.

Training issues had the highest frequency, with lack of trainingavailability and applicability the two most-identified concerns.Repeatedly, claim managers stated their desires to send adjustersto continuing education training that would not only provide thecredits needed, but also enhance adjusters' current knowledge baseof the specific claims the company assigned to adjusters. Theywanted their adjusters to gain new knowledge and skills that couldbe utilized immediately.

Obtaining the continuing education credits was the secondgreatest concern. Respondents predominantly were concerned withadjusters being able to obtain the proper continuing educationcredits in a timely manner. A specific concern was the licensewould not be renewed as a result of the failure to obtain theproper continuing education credits within the prescribed timeframe, which would mean that the adjuster would have to reapply andretest for the license.

Record keeping closely followed the previous issue. Almost allresponses expressed concerns about maintaining proper records totrack the adjuster's compliance and ensuring that all informationwas received properly and recorded by the state regulator. Theburden of record keeping increases when there is departmentturnover and reassignment of territories.

Staying current on the state regulations and the inconsistenciesamong the states' regulations also were issues raised byrespondents. Many voiced frustration in dealing with the continuingeducation requirement variances from one state to another whentheir territories encompassed multiple states. While the number ofresponses was greater than that given for record keeping, itsweighted value was less because half of the responses in thiscategory were ranked as lower concerns.

Cost issues had the lowest weighted value. While they werementioned as frequently as record keeping issues, they weregenerally ranked as a number 3 concern. Cost issues that could noteasily be quantified into specific dollar amounts, such as lostproductivity and time away from the desk, comprised 60 percent ofthe comments. Only six comments related directly to monetaryexpenditures for continuing education compliance. Costs are not thedriving concern; training availability and applicability are themajor issues.

Continuing Education Practices andPreferences

The respondents were asked to select the types of continuingeducation that were utilized in their offices to fulfillrequirements. The selection options were: correspondence courses,in-house training, outside trainers working on-site, computer-basedtraining, seminars, and web based training. They were asked toindicate all training methods actually utilized. The amount ofusage was not ranked.

The utilization of seminars was the most frequent method forobtaining continuing education credits. Seminars, correspondentcourses, and outside trainers working on-site were used two out ofthree times.

The actual methods utilized for obtaining continuing educationdid not align with the preferred methods based upon responses. Therespondents were asked to rank their continuing educationpreferences, with 1 being the most preferred and 6 being the leastpreferred. Not all respondents ranked each of the six methods.

It is interesting to note that seminars, which were the mostfrequently used method of obtaining the continuing educationcredits, were not the preferred method. They ranked fourth.In-house training was the number one preferred method, but was tiedfor fourth and fifth place in utilization. Lack of availability ofmeaningful continuing education training that directly supportedand enhanced the adjuster's knowledge base for the type of claimshandled was a factor cited. The need to timely obtain the necessarynumber of continuing education credits took precedent over coursecontent.

Record Keeping

The bulk of the responsibility for record keeping was left tothe individual adjuster 43 percent of the time for the license, andincreased to 51 percent for continuing education. The claimmanager's responsibility in both areas remained fairly stable. Theremaining responsibility was distributed among administrativepersonnel, home office, and other.

These results indicate a tendency to not centralize thelicensing and continuing education record keeping data and links tothe high level of concern surrounding documentation/record keepingissues expressed by the respondents.

Training Costs

Required continuing education training costs were explored intwo categories: the course cost by adjuster and the adjusterexpenses associated with taking the course. Some respondents didnot have sufficient access to the data or were unable to segregatethe data in order to answer. In both areas, the vast majority ofthe responses ranged from $1 to $500. The average cost of a CEcourse was $254.25 per person, and the average associated expensewas $213.75 for a total of $468.00. The average expenses were 45.7percent of the total costs, while the course cost was 54.3percent.

While the cost of the adjuster's time and/or lost productivitywas not calculated and not included in these costs, it is a factorthat claim management has to consider. This is the reason claimmanagement ranked on-site training as their number one trainingchoice. However, in reality, off-site seminars were utilized themost to fulfill continuing education requirements. The negatives toseminars were the need to attend enough to acquire the number ofneeded credits; the additional expenses associated withtransportation, lodging, and food; the additional time away fromthe desk to travel; and the unavailability should a claim fileemergency arise. These negatives increase greatly when an adjusterlicensed in numerous states has to attend separate continuingeducation courses instead of attending a seminar that was beenapproved for continuing education in multiple states.

Here to Stay

The findings from the claims managers' survey have provided anunderstanding of adjuster CE issues and an identification of therange of training practices, both desired and undertaken.

Effective adjuster CE training content is meaningful, relevant,and enhances the adjuster's knowledge and skill base. It is readilyavailable in an accessible format while mitigating lostproductivity. This research revealed that while cost is aconsideration, it is not the major one. The driving considerationsare the availability and appropriateness of training.

So, for all claim professionals, the bottom line is thatadjuster licensing and continuing education are here to stay. We donot anticipate uniformity among the states occurring any time soon.The best advice is to confront the licensing and continuingeducation nightmare instead of ignoring it. Adjusters need to beproperly licensed. This avoids potential state fines and reprisals.The key is to effectively obtain the needed continuing educationcredits and at the same time allow participants to gain newknowledge and enhance their adjusting skills. Continuing educationthat is approved in multiple states simultaneously and iscustomized to meet the training needs of your associates offers thelargest return on your continuing education investment.

Kathleen J. Robison is president of K.Robi & Associates.She can be reached at www.krobiconsult.com, [email protected].

William C. Stewart, Jr., is president of Claims TrainingServices. He can be reached at www.claimstraining.com,[email protected].