Adjuster licensing is confusing. Every state has adifferent set of rules and regulations about how — or how not to —license adjusters. Acting or failing to act out of ignorance cancause all types of problems, including fines, suspension of claimadjusting functions, and lots of aggravation. Consider this horrorstory that was shared with us in the past year.

Adjuster Sue got licensed in Anystate because her employer wasgoing to be writing business there. She had to take a fairlycomprehensive test, which she failed the first time. After studyinghard, though, she passed on her second attempt. She now had to meetAnystate's continuing education requirement of 24 credits every twoyears. Sue met all of her continuing education requirements andmaintained her license.

Several years later, as part of a reorganization, Sue's employerdecided to stop doing business in Anystate, and so Sue let herlicense lapse. A merger occurred soon thereafter, which resulted inher losing her job.

Fortunately, Sue landed on her feet with another carrier. Guesswhat? Her new employer was going to start writing business inAnystate. All of the company's adjusters had to get licensed, whichSue figured was no big deal. She could just contact the Anystate'sdepartment of insurance and ask them to reactivate her license, andshe could pick up where she left off with regard to her continuingeducation, right? Wrong! Because Sue let her license lapse and wasin arrears in her continuing education, Anystate had decided torevoke her license.

Anystate first required that Sue meet all of her continuingeducation requirements that remained before her license wasrevoked, and then the state made her meet her continuing educationrequirements for the current license period. To add insult toinjury, Anystate required that Sue retake the licensing exam beforereinstating her license.

Don't Be Sue

A complete understanding of the total licensing process in yourstate is critically important to avoid headaches. This includesknowing the specific requirements to become licensed, theobligations to properly maintain and keep your license in goodstanding, and, finally, the requirements to properly give up yourlicense.

In addition, it's important to remember that a state can changeits adjuster licensing, continuing education requirements, andreporting procedures at any time, so keeping abreast of changesthat occur in adjuster licensing is very important. For example,the Oklahoma Legislature recently enacted continuing educationrequirement changes from 12 hours per year to 24 hours every twoyears, with a carryover allowance limited to six hours. Louisianaenacted adjuster licensing and continuing education in June 2007.Previously, they had none. Texas recently began to require that allcontinuing education credits be reported to a central database bycontinuing education providers.

This article outlines the current state of adjuster licensingand continuing education requirements for staff adjusters andindependent adjusters. For questions about a specific state, pleaserefer to the state's complete regulations or statutes, or contactthe state's department of insurance directly.

Who Must Be Licensed?

The first step is to determine who has to be licensed in anygiven state. Many states differentiate licensing requirementsbetween staff adjusters and independent adjusters. These job titlesare normally defined within the state's licensing laws. Generally,staff adjusters are defined as employees of insurance companies.Independent adjusters are defined as those who work to adjustclaims on behalf of an insurer or self-insured. Firms that act asthird-party administrators are usually classified as independentadjusters. Independent adjusters have to be licensed in more statesthan staff adjusters.

Next, determine how far up the organizational managementstructure licenses are required. As a rule, front-line supervisorshave to be licensed, but claim managers might not. Rhode Islandexempts those adjusters handling claims for less than $2,500. Butwhat if that adjuster has to fill in for another adjuster on leaveand has to handle a claim that is $2,595? The safer path would beto require that everyone be licensed.

Defining “Home State”

When analyzing laws in states where you need to be licensed, akey term to understand is “home state.” Some states willreciprocate with granting licenses and/or continuing educationrequirements if you have met the requirements of your home state.The definition of home state, however, can differ from state tostate. Is it defined as the state in which you reside? If so, thenwhat happens if your home state (i.e., state of residence) does notrequire a license? Remember, not all states require adjusters to belicensed, and not all states that require adjusters to be licensedrequire continuing education.

Or, is home state defined as any state in which you have alicense and declare it as your home state? Does a stateautomatically become your home state once you pass the licensingtest in that state? Like we said earlier on, it can beconfusing.

First, understand the requirements to be licensed in each state,and then develop your strategy. Next, select the most appropriatepath.

For example, assume that you have to be licensed in both State Aand State B and that you are a non-resident of both. Both statesrequire that you pass a test to obtain a license. However, State Ais known to have a tough test and first requires a pre-test courseof study. Also, State A has a continuing education requirement foranyone who received a license by taking State A's test. State A,however, will reciprocate with other states that require a test,regardless of the state requiring continuing education. State B, onthe other hand, requires a test, which is known to be simpler.Furthermore, State B neither requires a pre-test course of studynor does it have a continuing education requirement.

In this particular case you should get licensed in State B andthen use your license in State B to reciprocate with State A toobtain a license in State A. Doing this in reverse order is boundto cause more work.

However, this obvious answer may not be the best long-termsolution. Usually, a state is more likely to reciprocate withanother state that requires a test and has a continuing educationrequirement. So even though starting with State A may be moredifficult, think ahead of the eventualities that may occur at yourcompany and factor this into your licensing strategy.

Earning a License

Many times when a licensing application is rejected, it isbecause of technicalities. Make sure that all the t's are crossedand i's dotted on the application. Some states require accompanyingdocumentation with an application such as fingerprints of theprospective licensee. If this is the case, then make sure thedepartment of insurance will accept the source of the fingerprints(e.g., local police department) before obtaining and submittingthem.

If your company is applying for multiple licenses simultaneouslyand a fee has to be submitted, then determine in advance if yourcompany can issue one check for all applications being submitted orif the state requires a separate check to accompany eachapplication.

Do not guess at answers to questions that you may have as towhat the state may want on the application. As you complete thelicensing application, write down any questions you have,regardless of how silly you may think they are. Then call thestate's department of insurance and ask those specific questions,write down both the name of the person who is giving you theanswers and the information given, and, if possible, get an e-mailconfirmation of the information.

Licensing Exams

First, find out if you have to take an exam. Some states maywaive the requirement if you possess a recognized industrydesignation like the AIC or the CPCU. In some instances, a statemay possibly waive testing based on your length of adjustingexperience.

If an exam is required, then find out where it is given. Manystates now utilize national testing services to administer theirexam programs. You may be able to take the exam relatively nearby —even for a state located far away.

Determine if the state makes available outlines or othertest-preparation materials. There are vendors that publish exampreparation guides. However, there can be a vast difference inquality of exam preparation materials. So before buying any exampreparation materials, do some research as to the quality of thematerials. Talk to others who have taken the test. If your companyhas a training department, then ask the trainers to use some oftheir network connections with other companies and associationslike the Society of Insurance Trainers and Educators to developthis information.

Best exam results occur when you create a study schedule andstick to it. The knowledge within the exam material should beunderstood fully before taking the exam. Better you leave the examthinking that you over-prepared than under-prepared.

Once the license has been obtained, it is important tounderstand the required procedures for its renewal. Determine ifyou will receive a renewal notice from your state of licensure orif you must contact the state directly to renew the license. If youswitch employers or change your residence address after you havebeen licensed, then make sure that your licensing states know ofthe change. Adjusters who changed employers but did not notify thestate DOI of the change risk having their renewal applications goto their former employers, who will likely discard them because theadjusters are no longer employed at that company. This results in alapsed license, which not only puts the adjuster back to squareone, but also takes the adjuster out of the adjusting function forthat state until the license is once again obtained.

If you are going to give up your license in a state, then findout what is required to relinquish the license. Do not just letyour license lapse with non-renewal. Remember the story of AdjusterSue: Following the correct, generally simple procedures of thestate will help avoid future hassles.

Continuing Education

The whole subject of adjuster continuing education raises itsown set of questions with often confusing answers. Let's break itdown:

Does the state have continuing education requirementsfor adjusters?

The answer is not necessarily “yes” or “no.” A state may requirecontinuing education for independent adjuster licensees, but maynot for staff adjuster licensees. Some require continuing educationfor both. Others may waive or reduce the amount of continuingeducation required based on the experience level of the licensee orprofessional designations that the licensee has earned.

Some states may reciprocate if the adjuster's home staterequires continuing education. However, reciprocity can oftencreate its own problems. For example, assume that Adjuster Sue'shome state is State A, which has a continuing educationrequirement. Sue's other states of licensure — States B, C, and D —also have continuing education requirements, but all of themreciprocate with State A. Sue only meets her continuing educationrequirement in State A and uses it to maintain her license in B, C,and D. Unfortunately, Sue's employer does not timely renew herlicense in State A. As a result, Sue not only loses her license inState A, but also loses her licenses in States B, C, and D.

We recommend that you meet your continuing educationrequirements in all states where licensed. If Sue had met hercontinuing education requirements in States B, C, and D, then shewould have still retained those licenses. Following a continuingeducation plan that provides credit in multiple statessimultaneously is a more efficient, secure strategy than relying onreciprocity.

What is the compliance period?

Some states use a calendar year as the compliance period, whileothers use the license renewal date. Some states may even use acommon date for all licensees to complete continuing education. Forexample, New Hampshire requires 20 credits of continuing educationby October 1, every two years. Depending on the state, thecompliance period and license renewal date may not be the same.

If you are licensed in multiple states with continuing educationrequirements that have different compliance periods, it is mostefficient to do your continuing education at the same time eachyear.

Is there any breakdown of types of credits that must beobtained?

Some states require that credits must be obtained in variousclassifications of courses. For example, Florida requires 24credits in each compliance period. Of these, ten credits must be inlaw/policy courses, 12 credits in optional courses, and two creditsin ethics. A law/policy or ethics course is one that has beenspecifically approved by appropriate authorities. Texas requires 30credits every two years, with at least two credits in consumerprotection or ethics. Texas also requires that at least 50 percentof all credits be in classroom-approved courses.

Are carry-over credits allowed? If so, then howmany?

Some states may allow carry-over credits for the next complianceperiod, while others do not. Making the incorrect assumption thatyou have credits that will carry over from the last complianceperiod can cause you to be non-compliant.

What happens if a course is replicated within a certaintime period?

Certain states may have regulations that stipulate an adjusterwill not receive credit for taking the same course again within acertain time period. For example, Florida will not award continuingeducation credit for a course that is replicated within threeyears. To be on the safe side, adjusters should not replicate anycourse within a three-year time period.

Who reports my continuing education credits to thestate?

The majority of states now require continuing educationproviders to report completion of continuing education courseworkto the appropriate state agency or its vendor within a certain timeperiod following the completion of the course (usually 15 businessdays). Generally, for a provider to report continuing educationcredits, it needs the license number and last name of the adjusteras it appears on the license. Often, the adjuster will receive acertificate of completion for each continuing education classattended. This provides a sense of security that all is up to date.However, it may be a false sense of security because if the creditswere not properly reported the state will have no record ofthem.

Other procedural issues that have resulted in an adjuster notreceiving continuing education credit for courses taken are failureto sign the course sign-in/sign-out list, not signing the name asit appears on the license, or either failing to provide a licensenumber or listing an incorrect one.

Some states have a database that licensees can check to verifytheir continuing education status, which should be checkedperiodically if available. If credits do not show up for aparticular class attended, contact the continuing educationprovider and ask that the record be corrected.

Some states require the licensee to report the credits. If thisis the case with one or more of your licensed states, you need toknow the reporting process and procedures. Some states may requirecopies of continuing education certificates at the time of licenserenewal; others require that continuing education certificates aresent in to the state as soon as the course is completed.

Finally, remember that the purpose of continuing education is tohelp make you a better and well-rounded professional. Evaluatecontinuing education from the standpoint of what you will learn andhow it will broaden your career. You have to earn it, so get themost from it.