2.2 NC Adjuster Licensing & Qualifications

2.2 NC Adjuster Licensing & Qualifications

Claims adjusters occupy a vital position of trust within the insurance mechanism. Because adjusters interpret coverage provisions, calculate loss valuations, and negotiate settlements that directly affect the financial well-being of policyholders and claimants, the state of North Carolina strictly regulates who may practice claims adjustment. Licensure ensures that every individual evaluating insurance claims meets statutory standards of competence, integrity, and regulatory accountability.

---

1. Statutory Definition of 'Adjuster' (NCGS § 58-33-10)

Under North Carolina General Statutes § 58-33-10, an Adjuster is defined as:

*"Any individual who, for salary, fee, commission, or other compensation of any nature, investigates or reports to their principal relative to claims arising under insurance contracts other than life or annuity, or who undertakes also to negotiate the settlement of such claims."

Scope of the Definition

• The statutory definition encompasses all lines of Property, Casualty, Commercial, Marine, Surety, and Workers' Compensation claims.
• Exclusion of Life and Annuity: Individuals who process life insurance death claims or annuity payouts are not defined as adjusters under NCGS § 58-33-10 and do not hold an adjuster license (life claims are handled by life insurance company claims examiners governed under life insurance statutes).

Statutory Exemptions from Adjuster Licensure

The following individuals are explicitly exempt from holding an adjuster license under North Carolina law:

1. Licensed Attorneys-at-Law: Attorneys admitted to the North Carolina State Bar acting in their professional capacity as legal counsel.
2. Licensed Insurance Agents: Regular resident insurance agents who adjust minor property or casualty losses (e.g., first-party property losses under $2,500) for policies issued through their agency, provided they receive no special compensation for adjusting beyond their standard agency commissions.
3. Salaried Clerical Employees: Insurer employees who perform purely administrative, clerical, or data-entry tasks without exercising independent judgment, discretionary evaluation, or direct settlement negotiations.
4. Marine Average Adjusters: Specialists adjusting general average marine losses under maritime law.

---

2. Classifications of Adjusters in North Carolina

North Carolina law distinguishes adjusters based on whom they represent and their contractual relationship to the insurance company or policyholder:

+-----------------------------------------------------------------------------------------+
|                                 ADJUSTER CLASSIFICATIONS                                |
+-----------------------------------------------------------------------------------------+
|                                                                                         |
|       REPRESENTING THE INSURER / CARRIER              REPRESENTING THE INSURED / PUBLIC |
|       ----------------------------------              --------------------------------- |
|       +--------------------------------+              +-------------------------------+ |
|       |     STAFF / COMPANY ADJUSTER   |              |        PUBLIC ADJUSTER        | |
|       |   Direct Salaried Employee     |              |   Contracted by Policyholder  | |
|       |   Fiduciary Duty to Insurer    |              |   Fiduciary Duty to Insured   | |
|       +--------------------------------+              |   Regulated under Art. 33A    | |
|                                                       +-------------------------------+ |
|       +--------------------------------+                                                |
|       |      INDEPENDENT ADJUSTER      |                                                |
|       |   Contractor / TPA Employee    |                                                |
|       |   Fiduciary Duty to Insurer    |                                                |
|       +--------------------------------+                                                |
+-----------------------------------------------------------------------------------------+

---

3. Individual Licensing Qualifications & Examination

To be granted a North Carolina Claims Adjuster license under NCGS § 58-33-30 and § 58-33-32, an individual must meet strict personal, professional, and examination prerequisites.

Mandatory Licensing Requirements

1. Age Requirement: Must be at least 18 years of age.
2. Integrity & Reputation: Must be determined by the Commissioner to be trustworthy, competent, and of good business reputation.
3. Criminal Background Clearance: Must submit to a fingerprint-based state and federal criminal background check. Applicants with prior convictions for felony crimes involving dishonesty, fraud, embezzlement, or breach of fiduciary duty are subject to statutory disqualification under 18 U.S.C. § 1033 (Federal Violent Crime Control and Law Enforcement Act) unless a formal 1033 Written Consent is granted by the Commissioner.
4. State Licensing Examination: Must achieve a passing score (70% or higher) on the North Carolina Claims Adjuster licensing examination administered through Pearson VUE.

Important Regulatory Update — Elimination of Pre-Licensing Education: In prior years, North Carolina required applicants to complete a mandatory 40-hour pre-licensing education course prior to testing. By legislative reform (Session Law), mandatory pre-licensing classroom hours have been eliminated for adjusters in North Carolina. However, applicants must still pass the comprehensive Pearson VUE state licensing exam, making thorough independent study of NC statutes and policy forms indispensable.

---

4. Non-Resident Licensing & Designated Home State (DHS)

Because major weather events and regional catastrophes require claims adjusters to operate across state lines, North Carolina maintains comprehensive non-resident and reciprocal licensing frameworks.

Reciprocal Non-Resident Licensure (NCGS § 58-33-32)

• An adjuster who resides and holds an active, unencumbered adjuster license in another state (such as Florida, Georgia, Texas, or South Carolina) may apply for a North Carolina Non-Resident Adjuster License without retaking the NC state exam.
• The applicant's home state must grant reciprocal licensing privileges to North Carolina resident adjusters under equivalent terms.

Designated Home State (DHS) Licensure

• Several states do not license insurance claims adjusters (e.g., Virginia, Tennessee, Pennsylvania, Colorado, South Dakota, Ohio, etc.).
• A resident of a non-licensing state who wishes to adjust claims in North Carolina or obtain multi-state non-resident licenses cannot obtain a resident adjuster license from their home state.
• Under North Carolina law and NAIC uniform licensing guidelines, such an individual may declare North Carolina as their Designated Home State (DHS) by passing the North Carolina adjuster examination and completing all NC licensing requirements.
• Once licensed under NC DHS status, the adjuster must satisfy North Carolina's continuing education requirements to maintain their license and use it as the qualifying basis for non-resident reciprocal licenses in other states.

---

5. Emergency & Catastrophe Adjuster Permits (NCGS § 58-33-70)

When hurricanes, widespread tornadoes, severe ice storms, or catastrophic floods strike North Carolina, local claims resources are quickly overwhelmed. To ensure that policyholders receive rapid claims assessments and immediate advance living expenses, North Carolina law provides an expedited mechanism for emergency adjuster deployment.

Statutory Provisions of NCGS § 58-33-70

• Triggering Event: A catastrophe, natural disaster, or state of emergency declared by the Governor, President, or Commissioner of Insurance affecting North Carolina property.
• Application by Licensed Insurers: An authorized insurance company or adjusting firm licensed in North Carolina must submit a formal Emergency Adjuster Request / Registration to the NCDOI Agent Services Division.
• Exemption from Examination & Fees: Emergency adjusters operating under NCGS § 58-33-70 are exempt from taking the North Carolina licensing examination and do not pay standard individual license fees.
• Duration of Permit: An emergency adjuster authorization is granted for a temporary period—typically up to 90 days from the date of issuance. If the catastrophe recovery requires additional time, the insurer may petition the Commissioner for an extension (e.g., an additional 90 days).
• Insurer Vicarious Liability: The licensed insurance company requesting emergency authorization remains strictly responsible and legally liable for all claims handling acts, negotiations, and settlements executed by its emergency adjusters.

+-----------------------------------------------------------------------------------+
|                     EMERGENCY ADJUSTER PERMIT PROCESS (NCGS § 58-33-70)           |
+-----------------------------------------------------------------------------------+
| 1. Catastrophe Occurs (Hurricane, Tornado, Major Ice Storm)                       |
|    --> Local claims volume exceeds resident adjuster capacity.                    |
|                                                                                   |
| 2. Insurer Submits Emergency Registration to NCDOI                                |
|    --> Identifies out-of-state adjusters, home state licenses, and credentials.   |
|                                                                                   |
| 3. Commissioner Issues Emergency Catastrophe Authorization                        |
|    --> No NC Exam Required; No Individual License Fee Assessed.                   |
|    --> Valid for 90 Days (Extendable upon Written Petition).                      |
|                                                                                   |
| 4. Supervision & Liability                                                        |
|    --> Carrier bears full legal responsibility for all adjuster conduct in NC.     |
+-----------------------------------------------------------------------------------+

---

6. Practical Scenario: Catastrophe Adjuster Deployment

Scenario: In September, a Category 3 hurricane makes landfall near Wilmington, North Carolina, generating over 60,000 property damage claims across 15 coastal and inland counties. A national property insurer headquartered in Raleigh needs to deploy 120 adjusters from its regional offices in Ohio and Indiana (states that do not license adjusters) and Texas (a licensing state).

Regulatory Protocol:

1. Texas Adjusters: Adjusters holding Texas resident licenses can either apply for expedited North Carolina non-resident licenses via reciprocity or be registered under the emergency permit.
2. Ohio and Indiana Adjusters: Because Ohio and Indiana do not license adjusters, the insurer submits an Emergency Adjuster Registration under NCGS § 58-33-70 to the NCDOI within 5 days of deploying the adjusters.
3. Operational Scope: The emergency adjusters are authorized to inspect storm losses, estimate structural replacement costs, issue advance living expense checks, and write settlement scopes in North Carolina for 90 days.
4. Carrier Liability: If an emergency adjuster misrepresents policy flood exclusions or mishandles a claim, the NCDOI holds the appointing insurance carrier directly liable for statutory unfair claims settlement violations under NCGS § 58-63-15.