1.1 NY DFS Authority, Superintendent Powers & Independent Adjuster Licensing (§ 2108)

NY DFS Authority, Superintendent Powers & Independent Adjuster Licensing (§ 2108)

Exam Focus: The New York Series 17-70 exam heavily tests the statutory boundaries between adjuster types, the administrative powers of the Superintendent, and New York's distinct licensing requirements. The highest-yield trap is the set of prerequisites that apply to public adjusters but not to independent adjusters: the $1,000 bond, the five certificates of character, and prelicensing education. Independent adjusters are expressly carved out of all three.

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The New York Department of Financial Services (DFS)

The New York Department of Financial Services (DFS) is the state agency responsible for regulating insurance, banking, and financial services. Established on October 3, 2011, under the Financial Services Law by consolidating the historic New York State Insurance Department (established 1859) and the New York State Banking Department (established 1851), the DFS protects consumers, safeguards solvency, and enforces legal compliance across all financial entities operating within New York.

For claims adjusters, the DFS oversees licensure, establishes claims settlement benchmarks under the New York Insurance Law, conducts market conduct audits, and investigates regulatory violations across domestic, foreign, and alien insurers.

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Powers and Duties of the Superintendent of Financial Services

The DFS is headed by the Superintendent of Financial Services, appointed by the Governor and confirmed by the State Senate. The Superintendent possesses broad administrative and regulatory authority under the New York Insurance Law:

• Rulemaking & Regulations: Promulgates official regulations interpreting insurance statutes, including Regulation 64 (11 NYCRR 216), which governs fair claims settlement practices.
• Examinations & Inquiries: Conducts financial condition and market conduct examinations of insurers and licensees as often as necessary (at least once every five years for domestic property/casualty carriers).
• Subpoenas & Oaths: Administers oaths, subpoenas witnesses, and compels the production of books, records, and claim files under penalty of law.
• Orders & Administrative Sanctions: Issues cease-and-desist orders, levies civil fines, and suspends or revokes adjuster and producer licenses.
• Criminal Referrals: While the Superintendent can impose administrative sanctions and civil penalties, criminal prosecution lies outside DFS authority. Criminal violations must be referred to the New York Attorney General or local District Attorneys.

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Adjuster Classifications in New York (§ 2108)

New York Insurance Law § 2108 classifies insurance adjusters into three distinct categories based on who they represent and how they are compensated:

1. Independent Adjuster (§§ 2101(g), 2108(a)(3))

An Independent Adjuster (IA) is any person, firm, or corporation who, for money, commission, or any other thing of value, acts on behalf of an insurer in investigating, evaluating, and negotiating the settlement of insurance claims. Operating as an independent contractor or employee of an adjusting firm, the independent adjuster owes contractual loyalty solely to the insurer.

2. Public Adjuster (§§ 2101(g), 2108(a)(3))

A Public Adjuster (PA) is any person, firm, or corporation who, for compensation, acts on behalf of the insured in negotiating the settlement of a claim for loss or damage to property. Public adjusters operate on a contingency fee basis (capped by New York regulation at a maximum of 12.5% of the gross claim recovery). By statute, public adjusters may only adjust first-party property losses; they are strictly prohibited from adjusting liability, workers' compensation, or life/health claims.

3. Staff Adjuster (Company Adjuster)

A Staff Adjuster is a salaried employee of an insurance company who investigates and settles claims exclusively for that employer. Under New York law, regular salaried staff employees are exempt from independent adjuster licensing, provided they do not adjust claims for third-party carriers or hold themselves out as independent adjusters.

Dual Agency Prohibition: An adjuster cannot represent both the insurer and the insured on the same claim. Dual representation constitutes illegal self-dealing, a serious conflict of interest, and grounds for immediate license revocation under § 2110.

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Qualifications for Independent Adjuster Licensing (§ 2108)

To qualify for an Independent General Adjuster license in New York under § 2108, an applicant must satisfy specific statutory standards:

• Minimum Age: The applicant must be at least 18 years of age.
• Trustworthiness & Competence: The applicant must demonstrate good moral character and professional competence to the satisfaction of the Superintendent.
• Fingerprinting via IdentoGO (§ 2108(d)(2)): Every person signing the application must submit electronic fingerprints through IdentoGO. The Superintendent compares them against Division of Criminal Justice Services (DCJS) records and may forward them to the FBI for a national criminal history record check.
• No Certificates of Character: § 2108(d)(3) requires approval by five reputable citizens of the applicant's community — but the paragraph opens with the words “Except in the case of an application for a license to act as an independent adjuster.” The Department of Financial Services states the point plainly on its adjuster licensing page: “Certificates of Character are no longer required for Independent Adjuster applicants.” The five-citizen requirement is a public adjuster prerequisite.
• No Surety Bond: § 2108(l)(1) requires a $1,000 bond for every adjuster's license “other than an independent adjuster's license.” DFS: “A bond is no longer required of Independent Adjuster applicants.” See Section 1.2.
• Pre-Licensing Education: New York does not require prelicensing education hours for independent adjusters. (A property/casualty agent or broker must complete a 90-hour approved course, and a first-time public adjuster applicant must complete 40 hours of approved training or document one year of qualifying insurance experience under § 2108(e)(1).) Self-study is permitted for the 17-70.

Trap Alert: Older prep books — and even the testing vendor's own general “adjuster license” checklist — still list a $1,000 bond and five certificates of character for all adjuster applicants. The controlling statute and the regulator both carve independent adjusters out. If a question asks what an independent adjuster must file, the bond and the certificates are distractors.

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Series 17-70 Examination & Lack of Reciprocity

Examination Requirements

Candidates must pass the Series 17-70 (New York Independent General Adjuster Examination) administered by PSI Services LLC:

• Format: 100 multiple-choice questions
• Passing Score: 70%
• Time Limit: 120 minutes (2 hours)

Strict Non-Reciprocity

A critical testable rule in New York is the strict lack of licensing reciprocity. While many jurisdictions grant non-resident licenses based on existing out-of-state credentials (such as Florida or Texas licenses), New York does not grant adjuster reciprocity. Every applicant, regardless of adjusting experience or out-of-state licenses held, must sit for and pass the New York Series 17-70 examination to be licensed in New York.