Unlicensed adjuster doesn’t fit the ‘expert’ exemption: Regulator

Manitoba’s insurance regulator fined a former adjuster $500 and ordered him to pay partial investigation costs of $2,500 for acting as an adjustor without a licence and not, as the former adjuster claimed, as an ‘insurance expert’ helping claimants.

Kenneth Wayne Munroe, a former designated representative of Sweetwater Consultants Inc., had been licensed as an adjuster from Dec. 4, 2006 until June 30, 2016. On June 27, 2016, he told the regulator’s staff he would not be renewing his adjuster’s licence.

The regulator sent him a letter that same day, affirming his stated intention not to renew, and reminding him that until he renewed the licence, he was prohibited from transacting insurance business.

On July 1 ,2016, Munroe let his licence lapse and was no longer an adjuster.

Just under three years later, on Apr. 10, 2019, Munroe, acting for insurance claimants, had them sign an Authorization and Approval to Act Document. This gave Munroe: “the authority to generally enter into direct discussions and entertain meaningful discussions with representatives of the underwriters at risk and their representatives and to request documentation and or any other document pertaining to this claimable loss and to make recommendations, offer suggestions, approve expenses and generally enter into negotiations and settlement discussions with representatives of the underwriters at risk and their representatives.”

Munroe did this work for compensation and invoiced the claimants for his services.

In a letter to the insurer on Apr. 26, 2019, Munroe indicated “we held a meeting at your office to discuss the variables relating to the quantum of the loss….During this meeting the objective discussed was to find an agreeable settlement solution.”

Elsewhere in the letter, he indicated: “It continues to be my hope the concept of a blended settlement can take place wherein all parties can agree with a settlement solution.”

Munroe told a council investigator that the majority of the file consisted of “scene investigation.”

He told council he believed he was one of the persons exempted from having to be licensed as an adjuster under s. 385(9)(d) of the Insurance Act. The exemption includes: “a person who is employed as an appraiser, engineer, or other expert, solely for the purpose of giving expert advice or evidence.”

Council didn’t agree his activities fell under the exclusion. In particular, they focused on Munroe’s negotiations with the insurer on behalf of the claimants.

Council’s decision referred to the definition of an ‘adjuster’ in the Insurance Act, which includes a person who “on behalf of an insurer or an insured and for compensation, reward or the hope or expectation of compensation or reward…solicits the right to negotiate the settlement of or to investigate a loss or claim under a contract, or under a fidelity, surety or guaranty bond issued by an insurer…”

Council said it reviewed this definition of an adjuster as well as the totality of the evidence. “On this basis, [we] concluded that the former licensee was carrying on the activities of and was holding out as an adjuster when acting on behalf of the complainants,” council ruled on May 2.

“Particular consideration was given to the activities of negotiating, settling, and investigating losses or claims under the definition; and, to the former licensee’s own evidence, namely the Authorization and Approval to Act Document, which contained wording to the effect that the firm had the authority to enter into direct discussions and into negotiations and settlement discussions with representatives of the underwriters at risk and their representatives.

“The former licensee was in direct communications (email and letter correspondence) with the Insurer, which was under the impression that he was a public adjuster as specified in the insurer’s file notes.”

Feature photo courtesy of iStock.com/BartCo