An older retired Florida Circuit Court judge once told me that his first job out of law school was in the claims department of an insurance company. He told me that all the company’s “adjusters” were licensed attorneys and that it was common for attorneys to act in that capacity during the 1930’s.

Indeed, during that time, there were many lawyers and local Bar Associations with the opinion that the practice of adjusting claims—whether first-party or third-party claims—would inherently require the practice of law. If that were so, all adjusters would have to be licensed attorneys. The concern was especially so for independent adjusters and independent adjustment firms not directly employed by an insurer, but acting as a representative of the insurer.

In 1939, The American Bar Association made a significant statement about adjusters and whether lay people without an attorney’s license could adjust claims. The document is entitled, Statement of Principles on Respective Rights and Duties of Lawyers and Laymen in the Business of Adjusting Insurance Claims. It provided in part:

The Conference Committee on Adjusters on January 8, 1939, besides considering other subjects, adopted and issued the following statement:

On July 24, 1938, at the Annual Convention of the American Bar Association, an agreement was entered into reading, in part, as follows:

‘As a result of a thorough study of the relationship between the fields of the adjustment of claims and of the practice of law, it has been unanimously agreed between the American Bar Association Committee on the Unauthorized Practice of Law and the Committee on Lay Adjusters of the Insurance Section of said Association, in conference with a special committee representing all types of insurance interests-life, fire, marine and casualty that laymen have a proper place.’ (Emphasis added)

The statement goes on to explain what would be considered the practice of law and what lay adjusters should and should not do so they would not be considered practicing law without a license. The statement also reflects many ethical conduct requirements by adjusters so the public would be protected. Many of these ethical statements about adjusting claims are contained in the National Association of Insurance Commissioners Model Acts.

It is important for readers of this blog to note that State Bar Associations may or may not follow the views of the American Bar Association. Accordingly, check local laws about what constitutes the unauthorized practice of law where you may be adjusting claims.

  • ND

    Love this article. Great archival resource! Thanks Chip!!!

  • Chip Merlin

    Always good to hear from you. History helps us from repeating mistakes twice and provides an understanding of how we came to the positions we currently find ourselves.

  • Chip Merlin

    Thank you for the nice wishes. And for you tomorrow, Happy Birthday to you as well!

  • Dale Felton

    The issue of whether a licensed public adjuster is actually acting as an attorney In the handling of an insurance claim under a carve out by the Texas Legislature allowing them to do so is pending in Bloom v. Aftermath Public Adjusters, Inc., in the 5th Circuit, Cause No. 17-41087. The significance of the case is that it would make the Hughes Tolling Rule applicable to public adjusters who do not timely file proofs of loss or supporting documentation to the insurance carrier, the same as would apply if it had been a lawyer who dropped the ball. See Hughes V. Mahaney & Higgins, 821 S.W.2d 154 (Tex. 1991).

  • Edward Fako

    There are discussions coming put of FAPIA Public Insurance Adjuster Members that they are interpreting new Florida law to mean that Only Licenced Public Adjusters can be allowed to handle Insurance Appraisals in that State.

    Do Appraisers act in the same capacity if Insurance Adjusters by the fact that their opinions and documentation Assist In Settling The Loss?

    Can an Appraiser who represents the Home Owners side of the disagreement in the Amount Of Loss be charged with UPPA, the Unlicensed Practice Of Public Adjusting?

    Thank you for your time in advance to put a legal minds opinion to dissect much of these unknown ramifications that may be encountered, particularly if the opposing side needs to use undefined legislative wording as a threat to either bar worthwhile policy holder advocates from representing their custom.ers or to challenge an Award.