State CE Requirements

State governments regulate the property-casualty insurance industry; federal regulation is virtually non-existent. This results in a lack of uniformity between the states and their approaches to adjuster licensing and continuing education. Some states require licensing, while others do not. Some states that require licensing also mandate continuing education, but not all. Some states that require continuing education have reciprocity with some states, others don't. Licensing and continuing education requirements also differ by state for various types of adjusters. Generally, state regulations categorize the adjusting profession by public adjusters, independent adjusters, and staff claims. Understanding staff adjuster licensing and continuing education requirements is truly as complex as it is confusing.

In early 2006, HB1056, the Louisiana Claim Adjuster Act, was signed into law in the state and requires adjusters, including those employed by an insurance company to obtain a license in Louisiana prior to adjusting claims in the state. While this law does allow for a 180-day exemption from the licensing requirement after a catastrophe or emergency, adjusters still will be required to register with the Department of Insurance.

Of the states that require licensing for staff adjusters, seven have continuing education requirements. Great variation exists between the states requiring continuing education as to the amount continuing education credit that is needed to maintain a license and the duration of time allowed to obtain the continuing education credit. For example, North Carolina requires 12 credits every calendar year, while Florida requires 24 credits every two-year licensing compliance period. Florida also requires specific credit breakdowns within its requirements. In addition, the Florida licensing compliance period ends on the last day of the birth month of the licensee on either an odd or even year.

When determining if a staff adjuster should be licensed, the law of the state where the adjuster works and the law of the state where claims are being adjusted should also be considered.

For example, a staff claim adjuster's office may be located in South Carolina (a state that does not require continuing education), but handle homeowners' claims for residents of North Carolina and Florida. North Carolina and Florida have continuing education requirements, therefore, the staff claim adjuster must comply with North Carolina and Florida's requirements, even though there are none for South Carolina.

No two states continuing requirements are the same. Delaware only requires resident adjusters to comply with continuing education requirements. New Hampshire exempts non-resident adjusters from their continuing education requirements only when the non-resident adjuster resides in a state that requires continuing education and the non-resident adjuster has complied with his resident states' requirements.

All seven states, however, require approval of the courses taken for continuing education credit. Each state's approval process varies in submission content and time frame. Only Wyoming allows for submission after the course has been completed. Delaware, Florida, North Carolina, and Oklahoma require the course provider to give notification before the course takes place. These states perform audits by randomly attending selected courses.

Fees charged for course approval by various insurance departments also vary. Some states charge by the length of the course to be approved (Texas charges $10 per approved credit hour); others charge a flat fee per course (North Carolina and Florida charge $100 per course regardless of its length). The approval process is completed by the Department of Insurance or by its contracted vendor.

Two states charge for banking CE credits after completion of a course. New Hampshire charges two dollars per credit hour/per student, and North Carolina charges one dollar per credit hour/per student.

The same course can be filed for CE credits with multiple states. Thus, an adjuster who must have CE in four states can take one course and receive credits in all four states provided the course is properly filed and approved in all four states. With proper planning efficiencies it can be created.

Claims CE Education Practices

A voluntary survey of claim managers representing 28 companies concerning their continuing education practices recently was conducted. The claim managers responded to questions about their current practices, tracking methods, scope of responsibilities, allocated and unallocated continuing education costs, and their preferred mode of obtaining continuing education. The survey also asked the claim managers how they viewed the perceived benefits, obstacles, and constraints of being compliant. The findings of the survey are summarized below.

Continuing Education Concerns

Continuing education training availability and applicability was the most frequent concern, while cost issues ranked the least.

The claim managers were asked to list their three most critical concerns regarding adjusters obtaining and maintaining state required continuing education credits and rank them in order of importance. The critical concerns identified were divided into five categories: Cost, Obtaining CE Credit, Record Keeping, State Regulations, and Training. A weighted value was assigned to each rank based on the respondent's order of importance. The concerns that were the same or similar were placed in a category. Within each category the assigned weight to each concern was calculated.

Training issues had the highest frequency, with lack of training availability and applicability the two most-identified concerns. Repeatedly, claim managers stated their desires to send adjusters to continuing education training that would not only provide the credits needed, but also enhance adjusters' current knowledge base of the specific claims the company assigned to adjusters. They wanted their adjusters to gain new knowledge and skills that could be utilized immediately.

Obtaining the continuing education credits was the second greatest concern. Respondents predominantly were concerned with adjusters being able to obtain the proper continuing education credits in a timely manner. A specific concern was the license would not be renewed as a result of the failure to obtain the proper continuing education credits within the prescribed time frame, which would mean that the adjuster would have to reapply and retest for the license.

Record keeping closely followed the previous issue. Almost all responses expressed concerns about maintaining proper records to track the adjuster's compliance and ensuring that all information was received properly and recorded by the state regulator. The burden of record keeping increases when there is department turnover and reassignment of territories.

Staying current on the state regulations and the inconsistencies among the states' regulations also were issues raised by respondents. Many voiced frustration in dealing with the continuing education requirement variances from one state to another when their territories encompassed multiple states. While the number of responses was greater than that given for record keeping, its weighted value was less because half of the responses in this category were ranked as lower concerns.

Cost issues had the lowest weighted value. While they were mentioned as frequently as record keeping issues, they were generally ranked as a number 3 concern. Cost issues that could not easily be quantified into specific dollar amounts, such as lost productivity and time away from the desk, comprised 60 percent of the comments. Only six comments related directly to monetary expenditures for continuing education compliance. Costs are not the driving concern; training availability and applicability are the major issues.

Continuing Education Practices and Preferences

The respondents were asked to select the types of continuing education that were utilized in their offices to fulfill requirements. The selection options were: correspondence courses, in-house training, outside trainers working on-site, computer-based training, seminars, and web based training. They were asked to indicate all training methods actually utilized. The amount of usage was not ranked.

The utilization of seminars was the most frequent method for obtaining continuing education credits. Seminars, correspondent courses, and outside trainers working on-site were used two out of three times.

The actual methods utilized for obtaining continuing education did not align with the preferred methods based upon responses. The respondents were asked to rank their continuing education preferences, with 1 being the most preferred and 6 being the least preferred. Not all respondents ranked each of the six methods.

It is interesting to note that seminars, which were the most frequently used method of obtaining the continuing education credits, were not the preferred method. They ranked fourth. In-house training was the number one preferred method, but was tied for fourth and fifth place in utilization. Lack of availability of meaningful continuing education training that directly supported and enhanced the adjuster's knowledge base for the type of claims handled was a factor cited. The need to timely obtain the necessary number of continuing education credits took precedent over course content.

Record Keeping

The bulk of the responsibility for record keeping was left to the individual adjuster 43 percent of the time for the license, and increased to 51 percent for continuing education. The claim manager's responsibility in both areas remained fairly stable. The remaining responsibility was distributed among administrative personnel, home office, and other.

These results indicate a tendency to not centralize the licensing and continuing education record keeping data and links to the high level of concern surrounding documentation/record keeping issues expressed by the respondents.

Training Costs

Required continuing education training costs were explored in two categories: the course cost by adjuster and the adjuster expenses associated with taking the course. Some respondents did not have sufficient access to the data or were unable to segregate the data in order to answer. In both areas, the vast majority of the responses ranged from $1 to $500. The average cost of a CE course was $254.25 per person, and the average associated expense was $213.75 for a total of $468.00. The average expenses were 45.7 percent of the total costs, while the course cost was 54.3 percent.

While the cost of the adjuster's time and/or lost productivity was not calculated and not included in these costs, it is a factor that claim management has to consider. This is the reason claim management ranked on-site training as their number one training choice. However, in reality, off-site seminars were utilized the most to fulfill continuing education requirements. The negatives to seminars were the need to attend enough to acquire the number of needed credits; the additional expenses associated with transportation, lodging, and food; the additional time away from the desk to travel; and the unavailability should a claim file emergency arise. These negatives increase greatly when an adjuster licensed in numerous states has to attend separate continuing education courses instead of attending a seminar that was been approved for continuing education in multiple states.

Here to Stay

The findings from the claims managers' survey have provided an understanding of adjuster CE issues and an identification of the range of training practices, both desired and undertaken.

Effective adjuster CE training content is meaningful, relevant, and enhances the adjuster's knowledge and skill base. It is readily available in an accessible format while mitigating lost productivity. This research revealed that while cost is a consideration, it is not the major one. The driving considerations are the availability and appropriateness of training.

So, for all claim professionals, the bottom line is that adjuster licensing and continuing education are here to stay. We do not anticipate uniformity among the states occurring any time soon. The best advice is to confront the licensing and continuing education nightmare instead of ignoring it. Adjusters need to be properly licensed. This avoids potential state fines and reprisals. The key is to effectively obtain the needed continuing education credits and at the same time allow participants to gain new knowledge and enhance their adjusting skills. Continuing education that is approved in multiple states simultaneously and is customized to meet the training needs of your associates offers the largest return on your continuing education investment.

Kathleen J. Robison is president of K.Robi & Associates. She can be reached at www.krobiconsult.com, [email protected].

William C. Stewart, Jr., is president of Claims Training Services. He can be reached at www.claimstraining.com, [email protected].