Anystate first required that Sue meet all of her continuing education requirements that remained before her license was revoked, and then the state made her meet her continuing education requirements for the current license period. To add insult to injury, Anystate required that Sue retake the licensing exam before reinstating her license.

Don't Be Sue

A complete understanding of the total licensing process in your state is critically important to avoid headaches. This includes knowing the specific requirements to become licensed, the obligations to properly maintain and keep your license in good standing, and, finally, the requirements to properly give up your license.

In addition, it's important to remember that a state can change its adjuster licensing, continuing education requirements, and reporting procedures at any time, so keeping abreast of changes that occur in adjuster licensing is very important. For example, the Oklahoma Legislature recently enacted continuing education requirement changes from 12 hours per year to 24 hours every two years, with a carryover allowance limited to six hours. Louisiana enacted adjuster licensing and continuing education in June 2007. Previously, they had none. Texas recently began to require that all continuing education credits be reported to a central database by continuing education providers.

This article outlines the current state of adjuster licensing and continuing education requirements for staff adjusters and independent adjusters. For questions about a specific state, please refer to the state's complete regulations or statutes, or contact the state's department of insurance directly.

Who Must Be Licensed?

The first step is to determine who has to be licensed in any given state. Many states differentiate licensing requirements between staff adjusters and independent adjusters. These job titles are normally defined within the state's licensing laws. Generally, staff adjusters are defined as employees of insurance companies. Independent adjusters are defined as those who work to adjust claims on behalf of an insurer or self-insured. Firms that act as third-party administrators are usually classified as independent adjusters. Independent adjusters have to be licensed in more states than staff adjusters.

Next, determine how far up the organizational management structure licenses are required. As a rule, front-line supervisors have to be licensed, but claim managers might not. Rhode Island exempts those adjusters handling claims for less than $2,500. But what if that adjuster has to fill in for another adjuster on leave and has to handle a claim that is $2,595? The safer path would be to require that everyone be licensed.

Defining “Home State”

When analyzing laws in states where you need to be licensed, a key term to understand is “home state.” Some states will reciprocate with granting licenses and/or continuing education requirements if you have met the requirements of your home state. The definition of home state, however, can differ from state to state. Is it defined as the state in which you reside? If so, then what happens if your home state (i.e., state of residence) does not require a license? Remember, not all states require adjusters to be licensed, and not all states that require adjusters to be licensed require continuing education.

Or, is home state defined as any state in which you have a license and declare it as your home state? Does a state automatically become your home state once you pass the licensing test in that state? Like we said earlier on, it can be confusing.

First, understand the requirements to be licensed in each state, and then develop your strategy. Next, select the most appropriate path.

For example, assume that you have to be licensed in both State A and State B and that you are a non-resident of both. Both states require that you pass a test to obtain a license. However, State A is known to have a tough test and first requires a pre-test course of study. Also, State A has a continuing education requirement for anyone who received a license by taking State A's test. State A, however, will reciprocate with other states that require a test, regardless of the state requiring continuing education. State B, on the other hand, requires a test, which is known to be simpler. Furthermore, State B neither requires a pre-test course of study nor does it have a continuing education requirement.

In this particular case you should get licensed in State B and then use your license in State B to reciprocate with State A to obtain a license in State A. Doing this in reverse order is bound to cause more work.

However, this obvious answer may not be the best long-term solution. Usually, a state is more likely to reciprocate with another state that requires a test and has a continuing education requirement. So even though starting with State A may be more difficult, think ahead of the eventualities that may occur at your company and factor this into your licensing strategy.

Earning a License

Many times when a licensing application is rejected, it is because of technicalities. Make sure that all the t's are crossed and i's dotted on the application. Some states require accompanying documentation with an application such as fingerprints of the prospective licensee. If this is the case, then make sure the department of insurance will accept the source of the fingerprints (e.g., local police department) before obtaining and submitting them.

If your company is applying for multiple licenses simultaneously and a fee has to be submitted, then determine in advance if your company can issue one check for all applications being submitted or if the state requires a separate check to accompany each application.

Do not guess at answers to questions that you may have as to what the state may want on the application. As you complete the licensing application, write down any questions you have, regardless of how silly you may think they are. Then call the state's department of insurance and ask those specific questions, write down both the name of the person who is giving you the answers and the information given, and, if possible, get an e-mail confirmation of the information.

Licensing Exams

First, find out if you have to take an exam. Some states may waive the requirement if you possess a recognized industry designation like the AIC or the CPCU. In some instances, a state may possibly waive testing based on your length of adjusting experience.

If an exam is required, then find out where it is given. Many states now utilize national testing services to administer their exam programs. You may be able to take the exam relatively nearby — even for a state located far away.

Determine if the state makes available outlines or other test-preparation materials. There are vendors that publish exam preparation guides. However, there can be a vast difference in quality of exam preparation materials. So before buying any exam preparation materials, do some research as to the quality of the materials. Talk to others who have taken the test. If your company has a training department, then ask the trainers to use some of their network connections with other companies and associations like the Society of Insurance Trainers and Educators to develop this information.

Best exam results occur when you create a study schedule and stick to it. The knowledge within the exam material should be understood fully before taking the exam. Better you leave the exam thinking that you over-prepared than under-prepared.

Once the license has been obtained, it is important to understand the required procedures for its renewal. Determine if you will receive a renewal notice from your state of licensure or if you must contact the state directly to renew the license. If you switch employers or change your residence address after you have been licensed, then make sure that your licensing states know of the change. Adjusters who changed employers but did not notify the state DOI of the change risk having their renewal applications go to their former employers, who will likely discard them because the adjusters are no longer employed at that company. This results in a lapsed license, which not only puts the adjuster back to square one, but also takes the adjuster out of the adjusting function for that state until the license is once again obtained.

If you are going to give up your license in a state, then find out what is required to relinquish the license. Do not just let your license lapse with non-renewal. Remember the story of Adjuster Sue: Following the correct, generally simple procedures of the state will help avoid future hassles.

Continuing Education

The whole subject of adjuster continuing education raises its own set of questions with often confusing answers. Let's break it down:

Does the state have continuing education requirements for adjusters?

The answer is not necessarily “yes” or “no.” A state may require continuing education for independent adjuster licensees, but may not for staff adjuster licensees. Some require continuing education for both. Others may waive or reduce the amount of continuing education required based on the experience level of the licensee or professional designations that the licensee has earned.

Some states may reciprocate if the adjuster's home state requires continuing education. However, reciprocity can often create its own problems. For example, assume that Adjuster Sue's home state is State A, which has a continuing education requirement. Sue's other states of licensure — States B, C, and D — also have continuing education requirements, but all of them reciprocate with State A. Sue only meets her continuing education requirement in State A and uses it to maintain her license in B, C, and D. Unfortunately, Sue's employer does not timely renew her license in State A. As a result, Sue not only loses her license in State A, but also loses her licenses in States B, C, and D.

We recommend that you meet your continuing education requirements in all states where licensed. If Sue had met her continuing education requirements in States B, C, and D, then she would have still retained those licenses. Following a continuing education plan that provides credit in multiple states simultaneously is a more efficient, secure strategy than relying on reciprocity.

What is the compliance period?

Some states use a calendar year as the compliance period, while others use the license renewal date. Some states may even use a common date for all licensees to complete continuing education. For example, New Hampshire requires 20 credits of continuing education by October 1, every two years. Depending on the state, the compliance period and license renewal date may not be the same.

If you are licensed in multiple states with continuing education requirements that have different compliance periods, it is most efficient to do your continuing education at the same time each year.

Is there any breakdown of types of credits that must be obtained?

Some states require that credits must be obtained in various classifications of courses. For example, Florida requires 24 credits in each compliance period. Of these, ten credits must be in law/policy courses, 12 credits in optional courses, and two credits in ethics. A law/policy or ethics course is one that has been specifically approved by appropriate authorities. Texas requires 30 credits every two years, with at least two credits in consumer protection or ethics. Texas also requires that at least 50 percent of all credits be in classroom-approved courses.

Are carry-over credits allowed? If so, then how many?

Some states may allow carry-over credits for the next compliance period, while others do not. Making the incorrect assumption that you have credits that will carry over from the last compliance period can cause you to be non-compliant.

What happens if a course is replicated within a certain time period?

Certain states may have regulations that stipulate an adjuster will not receive credit for taking the same course again within a certain time period. For example, Florida will not award continuing education credit for a course that is replicated within three years. To be on the safe side, adjusters should not replicate any course within a three-year time period.

Who reports my continuing education credits to the state?

The majority of states now require continuing education providers to report completion of continuing education coursework to the appropriate state agency or its vendor within a certain time period following the completion of the course (usually 15 business days). Generally, for a provider to report continuing education credits, it needs the license number and last name of the adjuster as it appears on the license. Often, the adjuster will receive a certificate of completion for each continuing education class attended. This provides a sense of security that all is up to date. However, it may be a false sense of security because if the credits were not properly reported the state will have no record of them.

Other procedural issues that have resulted in an adjuster not receiving continuing education credit for courses taken are failure to sign the course sign-in/sign-out list, not signing the name as it appears on the license, or either failing to provide a license number or listing an incorrect one.

Some states have a database that licensees can check to verify their continuing education status, which should be checked periodically if available. If credits do not show up for a particular class attended, contact the continuing education provider and ask that the record be corrected.

Some states require the licensee to report the credits. If this is the case with one or more of your licensed states, you need to know the reporting process and procedures. Some states may require copies of continuing education certificates at the time of license renewal; others require that continuing education certificates are sent in to the state as soon as the course is completed.

Finally, remember that the purpose of continuing education is to help make you a better and well-rounded professional. Evaluate continuing education from the standpoint of what you will learn and how it will broaden your career. You have to earn it, so get the most from it.