In its upcoming session, the Alabama legislature will revisit the licensing requirements for insurance adjusters in the state. This proposed legislation’s stated purpose is to reduce the number of unlicensed adjusters in-state and better protect consumers. If enacted, these changes to Alabama’s licensing requirements will significantly impact on the insurance industry in Alabama.

The proposed legislation would require insurance adjusters to be licensed by the Alabama Department of Insurance. Currently, insurance adjusters in Alabama are required to be registered with the Alabama Department of Insurance, but they are not required to be licensed through them. With passage of this bill, insurance adjusters would have to pass a licensing exam and meet certain education requirements before obtaining a license.

Additionally, this legislation would require insurance adjusters to carry liability insurance, both to protect consumers in the event that an insurance adjuster makes a mistake or acts inappropriately and to weed out unlicensed adjusters as uninsurable operators. Presumably, licensed adjusters would also be held to a higher standard of conduct, as they would be subject to discipline by the Alabama Department of Insurance.

These proposed requirements met with mixed reactions from the insurance industry in Alabama. Advocates of the bill claim the proposed changes will help to improve the quality of adjusters in the state and protect consumers. Opponents believe the proposed changes will create unnecessary barriers to entry into the profession and increase costs.

One of the practical impacts (and perhaps a motivation for the proposed legislation) is that it would create a new stream of revenue for the Alabama Department of Insurance. Currently, the department only collects registration fees from insurance adjusters. However, if the proposed legislation is passed, the department would be able to collect licensing fees as well. This would provide additional funding for the department, which could be used to improve consumer protection and oversight of the insurance industry as a whole in Alabama.

If passed, the proposed legislation has the potential to significantly impact the insurance industry in the state. While it is intended to provide better protection for consumers and improve the quality of adjusters in the state, it is also likely to create new compliance challenges for the industry. It remains to be seen whether the proposed legislation will be passed and what the practical impacts will be. The attorneys at WSHB will continue to monitor the progress of this legislation and keep our clients advised of any developments.

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