Law and Regulations for Loss Adjusters PDF

As a loss adjuster, you will need to be aware of various codes of practice and legislation that impact on the way you negotiate settlements. The law There are three areas of law that are relevant to loss adjusters: 1\. Common law --- this is a system of law based primarily on precedents coming ou...

As a loss adjuster, you will need to be aware of various codes of practice and legislation that impact on the way you negotiate settlements. The law There are three areas of law that are relevant to loss adjusters: 1\. Common law --- this is a system of law based primarily on precedents coming out of the court system. 2\. Statute law --- this is law made by parliaments (or delegated authorities). It overrides common law if they are in conflict. 3\. Contract law --- this involves the interpretation of specific agreements that are entered into between certain parties. Common law This is a system of law based primarily on precedents 🔍 coming out of the court system. By exercising reasonable skill and care in performing their duties, the loss adjuster is considered to be operating according to the common law standard. A long-established principle under common law is that the loss adjuster owes a duty of care to the principal. Normally, this involves carrying out reasonable inquiries and obtaining relevant information before negotiating a claim settlement. It will also involve an appropriate level of skill in conducting the negotiation process. While the duty of care that loss adjusters owe to other parties may not be exactly the same as the duty owed to their principals, there can still be a duty to other parties for example, the insured. Statute law and regulations Statute laws are made by Parliament (or delegated authorities) and override common law. As a loss adjuster, it is important to understand which statute laws you are operating under for a claim, as these can vary from state to state and country to country. Each loss or set of circumstances may present different requirements under different forms of legislation --- local, state and federal. It's important to be aware of legislative changes that are likely to affect day-to-day operations, such as changes to Acts or building codes. A loss adjuster is not expected to be fully familiar with every piece of legislation but does need to be aware that there could be a legislative process to consider during the life of the claim. For example, repairs to buildings may need to comply with current building standards rather than the standards that applied at the time the building was constructed. This may affect the costs involved and require modifications from the original design to make sure the reinstatement complies with current codes. This is especially common when dealing with older properties. The Insurance Contracts Act 1984 regulates classes of life and general insurance in Australia. Its purpose is to prescribe a uniform and fair set of rules to balance the interests of insurer and insured. The Act requires standards of reasonableness and fairness to be adopted by parties to a contract. Key sections to be aware of include: Sections 12 to 14A in Part II of the Insurance Contracts Act 1984 outlines the Duty of Utmost Good Faith. It requires that all parties must act towards each other, at all times and in respect to all things, with the utmost good faith --- that is, honestly, fairly and transparently. Sections 20 to 22 deal with information disclosure. Two different duties relating to information disclosure apply to clients depending on whether they are entering a consumer contract or not. Customers entering into a consumer contract of insurance have a duty to take reasonable care not to make a misrepresentation, which requires them to answer all questions posed by the insurer truthfully to the best of their ability. Clients entering into a contract of insurance that is not a consumer contract (i.e. a wholesale contract) have a duty of disclosure, which requires them to disclose matters known to be relevant to the insurer's decision to provide cover and that a reasonable person in the client's circumstances would know are relevant to the cover. The object of the Competition and Consumer Act 2010 is to enhance the welfare of Australians through the promotion of competition and fair trading as well as providing protection for consumers. The Privacy Act 1988 dictates how organisations can collect, use, keep secure and disclose personal information. It formalises consumers' rights to know why an organisation is collecting their personal information, what is kept on record, how it will be used, and who else will have access to it. The associated Privacy Principles clearly outline these requirements and provide a framework for how they can be met. There are building regulations required by local authorities and a national compliance code, the Building Code of Australia (part of the National Construction Code), and there may also be statutory requirements to adhere to. There are two Insurance Law Reforms Acts, both of which broadly require insurers to act reasonably. The Insurance Law Reform Act 1977 governs contracts of insurance and sets out the law relating to misstatements in insurance contracts. The Insurance Law Reform Act 1985 governs the conduct of insurers in relation to claims and policies. It limits the circumstances where insurers can refuse to pay a claim and restricts the sale of life insurance to minors. The Privacy Act 2020 governs how organizations can collect, store, use, and share personal information, providing individuals with rights over their data and outlining penalties for non-compliance. The associated Privacy Principles clearly outline these requirements and provide a framework for how they can be met. The object of the Fair Trading Act 1986 is to make it illegal for businesses to mislead consumers, give false information about their products or services, or use unfair practices. The Consumer Guarantees Act 1993 aims to create a trading environment in which consumers and businesses have confidence and where consumer interests are protected and businesses can compete effectively. This Act requires consumers to be given guarantees when they acquire goods and services. The Commerce Act 1986 prohibits companies from making anti-competitive agreements with one another, such as colluding to fix prices or divide up markets between them. It is illegal for a company to abuse a dominant market position. Such acts can lead to customers paying higher prices or having a restricted choice of goods or services. The Building Code sets performance standards for all New Zealand building work. It covers aspects such as structural stability, fire safety, access, moisture control, durability, services and facilities and energy efficiency. The Building Act 2004 is the primary legislation governing the building industry and its purpose is that people can use buildings safely and without endangering their health. Contract law This involves the interpretation of specific agreements that are entered into between certain parties. It is common for the terms of such contracts to be put in writing and adjusters will often operate under explicit contracts that define their duties and stipulate the methodology to be followed. The adjustment must be conducted within the terms of the contract. Codes of Practice Accordion (Expander tabs) Australia ONLY --- The General Insurance Code of Practice The General Insurance Code of Practice covers many aspects of the general insurance industry, including how products are sold, how claims are investigated and handled, how complaints are handled, the timeframes that must be adhered to and insurers' obligations to those experiencing vulnerability or financial hardship. Note that insurers must decide whether to accept a claim with 10 business days of receiving all necessary information, and that decisions must be made within four months of first receiving a claim (except in certain circumstances). External Experts, including loss adjusters, are expected to provide any reports requested within 12 weeks of being engaged. You can help insurers meet these standards and support customer care by performing your duties in a timely manner. New Zealand ONLY --- Fair Insurance Code The New Zealand Insurance Council\'s Fair Insurance Code sets out the standards that insurers must meet when providing services to their customers. It's essentially the New Zealand insurance industry's commitment to be open, fair and honest in its dealings with policyholders. The Fair Insurance Code details what happens when making a claim and covers how claims are managed and in what timeframe, and expectations for insurers and policyholders. Note that an insurer must acknowledge receipt of the claim within 5 business days, and decide whether to accept or decline the claim within 10 business days of the date that all information needed to make a determination on the claim has been gathered. When a complex claim arises, it may take longer than 10 business days to evaluate or obtain information from third parties. You can help insurers meet these standards and support customer care by performing your duties in a timely manner. Professional and representative bodies If you are a member of a professional institute, you are required to observe its code of conduct, which usually contains both technical and ethical dimensions. AICLA The Australasian Institute of Chartered Loss Adjusters (AICLA) also has its own code, known as the Charter of Objects and Professional Conduct. An AICLA member will be required to adhere to the requirements of this Charter. The Charter has a range of requirements. Point 7, Ethical conduct of members states: a member must neither maliciously nor in a reckless or careless manner do anything likely to injure, directly or indirectly, the reputation of the Institute a member shall refrain from any conduct or action in his/her professional role which may tarnish the image of the profession or unjustifiably detract from the good name of the Institute no member shall issue a report under his/her signature unless the work dealt with therein shall have been undertaken by the member or a person in the same firm a member must always with due regard to professional duties, act honourably towards his/her professional colleagues a member must always try to keep completely free of conflicts of interest and at all times shall recognise the legal and equitable rights of all parties if a member becomes aware of a conflict of interest, the member must notify the customer or principal as soon as possible. Statement / Quote / Definition (additional content) Conflicts of interest It is a fundamental principle that a loss adjuster cannot act for two customers whose interests conflict. For example, a loss adjuster should not accept instructions from both the insurer and the insured on the same matter. However, it goes further than this; it also means one should not accept instructions from two different parties (including two different insurers) whose interests may conflict. Other bodies --- Australia The Insurance Council of Australia (ICA) is the representative body of the general insurance industry in Australia. Members provide insurance products ranging from those usually purchased by individuals to those purchased by small businesses and larger organisations. The ICA's role is to represent the interests of the Australian general insurance industry. It is also responsible for coordinating the insurance industry and the government during the recovery phase of a disaster event. More information on insurance-based disaster recovery can be found on its website. Other bodies --- New Zealand Accordion (Expander tabs) Insurance Council of New Zealand The Insurance Council of New Zealand (ICNZ) represents fire sand general insurance companies. It is governed by a board of 10 members, appointed at the annual general meeting. The council performs an important role in informing and educating consumers about key issues and risks. The Natural Hazards Commission (NHC) Toka Tū Ake NHC Toka Tū Ake (formerly the Earthquake Commission) is a government agency that plays a very significant role in New Zealand's insurance industry given the country's high exposure to natural hazard events, including earthquake, natural landslip, volcanic eruption and tsunami. Homeowners pay a Natural Hazards Insurance Levy as part of their private insurance premium, and this goes into the Natural Hazard Fund. This fund covers claims for damage following a natural hazard event for up to \$300,000 plus GST for residential homes, with limited cover for certain areas of residential land.