Adjusting the occupational licensure mindset

Creating a license for public insurance adjusters is not necessary in Wisconsin

By JULIE GRACE | October 23, 2019

A new piece of legislation would spend state resources to create a new occupational license for a profession made up of just eight to 10 people in Wisconsin — and make it harder for others to get into the field.

Public adjusters work on behalf of insurance policyholders (not insurance companies) to help file claims or navigate the insurance industry after a loss or damage to property.

Elsewhere in the country, critics have complained that adjusters have appeared in areas ravaged by natural disasters, target individuals who’ve lost their homes or property and try to convince them to use adjuster services for a fee or a percentage of the claim.

At two recent public hearings, proponents of the legislation here said requiring a license is necessary to promote consumer protection and public safety. But when asked whether there have been any consumer complaints registered with the Wisconsin Office of the Commissioner of Insurance (OCI) regarding public adjusters, no examples were forthcoming.

The push to license adjusters in Wisconsin isn’t coming from consumers or the public. Similarly, none of the practicing public insurance adjusters in Wisconsin were consulted when the legislation was being drafted. Instead, legislators are being lobbied by the insurance industry and the national associations that represent insurance adjusters, groups some believe are trying to fence out competition.

“Licensing appears to be responsive to political pressure from occupational associations seeking to become regulated. Occupations that are well-organized and have well-funded campaigns with no organized opposition are more likely to find themselves at the top of the agenda before occupational regulatory commissions,” wrote Morris Kleiner, AFL-CIO Chair in Labor Policy at the Humphrey School of Public Affairs at the University of Minnesota.

The bill would require public adjusters to pass a written examination, pay fees and obtain 15 continuing education credits (including one ethics course) every two years. If public adjusters don’t meet one of these or other requirements, they may have their license suspended or revoked, making it illegal for them to continue working in the field.

History shows that once an occupational license is created, it is unlikely it will ever be eliminated. So, before legislators rush to license a tiny segment of the state’s workforce, they should consider other viable options.

A somewhat less-restrictive option is the model used in Ohio, where public insurance adjusters need not complete continuing education as part of the licensing requirements."

Some states require that less onerous alternatives be weighed every time a new occupational license is proposed. Wisconsin should consider such a sunrise review process.

Until then, given that licensing is the most restrictive form of occupational regulation, legislators in Madison should make a habit of considering less restrictive, voluntary choices.

Julie Grace is a policy analyst for the Badger Institute.

Editor's note: A previous version of this article stated that Ohio does not require public adjusters to be licensed. However, their certificate of authority requirement is in fact a license since it is mandated by the government.

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