NAII Seeks to Alter Proposed Neb. Ethics Rule

The National Association of Independent Insurers (NAII) is seeking to ensure that a Nebraska Supreme Court proposed rule regarding the unauthorized practice of law does not adversely affect the insurance industry.

The issue of unauthorized practice of law has been noted as a growing problem in many states across the country in the past several years. To address the issue in Nebraska, the court has proposed rules that define the practice of law and non-lawyers as well as provide an exemption for certain activities from being considered as the practice of law.

“The members of NAII support the general purpose of the proposed rule, to protect the public from being harmed by individual who are untrained and inexperienced in the law, however we are concerned that the definition of non-lawyer is too broad,” said Kathleen Jensen, insurance services counsel for NAII. “As currently drafted, licensed attorneys employed by insurance
companies could fall within the definition of ‘non-lawyer.’ In addition, the rule could result in claims adjusters who negotiate settlements as being considered to be practicing law without a license.”

NAII, based in suburban Chicago, is recommending that the Court amend its definition of non-lawyer.

“Simply because a licensed attorney is hired by an organization or entity to provide legal services to others such as an insurance company, they should not be relegated to the status of non-lawyer. These attorneys must meet the same ethical and professional requirements as any other Nebraska licensed attorney and they face the same disciplinary sanctions for violation of these
standards. Clearly these attorneys are not the untrained individuals for whom this rule is intended,” Jensen said.

To allow insurance adjusters to be able to do their job, NAII suggested that the court make an addition to the section on exemptions and exclusions.

“Just as the rule exempts real estate brokers and certified public accountants, it should permit adjusters to prepare certain documents, advise claimants regarding the settlement process and negotiate settlements on behalf of the insurance company and the insured,” Jensen said.

The public comment period on the proposed rule ended June 20, 2003.