Insurance consultant license is denied for Omaha storm-repair contractor who’s sued several insurance firms

Omaha storm-repair contractor Steve Shannon can’t get a state license as an insurance consultant, a denial that he said is “troubling and a little baffling” but which the Nebraska Department of Insurance says was correct.

Shannon, owner of Valley Boys Inc. and Disaster Response Group, said that he disagrees with the license denial and that he holds similar licenses in other states.

Asked whether his frequent legal action against insurance companies, the subject of an earlier World-Herald story, was a factor in the denial, Shannon said he “cannot help suspecting that has played some part in the denial of my application.”

Licensed consultants under state law can charge fees to advise clients about insurance policies and claims payments.

Two denial letters from the State Department of Insurance didn’t mention the lawsuits, instead saying Shannon didn’t meet the state’s experience and education requirements for the license.

After Shannon disputed the denial, the department said in an email to him that a “processing error” resulted in 19 other people being licensed who did not meet the qualifications, out of 85 people who were licensed over five years.

State Insurance Director Bruce Ramge said in an email to The World-Herald that the department is working to resolve those 19 cases, has changed its application procedure and is considering other changes.

But Ramge has upheld Shannon’s denial, saying, “All resident applicants must meet the requirements set forth in the Consulting Act,” the state law governing such matters.

The licensing tiff is the latest development in a conflict among Shannon, the Nebraska Department of Insurance and several insurance companies sued by Valley Boys.

Over the past three years Valley Boys has sued insurance companies for $11 million, an average of $19,900 per home, to recover what Shannon says are payment shortages for storm damage. Some of the lawsuits have been settled, and others are pending.

Insurance companies have disputed Shannon’s repair estimates.

Earlier this year the State Insurance Department issued a consumer warning against “assignment” contracts that authorize repair contractors to take over damage claims and, if there are disagreements, file lawsuits.

Some other contractors also use assignment contracts so they can talk with insurance companies about claims on behalf of clients, without ending up in court.

Shannon says the contracts are necessary because some insurance company adjusters routinely underestimate storm damage repair costs. Lawsuits are the only way homeowners can collect the correct amounts in some cases, he says.

Regarding the consultant’s license denial, Shannon said in an emailed response to questions from The World-Herald that he applied for the license to broaden the services he can provide in Nebraska.

He said he received an insurance adjuster’s license in Texas in June 2016 and holds similar licenses in Oklahoma, Iowa, Colorado and Minnesota.

“It is troubling and a little baffling that I had no difficulty obtaining this license as a nonresident in several states while being denied a license in my state of residence,” Shannon said. “Every Nebraskan should be entitled to expect the Department of Insurance … to apply its license rules and requirements on a fair, consistent and even-handed basis.”

After receiving denial letters in January and February from the State Department of Insurance, Shannon asked the department for records on license applications over the past five years and received a reply that showed the state had issued the 19 licenses to people who did not meet the requirements. He forwarded the department’s reply to The World-Herald.

Shannon said those 19 people had “similar, if not lesser, credentials and less relevant professional experience than I possess.”

Shannon’s Nebraska license application included a copy of a certificate from the Adjuster School of Katy, Texas, saying he had completed a 40-hour “pre-licensing course” in insurance adjusting that is “recognized and accredited by the Texas Department of Insurance.”

The school’s website offers an online pre-licensing course for $169 and an in-person course for $349. It says the school is certified by the State of Texas but doesn’t mention other states.

Kevin Schlautman, licensing administrator for the Nebraska Department of Insurance, and Christine Neighbors, deputy director and general counsel, wrote separate letters to Shannon saying that the Texas course doesn’t meet Nebraska’s requirements.

Neighbors said in her letter that the Adjuster School course appeared to be specific to Texas law and that Nebraska insurance laws are different.

She said Nebraska requires a consultant to be licensed for three years as an insurance agent, broker or consultant in Nebraska or another state or to have completed a “program of study with broad national or regional recognition” and “more vigorous training over a wider variety of insurance topics.”

The Texas course isn’t enough to substitute for the required three years’ experience or the advanced training required for a Nebraska license, Neighbors’ letter said.

She said she reviewed Shannon’s information with Insurance Director Ramge and the denial stands.

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