Note: This guest blog is by Scott deLuise. Scott deLuise has been a public adjuster in Colorado since 1985, and licensed since Colorado implemented licensing. He is licensed in 28 states and Puerto Rico. He is a past president of NAPIA, and founding president of RMAPIA.

Monday before last was a sad day for the property insurance industry for carriers, but mostly for consumers.

House Bill 18-1153 very carefully and deliberately codified Colorado Division of Insurance (CDOI) Bulletin B-5.26 almost word for word, which, one would think, should make it easy to get the statute approved by the Colorado Legislature. The only addition to Bulletin B-5.26 in the proposed bill was a prohibition on either party to the policy – insurer or policyholder – taking actions to control or direct their appraiser during the appraisal. Again, an accepted, bipartisan codification of a basic principle of appraisal.


Over the last five years, Colorado has seen a cottage industry grow because of, among other details, more sophisticated hail weather event identification, easy migration of licensed public adjusters (PAs) from other states as a result of reciprocity, and, most disturbingly, both the ease of a contractor obtaining a PA license and proliferation of the Unauthorized Practice of Public Adjusting (UPPA) by contractors, “consultants”, CPA’s and, in my opinion, insurance brokers and agents. This problem has been exacerbated by the legal (and illegal) assignment of benefits (AOB’s) which have allowed bad actors to bypass PA licensing by simply receiving permission of an insured to take over their claim.

The insurer side of the claims table has decided that, instead of tackling the root problems above, they will vilify the public adjusting profession. At my last count, only 17 states license staff and independent adjusters, yet some of those mostly untrained, sometimes rogue players routinely underpay and deny claims by homeowners and commercial property customers. To the contrary, PAs are licensed by examination, are bonded and maintain trust accounts in 47 of the 50 states, Puerto Rico, and DC. As such, PAs act as fiduciaries for their clients, much in the same way as an attorney or bank trust manages client funds for their principals. It’s a higher standard of care, and very important to the claims process. Contractors, roofers and insurance companies are seller/vendors with customers, not clients. This means that they work for themselves, not their customers.

In October 2015, the Division published a revised B-5.26 which was carefully negotiated over eight months by a committee of industry leaders including representatives from the Property Casualty Institute, Rocky Mountain Insurance Information Institute (RMIII), three insurance defense attorneys/lobbyists, president of Rocky Mountain Association of Public Insurance Adjusters, as well as RMAPIA’s general counsel, and three ad-hoc members of RMAPIA. Our Colorado Insurance Commissioner was in attendance, as was the CDOI Deputy Commissioner (legal counsel). This document was, in fact, drafted in its final form by, and at the insistence of, one of the prime insurance defense lawyers/lobbyists in Denver (also in attendance at the negotiations).

The Colorado Supreme Court last month granted certiorari to hear the Owners Ins. Co. vs. Dakota Station arguments proffered by the Colorado Civil Justice League (CCJL) on two issues: can an appraiser in Colorado have a percentage fee cap on an hourly appraisal agreement and, more importantly, act as an advocate for his party to the appraisal. The trial court and appeals court said yes, if the appraiser does not also act in a demonstrably unfair manner or with a provable bias.

Notably, CCJL is a carrier funded and supported organization ostensibly formed to “limit unreasonable lawsuits and preserve common sense in the courtroom.” This organization is really a thinly veiled anti-consumer group bent on tipping the scales to the benefit of its membership. Just look at their website!

Because of manipulation of B-5.26 by the insurance defense bar, more litigation has been prolonged and more cases lost by the carriers to the point that they think the Colorado supreme court will bail them out of the problem created by the carrier’s poorly trained (and unlicensed) adjusters, outcome oriented experts, and oft-used appraisers. Fact is that only seventeen states license staff and independent adjusters; carriers use their “program” contractors as adjusters (engaged in the Unauthorized Practice of Law and Public Adjusting), and will only hire experts as appraisers who they know will act as advocates for them because they get all their work from carriers. The carriers have the gumption to routinely object to the appointment of retired judges and seasoned mediators as umpires….because they are fair!

At the risk of upsetting those who license me as a public adjuster, I’m coming forth with this: Colorado is one of those states in which the carriers and their industry groups have, in my opinion, an unhealthy relationship with the Division of Insurance. Not necessarily the Commissioner, but clearly the Deputy Commissioner and staff, who historically will meet with them whenever they ask, schedule meetings with the Commissioner whenever asked, and, in the past, allowed these anti-consumer players to work behind the scenes to create an insurance bulletin modification without participation by all the stakeholders. I “caught them with their hands in the cookie jar” by documentation produced in a CORA (Colorado Open Records Act) request which, despite torpedoes by the carriers, resulted in negotiations leading to the October 2015, revision of B-5.26. I’ve tried many times to meet with commission staff and have been rebuffed. They just don’t like what I have to say about their friends.

The Bill:

RMAPIA has sponsored this bill for two years, and the carrier lobbyists have been successful both times in killing it before it got onto the house or senate floors. Last year, the excuse (not reason) was that it strayed from B-5.26 because it used the word “impartial,” which was not in the bulletin. This year, the Chair of the House Finance Committee used the “Judicial Superiority” excuse (not reason) that, because the Colorado Supreme Court is hearing the two issues, the legislature should wait until settled before entertaining a codification of a bulletin. Balderdash! The issues in front of the Court are case-specific and will not change the intent of a bill equally impactful on both the carriers and consumers. It’s fair to all concerned. I’ve queried numerous carrier group representatives, lobbyists and insurance defense counsel around the country, and except for Colorado, all agree that this is fair to all parties. The “reason” these bills have failed is because the carrier groups and their lobbyists are too numerous to count, prowl the halls of the legislature daily, and give money—lots of money—for the reelection of those who understand their point of view. The consumer is left out of the discussion.

Attached is the legislative “fact sheet” prepared by the RMIII lobbyist and countered by RMAPIA’s lobbyist, on HB 18-1153 as distributed to the legislature.

  • The “legislative superiority” argument falls short of being an argument at all.
  • PA’s “inserting themselves in the contractual relationship of the carriers” is absurd and a red herring. That’s why PA’s are licensed and bonded in CO and other states. Carrier adjusters and contractors are the bad actors, not licensed and insert themselves into the claims process. If the carriers paid claims, PA’s and plaintiff’s lawyers would be out of business!
  • The idea that appraisers for either side are not advocates for their clients is ridiculous. It is the umpire in the appraisal that is to be the neutral party. One carrier appraiser has disclosed that he has performed over 200 appraisals for his carriers.
  • This bill is almost word for word from the negotiated terms of B-5.26 and has nothing to do with coverage questions! Another red herring.
  • Same as above. No substance to the argument and is made only to confuse legislators.

No sense in bullet-pointing the balance of Mr. Jablan’s arguments—they’re all the same. As attorneys would say: asked and answered.

The Solutions:

I know how it disturbs me when reading the writings of someone, as above, without a solution; I call them whiners! So here are my proposed solutions, which many advocacy groups (and outside of Colorado, carrier groups) would be willing to discuss. NAPIA, RMAPIA, NAIC, CAIF, TAPIA, FAPIA would be willing to work on these problems with the carriers, if the carriers had the will to do so:

  • Colorado Division of Insurance:
    • Raise the bonding requirements for PAs to $50,000. Tough to get bonded when you’re a scofflaw. Some states require this, most don’t.
    • Structure the PA licensing exam to require an applicant acquire a reasonable knowledge of the profession. If you can fog a mirror, you can be a PA in Colorado.
    • License carrier staff and independent adjusters to the same standards of a PA. Less litigation will ensue.
    • Censure UPPA practitioners much as the Colorado Securities Division goes after and fines unlicensed securities dealers. More money is lost by consumers by UPPA practitioners by far than unlicensed securities dealers.
    • Implement a regulation that one cannot be a contractor and a PA. this is a conflict of interest, and all PA organizations that I’m aware of do not allow members who are both.
  • Colorado Supreme Court Unauthorized Practice of Law Committee:
    • Vigorously prosecute contractors and others acting as lawyers in the representation of policyholders.

There you have it. These solutions will probably never be implemented because they’re fair to consumers. These recommendations will also benefit carriers, but so far they’ve proven to be so blinded by rage and disrespect for PAs that they cannot see the forest for the trees.