To address industry concerns, the Colorado Division of Insurance has recently revised Bulletin No. B-5.26, Requirements Related to Disputed Claims Subject to Appraisal. The original Bulletin was addressed only to insurers and attempted to ensure that appraisers and umpires conduct the appraisals in a “fair, competent and impartial manner” by forbidding ex parte communications with appraisers and umpires.

The industry raised concerns with the language of the Bulletin, specifically, whether the Bulletin was too broad, as drafted, and might impact normal claims communications. The Division responded by clarifying that the prohibition on ex parte communications applies only after an appraisal is triggered.

Notably, the Division also modified the Bulletin to make it applicable not only to insurers but to policyholders, their representatives and public adjusters.

This comes on the heels of the Colorado Legislature’s adoption of C.R.S. § 10-2-417 which attempts to eliminate significant conflicts of interest by public adjusters. Alarmingly, prior to the statute it was common practice in Colorado for a public adjuster to represent a policyholder on a claim, and then subsequently perform the repairs which were the subject of the claim. Pursuant to statute, public adjusters are now prohibited from having any financial interest in a claim, beyond their payment as a public adjuster.