House Business Affairs & Labor [Mar 25, 2026 - Upon Adjournment]

Representative Brooks. Excused.

English. Here. Gonzalez. Excused. Kelty. Here. Leader. Present. Mabry. Here. Marshall. Excused. Morrow. On the wall.

Raiden. Excused. Zucla. Here. Camacho. He. Here, but not in the room. Excuse, I guess. And Madam Chair. I am present.

Thank you, Madam Chair and committee. On behalf of my co-prime, Rep. Stewart and I, thanks for coming out. Colorado, like much of our nation, is facing a serious CPA shortage. The shortage isn't abstract. It affects small businesses trying to make payroll and plan for growth. It affects nonprofits working to meet community needs, and it affects families and taxpayers who rely on timely, qualified accounting and audit services. When this pipeline shrinks and it has, workloads on the remaining CPAs has risen. Burnout is increasing. The profession is becoming less attractive to the next generation. And this is a cycle that's really hurting nationwide and certainly communities throughout our state. This bill, which passed unanimously in the Senate Business, Labor and Technology Committee, and with the 35 to zero vote in the full Senate addresses those challenges in the right way. It preserves public protection by keeping the uniform CPA exam and a board-approved ethics exam as requirements in every case, but at the same time, it modernizes how candidates can demonstrate competency through a clearer balance of education and real-world experience. People learn things in different ways, some in the classroom, some through experience, some through apprenticeships. These pathways kind of open up all three. The bill represents a thoughtful, comprehensive approach to expanding access to the CPA profession while maintaining vigorous standards and ensuring that CPAs remain trusted advisors across our state. And most importantly and distinctly, it creates three distinct pathways to licensure. Pathway 1 is a bachelor's degree plus 30 additional credit hours and one year of accounting-related work experience. This is consistent with the current framework and remains available for candidates who follow the traditional model. Pathway 2 is a bachelor's degree and two years of accounting-related work experience. This is really a big change in the way we have done things is it provides a flexible alternative by allowing candidates to substitute an additional year of supervised professional experience in place of an extra 30 academic credit hours and it helps working adults and those that are changing careers enter the profession without lowering the standards for the profession. And the third pathway is a master's degree, meaning a post bachelor's degree plus one year of work experience. This is also aligned with current law. The bill modernizes it by placing eligibility on degree completion rather than just tallying up what the credit hours are. And it reflects how higher education has evolved and encourages a meaningful graduate credential. Photo up.

So also in the bill is some reciprocal licensing pieces as well that help with our businesses that have operations both in-state and outside of Colorado. But with that, I'd pass it on to my co-prime.

Thank you so very much, committee, for hearing us today. Like you heard, Colorado is facing a shrinking pipeline of certified public accountants. Over the past decade, accounting degree completions nationally have declined by as much as 30%, which is far outpacing the decline in overall undergraduate enrollment. Fewer systems are entering accounting programs, and the CPA exam pipeline has narrowed as well, with first-time exam candidates down by roughly a third. These are not abstract trends. They translate into real gaps in expertise that businesses, nonprofits, and government agencies across Colorado depend on every day. Under current law, Colorado requires CPA candidates to complete a single pathway to licensure. And while this model was designed to ensure readiness, it has also increased the time and cost required. You heard already from Representative Richardson about the way that we're expanding the flexibility for those three pathways, so I will not reiterate those points. But I will also say that this bill keeps Colorado competitive and supports workforce mobility. More than 25 other states have enacted similar reforms, with more in progress. The bill codifies mobility provisions in statute to allow CPAs licensed in good standing in other states to practice in Colorado, shifting eligibility from a state-based model to one grounded in individual qualifications, which preserves core standards, including the passage of the uniform CPA examination and completion of a baccalaureate degree. Senate Bill 76 aligns Colorado's licensure framework with the Uniform Accountancy Act promoting consistency. The legislation is ultimately about opportunity. The CPA profession offers a clear pathway to the middle class and beyond with strong earning potential, long career stability, and opportunities across every sector of Colorado's economy. By reducing unnecessary financial barriers while still maintaining standards, Senate Bill 76 opens the door for talented Coloradans who might otherwise be excluded, not because of ability, but because of cost and time, and I would ask for your aye vote.

Chair, thank you. I want to commend the sponsors for their fearlessness and taking on work in such an emotionally complex space. it really is inspiring hey I'm just wondering is it just purely to the barriers that you feel are contributing to the shortage of CPAs Are there other factors that have gone into this or this just fixes it Anything else that's contributing to it?

Red Richardson. Thank you. Actually, I will leave that in the hands of our witnesses. We have the leadership from the CPA Association that I think could talk about all aspects.

okay with that then we're going to go into witness testimony we have three witnesses signed up and we will call all three of them at the same time miss Alexandra Romero, Alicia Galenas, and Nicole Garcia. Please come up and you have three minutes each to give us your testimony. Okay, who wants to begin? Let's start. Yeah, thank you. Please unmute. Introduce yourself. Tell us who you're representing. Good afternoon, Madam Chair and

Thank you so much. We're going to go on to the next witness.

Thank you. Please stand by for questions. We're going to go online to Ms. Nicole Garcia. You have three minutes to unmute and give us your testimony.

Thank you, Ms. Garcia. Let the record reflect that we've been joined by Rep. Marshall and Gonzalez in writing as well. Committee members, are there questions for our witnesses? Rep. Wrighton, you had a question. No? Okay. I do have a question.

Yes. Thank you, Madam Chair. So the State Board of Accountancy is the body that does set the requirements for work experience, and currently we anticipate that that work experience would stay the same under the rules. It's the equivalent. The standard has been the rules are set so that it's in specific areas of accounting that are relevant and must be verified by a certified CPA so that that work is actually supervised. And have there been any major updates to the exam in recent times?

Thank you Madam Chair Yes so approximately two to I think three years ago the CPA exam was reevaluated for current competencies and actually expanded in its model so that it can be more flexible for CPAs that may want to concentrate in a particular area because the body of knowledge related to CPA has expanded widely since the evolution of the CPA or since the beginning of the CPA license. And so now there are actually multiple areas that are tested and students can now lean into one area in greater depth and have a little bit more flexibility in the CPA exam. And that exam is reviewed on a routine basis to make sure that it's relevant

Thank you, Madam Chair. So there are three core areas that have not changed. And the fourth one is now an option that there are three different areas for your fourth part of your exam that you can choose one of the three. Because the body of knowledge is so wide that shoving it all into four parts has become challenging. So the three core areas have remained the same. And the fourth one is a flexible one that you choose one of three in-depth areas to go deeper.

It is. I mean, I actually took the exam. It is. It's still a popular resource. Okay.

Thank you, Madam Chair, and thank you so much to my co-prime sponsor, Representative Richardson as well. I will be brief. Together we are presenting a comprehensive solution to a pressing workforce challenge here in Colorado, one that balances innovation with accountability and opportunity with excellence. And I would respectfully ask for your yes vote. Thank you.

Thank you, Madam Chair. I do want to thank my co-prime and the witnesses that came out today. I think, though they were not a lot of witnesses, I think they covered very well to highlight the need for this and kind of the balance that struck in this legislation. So it creates a practical path forward and keeps the standards in place for those that are served by our CPAs. And I think both are very important for those that may be right on the edge. There is no fiscal note, and this bill is subject to petition. And I appreciate your time and consideration and would ask for your support in this. Thank you.

You were so moved at how interesting this was. Thank you, Chair. Actually, I've just been able to regain my composure, so your timing is perfect, and I will be pleased to offer some comments. Honestly, being able to have some relevant work experience and have that count for something, I mean, it's not reducing qualifications. It reducing a barrier in my mind to being able to get some folks even interested right even to say yeah that something I want to do instead of looking down some really long lines of barriers and problems of getting into that field So very very supportive and appreciate the work in trying to help people get into the workforce in a meaningful manner

Rob Kelti Thank you, Madam Chair. And thank you for bringing this bill. Honestly, it's something that I hadn't really even thought about. And I'm glad. I pushed for this kind of training in the military when I was in the military. You know, common sense is common sense. So being able to open this up for them, I think it's great. And I think I'm a definite yes on this, and hopefully this will carry on to my bill. Wishful thinking, no kidding.

Representative Richardson, would you like to move the bill?

Yes.

I move Senate Bill 26076 to the Committee of the Whole with the most favorable of recommendations.

Ms. Gerrard, please call the roll.

English. Yes. Gonzalez. Yes. Kelty. Yes. Leader. Yes. Mabry. Yes. Marshall. Yes.

Richardson. Yes. Bryden. Most favorably, yes. Sucla. Yes. Camacho. Excused. Madam Chair.

Let's go.

Well, hello, Madam Chair and everyone else. It's a pleasure to be here today. So I bring before you House Bill 26 And I want to let you know how this bill came to be I had several complaints from my constituents over some time And during that time, they, you know, were telling me what was going on. And, you know, I had been listening. I listened to everything. But I really didn't have anything personal to attach it to, to understand it fully. And so anyway, so until recently, until I myself had to go through the same exact thing, and then I went, oh, there's a problem. I completely understand. I lost a piece of paper here. I'm trying to find it. But anyway, so with that in mind, you know, I kind of went through and tried to see, well, this is obviously a problem. How can I stop it? How can I help this problem? So I'll go into my remarks. as you know, I'm presenting HB 26-1247. It's a property insurance appraisal clause claim disputes. It is a consumer protection and transparency bill focused on improving the property insurance appraisal dispute process. When homeowners experience property damage and disputes arise over claim values, the appraisal process is intended to provide a fair and efficient path to resolution. However, too often that process lacks transparency, leaving policyholders without clear explanations, consistent standards, or a full understanding of how decisions are being made. This lack of clarity can create confusion, delays, and unnecessary disputes at a time when homeowners are already dealing with significant property loss. This bill addresses this by bringing greater transparency to the appraisal process and ensuring consumers have a clearer understanding of determinations before disputes escalate. Importantly, this bill maintains a good faith framework that works for both insurers and policyholders. It does not change coverage requirements. It will not increase rates as it's already being done by approximately 90% of insurance of policies out there as it is right now. There's a small percentage that are not adhering to the appraisal process. They actually have taken it out of their contracts. But 90% have it in there. It will not. You're going to be told scare tactics. The scare tactics are there. They're just that. It will not cause an impact. Instead, the legislation simply creates consistency and clarity across the industry, helping protect consumers while supporting fair and efficient claim resolution. As I stated, this bill is a common-sense measure designated, designed to bring greater transparency, fairness, and efficiency to Colorado insurance claims dispute process. At its core, this bill simply codifies what is already standard practice in the vast majority of cases. As I stated, nearly 90% of insurance claims are already handled in a way consistent with these principles outlined in this legislation. By putting these practices into statute for everyone, This bill ensures consistency across the board so that every Colorado policyholder is treated fairly, not just most. most transparency by making the claims process clearer and more predictable for consumers. When policyholders understand how decisions are made, it reduces confusion, builds trust, and helps avoid unnecessary disputes, which we find our seniors in our state have issues with. Just as importantly, it is expected to reduce litigation. Clear standards and open communication mean fewer disagreements, escalating to costly legal battles, saving time and resources for both insurers and consumers. There is no evidence that this bill will increase any insurance premiums because it largely reflects existing industry practices. It does not impose new burdens on insurers. It simply ensures those practices are applied consistently and fairly. There was some information. There was an individual that was going through and trying to claim all kinds of scare tactics, trying to say that some of the individuals involved with this bill had been censured, were taking this bill across state lines, trying to get it passed in all these states. And it was their process. It was their bill. And I'm here to tell you right now, this bill came from Representative Rebecca Kelty. It came from my noggin and from the information that I got from my constituents. That is where it came from. So any information that has been spread out there, these rumors, that this came from any other source is absolutely false. And if you were told that, just understand that it's a lie that you were told right from the get-go and that it's something that you need to really think hard on and where they are trying to take this. I brought this bill. This is my bill. I listened to my constituents and I had gone through this myself. I didn't believe it until I saw it. It's not anti-insurance. I love all my businesses. It has nothing to do with that. This is a non-partisan bill in search for a bipartisan solution. What it does is it makes sure that the appraisal process is codified, which is already being done in statute, so we make sure that consumers have that even playing field. That's what we're going for. We're trying to even the playing field for consumers, for people who are forced to have insurance. You have to have homeowner's insurance. So if you're forced to have it, then you should be able to have a say. And to say that this may take away any freedom of contract or anything like that, the consumers don't write the contracts. The insurers do. We don't have negotiating power in contracts. The contract is what the contract is, and we either sign it or we don't. And to me, that's not fair for the consumers. So we need to do more for our consumers. As in the fiscal note, the summary of the legislation says, under current practice, most homeowner's insurance policy contracts include an appraisal clause which may be used if the insured and the insurer dispute the amount of a loss. Beginning in January 2027 is when we want this to begin. This bill requires all homeowner's insurance policies to include a clause authorizing an insurer and an insured to invoke a mandatory and binding appraisal process to settle a dispute over the amount of loss causation or necessary scope of repair or replacement of property The bill establishes the appraisal process requirements eligible participants timelines and division of costs for the process. A willful or repeated violation of the appraisal clause by an insurance company is an unfair method of competition and unfair or deceptive trade practice in the business of insurance. The analysis of this bill is there is a small but growing group of states that have put appraisal for property claims into statute. It is not in statute. It's just a policy that can be taken out at any time. And it has been out of some insurers. They have been taking it out. rather than leaving it purely to contract and case law. Texas has passed this in their Senate Bill 458, which requires all residential property policies to include a binding appraisal provision. For homeowners, the bill's main advantage are predictability. Every policy must offer appraisal on standardized terms. more transparency around how insurers value losses and a faster non-judicial path to correct undervaluations without forfeiting the right to sue. What's happening across, not just in Colorado, but across the states, but we care about Colorado first, is that the customers are putting in claims and they're either being delayed by years, Mine has taken about two years now. By years, or they're being undervalued, they're being underpaid, and it's a problem. It's a problem that I seek to solve. I'm not anti-insurance in any way, shape, or form. I'm here to help solve a problem. I stakeholder with a bunch of people in the insurance industry, and they gave me their concerns. They asked me, actually I was given by some of them a request for amendments, which is what I had put on there. I did exactly what they wanted. I worked with them. I promised I would do it, and that's what you have before you today. I'll read you just one of the letters. I've gotten many letters of support for this bill from constituents, not just mine, but from all over. My name is Ken Hunter. I'm a longtime homeowner and resident of Littleton, Colorado. I'm requesting your support of HB 26-1247. My residents, along with many others in my neighborhood, experienced a severe hailstorm that produced significant roof damage in 23. I subsequently filed a claim with farmers. After inspecting my roof, they denied coverage, stating that any roof damage they found was a result of wear and tear. Following several months of back and forth, wrangling with farmers regarding the hail damage, I sought the assistance of an appraiser, Steve Ziegler, who is here today. The actions of the appraiser, his knowledge of roof damage, cases, and how to interface with the reluctant insurer resulted in a settlement payment to cover the cost of the roof. The appraiser's efforts serve to reduce delays and foot dragging. So in Colorado, they do have the ability to have an appraiser to come out to assist. But for Coloradans many of my constituents they want to be able to handle this themselves They shouldn have to hire other people They shouldn have to go beyond just working with the insurance company what they have the contract with We want to make sure that the appraisal process stays in statute is in statute and it will always be an option Right now it's not. And that is what this bill is seeking to do. And today, I have several witnesses that can come up and that are experts in this field, and you can ask them whatever questions you want. Thank you.

Thank you, Madam Chair. So just looking over it in a cursory manner, something caught my eye that was brought to my attention that you're putting in a definition of appraiser, On page 3, line 6, appraiser means an individual who is licensed in the state as a contractor in the building of construction trades, an inspector, a public adjuster, or an attorney, an in-house insurance company adjuster, or an independent insurance adjuster. And the issue I have with that is the Colorado Supreme Court in 2019 was very clear that when parties invoke an appraisal clause in an insurance policy, and this is from owners, insurance company versus Dakota Station to condominium association, that when parties invoke an appraisal clause in an insurance policy, the appraisers must be unbiased, disinterested, and unswayed by personal interests and cannot advocate for the appraisers. the party who retains them. My concern is trying to take that away, that holding of that case, and having people pick individuals that are going to advocate for either side just raises the friction level beyond what, you know, it may sound like a good idea, but the Colorado Supreme Court's already been very clear that an appraiser is supposed to be unbiased and you are shooting a hole right through that with this well you nod your head no but why is it no because if you're hiring an attorney their their core duty is uh duty of loyalty to the client not to anything else and is not really to the truth either. Thank you Madam Chair. Actually the the hiring of the individuals are not to, and it specifies in the bill, they are to be non-biased. They are not to have any stakeholding in the claims process if they are hired as an appraiser only. That's all that they're going to be hired for. It just gives them more options to be able to have someone to come in and do the appraisals. But they are non-biased. They're not someone that is going to have any type of financial gain off of the actual claim. So, and actually, I mean, I do have the individual that assisted me in writing the bill. I feel bad because I gave away my bill to someone. I don't know. So I feel bad. But they can answer that more in depth for you, 100%. Follow up.

Thank you.

Thank you, Madam Chair. And thank you, Representative Kelty. I know this is an issue that I think should be addressed. Can you just enlighten me? And I know we had a conversation earlier today about what this state holding process looked like to get the bill in its corner from like who was involved in the conversations how it went how many people were involved who was involved in it And just to get to where we at now because I know you have an amendment so I appreciate the amendment Could you just tell me more about the stakeholder process that was done Rep Kelti. Sure, absolutely. Thank you, Madam Chair. Yeah, and thank you, Rob Gonzalez. The stakeholder was, there was a lot. I went through, I had a large meeting with about 40 to 50 different individuals in the industry, I'm part of all different insurance companies. And we went through the bill and they said what they didn't like. And I took that for action. A few of the insurance individuals got a hold of me and sent me suggested amendments. And going to stakeholder even through that. I mean, this has been weeks and discussions and talking to people throughout the entire industry. and they gave me what they felt would be fair and amendments that would help the bill be palatable. Because my goal, honestly, is to not make everyone happy, is to make everyone just a little unhappy. Because no one's going to get their way completely. And that's what I did. I said they gave me the amendments they wanted. I did exactly what they wanted. I said, help me help everybody, you know, make this a more even playing field. Make sure that, you know, everyone's getting a little bit of what they want and a little bit of what they don't want. And for me, the power is in the hands of the insurance companies right now, and it's not in the hands of the consumers. And, yes, they can contact the Division of Assurance and file a claim and go through all this rigor and move, rigor and move. But, you know, you've got our senior citizens. I mean, I'm not a senior citizen. Well, I guess I am a senior citizen. Oh, my gosh. But anyways, so senior citizens don't know all the steps that they're able to do. And I didn't know that you could contact the division of insurance and make a complaint. I had no idea. And if I didn't know that, how many other people out there, especially widows or seniors or whoever who don't have access to Internet, who don't do all the technologies and all that, who are they supposed to know? They do an insurance policy, they think it's supposed to be the same, but then you have just a few of them. 90% do the appraisal process is in their policy. 10% do not. So for me, the appraisal option is what we as consumers can utilize to actually have some say, some power within the process of there's a claims dispute. If they take that out of the policies, which it looks like sometimes that's the direction that they do because when a big guy takes it out, everyone else follows suit. It's a great thing to have in policies. Ninety percent are already doing it. It shouldn't be a problem to codify it to make sure it stays there.

Thank you, Madam Chair. Rep Kilty, you'd mentioned a couple of times that 90% of folks already have this in their contracts. Is it kind of scattershot, or are there particular carriers that just don't put this in? There's one that I know of that's one of the larger carriers that don't. And when they say, when they act, everyone seems to follow behind them. So I just want to make sure that we keep the protection in statute. So that way it'll always be there. Interesting. Just in witnesses, do we have somebody from DOI here today?

Follow-up.

Any other questions for Rep. Kelty? Oh, Rep. Sukla.

Any other questions for Rep Kelty?

Is there a preference that you have, Rep Kelty?

And then oppose, and then four. Okay. Thank you. Okay. Our first witness we're going to call up is Larry Bach. And then we're going to have Steve Ziegler, Kyle Larson, and then Brett Allen. Okay, who wants to begin? Are you Mr. Brock? Bache. Sorry. Larry Bache. Go ahead. Did he say Bache? Close enough. No, I said Bache. No, you guys were looking for something else. Bache Mr Bache please My light will not turn the microphone Oh the plug Yeah the button right in front of it There you go. Thank you. Thank you. Yeah, so Bache, but I've been called worse. Thank you. I know it's been a long day for you guys. I'll get started.

Please stand by for questions, and we're going to go on now to Mr. Larson.

Thank you. Stand by for questions. Also, Mr. Ziegler.

please stand by for questions. And then next we have Brett Elian. Please unmute and give us your testimony.

Thank you. Thank you, Mr. Allen. Committee members, questions for our witnesses? Yes, Rep. Gonzalez. Thank you, Madam Chair. So my question is for Mr. Page. What will happen if this bill does not pass, and will this bill increase rates?

Thank you, Madam Chair.

Mr. Vice Chair. Thank you, Madam Chair, and thank you for the testimony. I'm going to push back a little because I think there's a third option you're not identifying. One, Colorado has very strong consumer protections in the insurance space that award someone treble damages, so treble the amount that they would normally get, plus their attorney's fees and costs. There's also a route to go and make a claim through the Department of Insurance whether or not someone actually or an insurance company followed through with their contract. So that's another avenue that you didn't discuss. Why isn't that sufficient?

I do, and I just want to push back on timing a little bit. I'm an attorney, your attorney. I think we all know that most cases do not resolve a jury trial. They resolve far less than that, especially when lawyers are involved. So I do push back on the assertion that every claim will then take two or three years, because that simply is not how our legal system works. It's not how we've seen it in Colorado. And I do think that the protections we have, I haven't heard anything that would rebut that.

Mr. Vice Chair, was there a follow-up? No. Okay. So a question for you. How would a homeowner who cannot afford the appraisal participate in this process?

So I have Dakota Station right here in front of me, and this bill would definitively overturn the central holding of it. When you said that not having a financial interest doesn't impact at all, that wasn't even what the court reached. in that case there was a 5% contingency and they found that was fine that it didn't impact impartiality but they were very clear and there was one dissenting opinion saying the court was in an ivory tower but the court said an appraiser has to be impartial and they were very clear of what impartial means this overturns that because it meant no advocacy and yet putting a public adjuster or an attorney that has a duty to the client rather than solely to the appraiser, again, I'm reading the holding right here, and this overturns it. Do you disagree?

Okay. Red Leader.

You're welcome.

Mr. Beach.

under a policy without a lawsuit? Yeah, they can make you sit for a deposition without filing a

Mr. White, okay, Rep. English.

Will this solve the issue that we're trying to solve? Yes. It's a page.

I apologize for being so jumpy. Judges yell at me often for that, too, so you can feel free to let me know. Representative English, I've never seen rates go down. I'm just going to be honest. Have you guys? I haven't seen rates go down. I hear all the time that what we're doing, rates go up. The reality is that this has been around in the policies for over 200 years, and still the vast majority of carriers, farmers, these different carriers still include this exact provision. This is the exact provision that's currently in the majority of your insurance policies. This is not changing anything. This should not have any direct effect. This is to protect one of the larger carriers in Colorado has changed the provision that says you can invoke appraisal, but we don't have to go if we don't want to. That's I mean, I love to say the carrier is any reason why I can't. It is fact. OK, State Farm State Farm's policies are now being issued that say it has the exact appraisal provision. Right. The same thing about Mr. Marshall's concerns about independent appraisers, independent, unbiased. That's fine. Same exact language, except it says both parties have to agree to go. Now, this is an adhesion contract. I heard something about, well, it takes away restricts the right to contract. Who here wrote their insurance contract? Anybody? who here knew there was an appraisal clause in your policy? I can't even believe I'm debating this, the fact that this has been around for 200 years. This is in your policy. State Farm is saying we're not going to go unless we agree to go. So you have one other option, litigation. At the same time, they're saying, but this, if we don't take this, it's going to increase litigation. No, this has been around for 200 years and it's worked effectively and efficiently to get claims resolved. And I want to make sure this is also important. This currently is just for owner's policies. This isn't some commercial conspiracy, billion-dollar claims, million-dollar claims. This is for grandma that has a $30,000 dispute over her kitchen that doesn't want to litigate for 18 months, that just wants to know if the upper cabinets should match the bottom cabinets, because you know they match before my dishwasher broke. I hope that addressed your question. I can't imagine why it would raise rates, but rates never go down. Thank you.

Yeah, talk about that. So that's a great question. So the way there's, just like any other contract, they can agree to work on an hourly fee. So this is a public adjuster profession. They're regulated. Mr. Allen is the director of RMAPIA, which is the, every state has their own organization that puts ethical courses on, If you're a member of this association like Rocky Mountain Public Adjuster Association, there's a national organization. You guys have seen them. There are conferences. You go. You get continuing education credits. State of Colorado requires those, and there's ethical requirements. But as far as how they're paid is you can either be paid in an hourly rate or most people in these situations don't have the ability to pay hourly, so they pay a contingency. And the market rate is typically about 10% on claims. they get 10% of the increase on whatever they're able to help you recover from the initial payment. So if the carrier comes out and you get $10,000 for your kitchen, your dishwasher, the pan leaks, and then they help you get the upper cabinets paid and they get your floors replaced, and they get you another $15,000, they would charge you $1,500 of that increase. And the insured has to pay that out of their pocket for the services provided. So the insured would still have to then pay the additional $1,500, but the idea is 90% of the increase is obviously better than where you started from.

Sure, just a moment, ma'am.

So thank you, Madam Chairman, and everyone on this committee. My name is Hillary Patterson. I'm 44 years old. I'm a lifelong resident of Colorado. I'm a homeowner. I have two kids. I have the similar predicaments as many people in this state. I'm also a lawyer, and I've been a lawyer for 10 years, representing various interested parties in disputes over homeowners' claims. So I'm very knowledgeable, and I can answer questions if you have follow-up, but I will try to use my time quickly, and I apologize if I speak too fast, but I'm trying to get through a lot of points, And there was a lot raised in the recent discussion that I'm sure my peer here, Ms. Scroggins-Updor Grove, will address as well. But this bill addresses a couple things that add a lot. If you guys saw the length of the bill, from a lawyer's perspective, it adds a lot of problematic language. It has constitutional issues It has vague ambiguities that will lead to litigation just because of the way the words are phrased It does not track with the policy language that has been around for 200 years on appraisal clauses. It actually adds and changes things to fit the interests of the people behind this bill. People like contractors, roofers, public adjusters, and lawyers. Appraisal in Colorado may have been okay for 100 or 200 years, but it has gotten very bad in the last 10 or 20 because of other laws in Colorado that have created harsh penalties for insurers. They have incentivized lawyers and other people to come into this state to litigate and take advantage of those penalties, and appraisal has become an ingredient in that recipe, a very important ingredient, a useful tool for abuse. Appraisal in Colorado is no longer a means for dispute resolution. It's a means for dispute escalation. And I see that every day in my legal practice. But from a policyholder perspective, I want to back up a little bit because I've had insurance claims. I've had multiple hail damage claims. And I can tell you I've seen abuses that contribute to what the actors here are trying to pull the wool over your eyes about. I had a claim where I got my insurance money from my insurance company first, and then I went to the contractors and I said, tell me how much it's going to cost. Half of them wouldn't tell me without seeing what my insurance company estimated. When I finally got an honest answer from someone who didn't care about an insurance claim, I got an honest price, $15,000. All the other estimates I got either were double or triple that price because they knew there was an insurance claim or they wouldn't give me an estimate. You have to understand that these disputes of $15,000 we're dealing with are born from price issues. They're from a market inflation that's arbitrary and artificial from the people who come in and set their price. Those are the contractors. Affordability and availability of insurance in Colorado was one of the biggest issues we deal with in this state, and I can guarantee that the costs will increase both in what you pay on repairs, what these insurers have to pay to handle the claims with all of these new requirements, and absolutely with the increase in litigation you're going to see. I'll stop you there.

Yep, up to Grove.

Thank you, Madam Chair and members of the committee. My name is Kayla Scroggins-Updegrove, and I'm a trial lawyer here in Colorado that mainly represents insurance companies defending against bad faith claims under the tribal damages statute that the vice chair alluded to earlier. I've lived in Colorado for 16 years, went to undergrad here, went to law school here, and I'm here to speak on behalf of myself and to oppose HB 26-1247 because it will increase premiums, drive insurers out of Colorado, and create a system ripe for abuse, harmful not only to insurers, but to homeowners statewide. I have spent the last decade of my career prosecuting misconduct in the appraisal process here in Colorado, misconduct that is frequently done by policyholders and their representatives, whether it be their contingent fee public adjusters, their contingent fee attorneys, or their appraisers. Colorado courts, federal and state, and the Colorado Supreme Court, as Representative Marshall has mentioned, have issued numerous opinions to attempt to set impartiality guardrails and to curtail the appraisal misconduct that has occurred in this state as the result of policyholders and their representatives Representative Marshall touched on this This bill contrary to Mr Basha representation my friend on the other side this bill would effectively overturn the Colorado Supreme Court's ruling in Dakota Station 2, which requires appraisers to be impartial. Dakota Station is one of the best protections against appraisal abuse. I was on the case. This bill does not even use the word impartial. It uses fair and competent. It does not require that appraisers be impartial. This is the language of the Colorado Supreme Court. Based on the plain meaning of the word impartial, which, by the way, that's the insurance policy term. That appraisal provision that's been around for 200 years, it uses the term impartial, not fair. And it says, based on the plain meaning of the word impartial, this is the Colorado Supreme Court, We conclude that the policy requires appraisers to be unbiased, disinterested, and unswayed by personal interests. They must not favor one side more than the other. This means no advocacy on behalf of either party. Respectfully, Mr. Bache saying that, well, there's no financial interest. As long as they don't have a financial interest, that complies with Dakota Station. That is inaccurate. Cartea case. That was a case where a $1.6 million appraisal award was vacated by the federal district court. That policyholder appraiser, he was on an hourly fee. Why was it vacated for partiality? Because he had an established relationship with the Merlin Law Group. And why is that important? Because the Merlin Law Group is one of the major proponents of this very bill. There are multiple cases in the state of Colorado, appraisal misconduct cases that involve this law firm, an out-of-state Florida law firm, which, by the way, Florida doesn't have a bill as broad as this. So I'm happy to take any questions that you may have, but we would ask that the committee

Rob Gonzalez. Thank you. My question is for Mrs. Updegro.

Can you elaborate more and allude to kind of what, if this was implemented, what the implications would look like for the industry as a whole? Yeah.

Thank you, Madam Chair. So what I think maybe some of you already know is that Colorado is one of the most hostile environments for insurance companies in the United States, and that's because of the treble damages statute. It's a huge, huge incentive for insurers to pay what is owed because if you get a court case and they're found to be unreasonable, just unreasonable, no knowing, no malice, nothing else, you get three times your benefits. So that is already – I think Representative Kelsey touched on this. Oh, premiums are skyrocketing. Well, they're skyrocketing because of the litigation that's caused by the trouble benefit statute. How is this bill going to make it worse? Well, first of all, there are administrative burdens that are unnecessary that are included in the bill, the re-inspections. Basically, if you haven't insured, just submit any type of third-party damage estimate that maybe it's 100 line items. That's what you normally see. And the insurance companies already looked at it, already said, okay, no, this isn't hail damage. If they just submit another estimate with four or five extra line items, this bill requires the insurance company to go out and do a mandatory inspection. That's one way. Another way, this bill will not reduce litigation. It is a springboard for litigation after the appraisal process. And how do we know that? Because at the stakeholder meeting it was requested that an amendment be added that said look and this happens in Texas go to appraisal process pay the appraisal award timely You can bring a bad faith claim Over. Over and done. They will not agree to put that in the bill. Okay, so that's how we know that this is a springboard to litigation. Also, the bill includes express provisions that expand liability on the insurance company. It has a specific section about expanding unfair claim practices act liability that does not currently exist under the current statutory scheme. Here's another example. 90 days to complete the appraisal process. Insurers don't control how long the appraisal process takes. This is supposed to be done by two impartial independent appraisers. We cannot control. The insurance company cannot control how long the appraisal process takes. This bill imposes bad faith liability for a third-party independent appraiser's conduct. Those are just a couple of examples. Let me give you another example. This was an amendment that was proposed. If this bill was really about $15,000 roofing claims or $30,000 kitchen claims, put a cap on the damages in there, that this addresses disputed damages claims of $30,000. That amendment was refused.

I do have a question. So how would you advise a customer of the major insurance company who might be taking out this clause in their insurance policy? How would you advise somebody like that? How do you protect their rights in a situation like that?

Any other questions? I see Rep. Marshall and then Rep. Leader. Oh, and then Rep. Mabry as well. No? Okay. Okay, thanks.

Absolutely. The standard is unreasonableness. I mean, so if a decision is made to say, look, I don't want to go to appraisal, and by the way, that happens. Sometimes the insureds do invoke appraisal over issues that are not appraisable. I heard Mr. Baish say probably three different times, The purpose of this bill is to allow an insured to get an answer on whether undamaged cabinets may be required to be replaced when the upper cabinets need to be replaced due to damage. That's a coverage issue. Appraisal is not for coverage. Colorado law is very clear that coverage matters are determined by the court, not appraisal. So this is just another aspect of the bill that is trying to widen appraisal without the protections of the legal process to require coverage. You know, whether a policy includes replacing undamaged material, it's called matching in the industry, that's a coverage issue. That's not appraisable. And in fact, that's what Colorado law says. So that's an example, though, of a reason that an insurance company would say, you know, I see your appraisal request. We're not going to because it's not appraisable. But, hey, if you go to a lawsuit and the court says that was unreasonable or that was not in compliance with the insurance policy, you're either going to appraisal or you're subject to the triple benefits.

Ms. Croggins, Optic Growth. I certainly don't know a percentage. I don't think it would be any more that would know by this bill. I guess I would say that. And certainly the ones that are represented by public adjusters, they would know. Yes.

Is it Ms. Scroggins?

I feel like I'm watching an episode of Suits. Anyway, my question was you stated that you work for the insurance companies but yet you're here on your own?

That kind of seems lawyer-y to me. But what you did say, I watched the representative shaking their head when you said that the representative was offered an amendment and they didn't take it. So I would like to know how was the amendment offered to the representative, and was you working for the insurance company when you made that offer? Thank you.

Okay, Mr. Vice Chair. Typically, I try to respect the sponsors and their stakeholding process, but we've kind of opened the door to it, so just curious. What was the rationale for not accepting the amendment, that if you timely make a payment on an appraisal claim, that there would be no bad faith claim? What was the rationale, or was there any given?

Any other questions for these witnesses?

It's up to growth.

I'm sorry. Absolutely not. I mean, I've been doing this for 10 years. I actually see insurance companies, when we get the case, when the lawsuit's been filed, that I wonder why they have paid the policyholder for certain things. And what actually ends up happening, because it wasn't covered or wasn't owed, but what happens is then the plaintiff's attorneys actually say, well, that sets the floor. Of course you owed this. And then when we try to explain the coverage position in the litigation, that's what we're told is that that's now the floor. That wasn't good faith.

Okay, she wanted to also answer.

Beth Leder?

Go ahead, Ms. Patterson.

Any other questions from the committee?

Madam Chair, we have Janine online. Janine is online. She's not in the Zoom. Oh, there she is. Okay, great.

Good afternoon. Chair Ricks, Vice Chair Camacho, and committee members, thank you for your service, in particular the opportunity to visit with you today. I support this House Bill 26-12-47. I'm Robert Norton. I'm here on behalf of IAUA, the Insurance Appraisal and Umpire Association. I've been in the insurance industry since 1989. I'm a licensed independent adjuster and a licensed general contractor. I hold many industry credentials, including CPCU, the highest credential offered in this business. Insurance is a promise that if something happens the insured hopes never will. The policy provides for recovery. The initial claims handling makes the coverage decisions after which we need to reach agreement for the damage or the loss. We need to reach that agreement. Rep. Marshall, you're bringing up Dakota Station. This bill does not stray from that. I know the attorneys went back and forth with that to some extent. An attorney may serve as appraiser currently and under this bill. An attorney may serve as appraiser. The attorney for either party may not. just as a public adjuster may serve as the appraiser, but the public adjuster for the policyholder may not. Rep Sucla, your comment with respect to auto appraisal. There's a use of the term appraisal in autophysical damage, which deals with just the estimates for the initial measurement of the claim. Autophysical damage also has an appraisal process for dispute resolution, so it's a little convoluted to have that term used in two different contexts. IAUA, the Insurance Appraisal Umpire Association, is a nonprofit educational association formed in 2009 It focused solely on appraisals Its mission is education to define and enforce ethical requirements and industry best practices for the appraisal process IAUA holds training conferences around the country and provides certification of appraisers and umpires. With steady growth since 2009, IAUA has now over a thousand members globally. Appraisal is a centuries-old process. When insurance was created in the late 1700s, way back when, over 200 years ago, those early policies included this tool for dispute resolution without litigation for covered claims. So the issue with respect to a covered claim is what's wrong, what happened due to the covered peril, what's needed to remedy what's wrong, and what's the cost to do so. Appraisal prevents litigation and while doing so provides quicker and cheaper resolution of these disputes. And the resolution is better because the resources engaged in appraisal are subject matter experts. This bill protects the longstanding valuable tool of appraisal that's provided for in policy contracts. If policies are amended to remove appraisal, there are some consumer complaint provisions, but litigation is really the tool for resolution. DOI will enforce compliance, but they don't really enforce resolution. For small cases, litigation can be cost prohibitive, so appraisal is a good tool for that. So I appreciate the opportunity to be with you here today and welcome any questions if I may have any further assistance.

Yes.

Yeah, thank you very much, committee, for having me. I'm testifying in favor of the bill. I'm testifying as a homeowner. However, I am also a licensed attorney here in Colorado. I am also a plaintiff's attorney, and I cannot tell you how many times we turn down cases in these various circumstances because the damages involved are so small. I did hear some of the opposition, and I must say I vehemently disagree with the appraisal process being expensive as compared to litigation. It is 1,000 times more cheaper for the homeowner. And I had my own situation with my insurance company where I demanded the appraisal process, and nothing was happening for quite some time. And we litigate. My firm litigates. I litigate. My partner can litigate for me. Until I demanded the appraisal process, nothing was happening. I was being ignored. And why? It's because insurance companies know that little claims, smaller claims, the claims that attorneys cannot take by virtue of the fact they're so small are going to go unaddressed, right? And in speaking to the bindingness on the attorney before said that, you know, hey, why are we not taking out bad faith as another remedy? Why? Because there's other bad behaviors insurance companies can engage in that have nothing to do with the appraisal process? And why should a homeowner be foreclosed from going after insurance companies for the other bad behaviors that have nothing to do with the damages in the appraisal process? So in my own situation, until I triggered the appraisal process, I was ignored. I was set off to the side. The tactics that the insurance company engaged in, there is absolutely no way a normal policyholder, or a homeowner could have gone through what I had gone through and come out with any favorable result without an appraisal process. So I want to say this bill is absolutely pro-consumer. It's absolutely pro-having an avenue that is a hundred times, thousand times cheaper than litigation. And if it's something that maintains the status quo, codifying like this holds everybody accountable, not just the insurance company, but the homeowner too. Everybody has to follow the proper steps. The proper steps are clear. They're outlined and it can provide a faster, cheaper, easier way for homeowners to get their issues remedied when they will never find attorneys to help them when these claims are smaller with the damages. Attorneys just simply cannot take these cases. When an attorney takes a case, there's often no guarantee of an outcome. And on these smaller numbers, attorneys just, especially smaller firms, cannot just take the risk. So I am testifying again in favor of this bill. And I'm testifying as a homeowner, what specifically happened to me. and I'm happy to take any questions, but again, I am an attorney and I do do plaintiff's work.

Yeah, so having something codified, I think, gives the clear process, but attorneys often will tell clients. So when a potential client calls me and they have a case I have to turn down by virtue of the size of it, you know, and we all look to damages. The attorney before, by the way, spoke to coverage issues and damages. Well, when attorneys are evaluating plaintiff's cases, We look at what are the damages, right? If I can tell a client, gosh, you know, your case is, you know, $50,000, $30,000, you know, there's no way you want to pay an attorney to go after this for you. However, there is a mechanism that our state legislature has codified for you that you can follow. Here it is. Do you know what a wonderful thing that would be for me to tell the clients where I have to turn down their cases? I can refer them to the statute. The word has to get out there, right? People don't even read their policies sometimes. So attorneys can be the the megaphone, if you will, to help get the word out to Colorado citizens. Hey, we have a process for you. You know, you're unlikely to find an attorney that takes your case. But by golly, we have a process here that you can get binding resolution where you don't have to undergo two years of a lawsuit and then a possible appeal. Right. And so having having this process that we've had, you know, you heard testimony. we've had it for a long time having this process be be a little bit more solid a little bit easier for clients to rest on the legislature part instead of just what's in their policy the attorneys can get these words out when we have to turn down cases

is that right it is yes it is but what what has been happening is um because insurance companies will often lose in the appraisal process. It's been our experience that they'll try to shut down that appraisal process because they know that homeowners, one, don't want to litigate just by their very nature. Most folks that have ever been in court, they know it's a very difficult process and they won't litigate. And so if they're banking on the fact that homeowners can't litigate, won't litigate, they can shut that process down, right? So if the appraisal process, and that's what was happening, one particular insurer from our experience was not allowing that process to go forward, right? Whether it required mutual consent. And when something requires mutual consent, if you have a big gorilla, like an insurance company in the market, right, who's saying, no, sorry, I'm not going to do it. We have to agree. We're not going to agree. So sue us, recognizing the poor homeowner can't do it.

I've never seen a policy just in my 20 years of being a lawyer. I've never seen a policy where it requires litigation. The damages process to ascertain and have a binding damages, the proposed law, the proposed codification, talks about the binding nature of the process, right? But the reason why you wouldn't want to say, okay, it forecloses all bad faith damages claims is because there are other behaviors that insurance companies enter into that you wouldn't want to foreclose any bad faith claims that have nothing to do with the binding nature of the damages piece to an appraisal process.

Ms. Gillen? Yeah, thank you. That is a very good question, and you might imagine over my two decades of experience, we've had clients who have absolutely filed DORA claims. There's absolutely no question that that is an avenue for people to undertake. the problem is with DORA, right? DORA doesn't hire appraisers. DORA doesn't hire public adjusters. DORA doesn't do those types of things on behalf of a homeowner. This avenue is a little bit different because it's not a dependency process. I'm not dependent on what DORA says or does to the insurance company. DORA makes a phone call. DORA sends a letter. DORA does some sort of an investigation, but there's no power given to the policyholder. There's no power given to the homeowner. The homeowner is kind of dependent on what, if anything, Dora can encourage the insurance company to do. Absent a violation of some Colorado statute or some Colorado law, absent a violation by the insurance company, Dora's not going to litigate on your behalf. DORA is not going to undertake any monetary, you know, liabilities on your behalf, right? This process gives accountability to the homeowner, accountability to the insurance company to resolve the claim. DORA is public, you know, public safety, public, you know, I have a nursing license. I'm also a nurse. I'm licensed through DORA. Public adjusters are licensed through DORA. If a public adjuster does something wrong, you know, there'd be an investigation against a license. But when it comes to reporting complaints to Dora, unless there is something Dora can motivate the insurance company to do, the homeowner is pretty much helpless if Dora says, well, you know, there's not a lot. Take it up civilly. You know, take it up civilly. File a lawsuit. Right? I mean, Dora has told our clients that before.

Rep. Sucla. Thank you, Madam Chair. this question is to Bob.

Mr. Norton.

Thank you, Chair. Yes, appraisers generally today on a global basis, on a countrywide basis, and in Colorado, do tend to be subject matter experts, which is good, because in lieu of litigation or a jury, where you have the jury of your peers that are citizens that know their homeowner's risk, as well as the insured who has a claim that's in dispute, so they're in litigation, which they don't understand. Now you have a panel of their peers, which they also don't understand. The appraisers are subject matter experts, so they can determine means and methods of repair, or that repair is not practicable or feasible, so we must replace whatever that element of damage is, whatever that system is that's necessary and is priced appropriately given current market conditions. I know there was talk about market and potentially different inflationary tendencies, but yes, appraisers are subject matter experts. The two appraisers picked the neutral third party called the umpire so the three-member panel is able to render the award to resolve the situation. Okay.

I didn't raise my hand quick enough to get my follow-up in,

Ms. Cohen. Well, thank you. We're kind of victims of what we've experienced. So over 20 years of having many multiple DORA complaints from clients and family members, we have not seen outcomes as you've just described them. we have seen different outcomes where in fact I've never in fact I can't think of a time where I have seen Dora sanction an insurance company with some kind of punitive sanction or some kind of mandate that they cover something that they do something and and and perhaps it's a staffing issue I don't know all I know is that when when we've had complaints go to Dora some have been successfully just back channeled by Dora having a conversation, most of them have been not successfully resolved with Dora. And it has not been my experience as an attorney representing clients that have made complaints and in my own family. I have not made myself a complaint to Dora. I don't believe I have, at least in the most recent 10, 20 years, I haven't made a complaint to DORA where anything was resolved monetarily in the way this bill is designed to address, where there's public adjusters who are licensed, there's people involved to assess the damages that have happened on a home. I have not seen that happen to that level with DORA investigations or mandates.

Mr. Norton. Thank you, Chair. The policy, to my knowledge, has no language with respect to any regulatory authority, but I think inherent in the licensing and the admitted status of the carrier and of the policies, they have that right, but it's not set forth in the policy. In the appraisal clause, as you mentioned, the standard language, the centuries-old language, is what's called unilateral. If we fail to agree, we as the insurance company and the policy holder, if we fail to agree on the amount of loss, either may demand an appraisal. That's unilateral. We've seen shifts where some policies begin to say, we may consider appraisal if both of us agree to go to appraisal and they want to execute some sort of an agreement with which how they're going to go to appraisal. And that's where it can become stalled and need litigation to go. We also see cases where we have a unilateral appraisal provision, but the carrier or the insurance company is reluctant to go. They want another re-inspection. They want a third re-inspection. They want to investigate and ask more questions. So they stall and there's a need to file a suit. And then in the suit, there's a motion to compel where the attorney for the owner, the policyholder, is asking the court to order that the matter be moved into appraisal per the terms of the policy.

Okay. With that, we're going to wrap up the testimony. That's the time that we have. We do have to get into our afternoon committees. Is there anyone else? It's the last call. I've already made last call, but I'm going to be graceful. I don't see any other witnesses coming forth, so testimonies are closed.

Do you have any amendments?

Second. It's been moved and seconded by Rep. Suclas. Oh, Gonzalez. Sorry, Rep. Gonzalez. Okay, please explain your commitment.

Okay. Are there any questions about this amendment? Any objections to it? Seeing none, the amendment is adopted. Any other questions or, I'm sorry, amendments from the committee or from our sponsor? Okay. The amendment process is close. We'll wrap up Ms. Rep. Kelty.

We're talking about appraisals.

Thank you. Thank you, Rep. Kelty. Committee members, closing comments for Rep. Kelty.

Okay, Rep. Leeda. Okay, Rep. Brooks.

Red Leader. Thank you, Madam Chair.

Anyone else?

Bette Marshall?

Thank you, Madam Chair.

Okay. Rep. Richardson.

Mr. Vice Chair, did you have closing comments? Okay. So, Rep Kelty, can you move your bill? We're going to be moving it to approves. As amended.

Second.

Pass. English.

No for today. Raiden.

Yes. Camacho.

No. The bill is phase 5 to 8. Thanks very much. With that, business and labor. We need a new motion. Okay, we need a motion. Representative.

Second. Seconded by Rep. Marshall. Any objections to that? Okay.

So we need to vote? Please withdraw your motion.

Okay, and seconded.

Yes. English.

Ryden. Yes.

Madam Chair. Yes. It passes 9 to 4 on the postponing definitely. Okay, and now we are adjourned. Thank you.