Whoever wrote the proposed Iowa laws regarding insurance appraisal has a very narrow understanding of what appraisal is and how it functions. While I admit that I have not studied this law in great detail, the details as I read the new law are very different than how appraisal operates in any other state. From my view, the new proposed Iowa appraisal laws will harm policyholders, inject unnecessary bureaucracy into a historically efficient process, and fail to address the broad range of issues that appraisals often resolve in real-world insurance claims. If signed into law, SF 619 will transform appraisal from a practical dispute-resolution mechanism into a regulatory quagmire.
The Iowa bill, which has passed the Iowa legislature, begins by codifying statutory definitions of terms like “appraiser,” “umpire,” “amount of loss,” and “actual cash value.” While definitions may seem harmless, embedding them in state law limits the flexibility that courts, insurers and policyholders have long relied upon to interpret these terms in context. Once definitions are fixed in statute, they can override contract language and established judicial interpretation, potentially narrowing the scope of appraisal and limiting policyholder rights in unanticipated ways.
A core pillar of the bill is its mandatory licensing requirement for all appraisers and umpires. Under SF 619, anyone serving in either role must obtain a state-issued license, which requires passing a written examination, undergoing a background check, and proving years of relevant experience. Compensation based on the outcome of a claim is explicitly prohibited, which eliminates contingency fee arrangements. It also seems to outlaw umpires charging on a flat fee basis. Many experienced professionals—like retired adjusters or contractors with deep industry knowledge—may be excluded simply because they lack formal licensure or educational credentials. The licensing mandate also disproportionately burdens rural areas and post-disaster zones, where access to qualified professionals is already limited.
What happens if the parties have a jewelry, boat, painting, or business interruption case in dispute? I hope there are licensed appraisers or umpires in that arena. The people who made this law did not contemplate these types of disputes.
The bill also imposes a rigid procedural timeline that reshapes the traditional appraisal process. Once a written demand for appraisal is made, each party must select a licensed appraiser within twenty days. The appraisers then have fifteen days to agree on an umpire; if they fail, the state will randomly appoint one from a pre-approved list. There is no indication of what the criteria are for getting on the pre-approved list. After appraisers submit their estimates, the umpire must issue a written award within forty-five days. This fixed timeline removes the flexibility appraisal was originally designed to provide. Complex claims, large commercial losses, or cases arising during natural disasters will likely fall outside these prescribed windows, leading to disputes and procedural failures.
One of the most far-reaching changes in SF 619 is its requirement that all property insurance policies issued or renewed in Iowa after January 1, 2026, must contain an appraisal clause that complies with this new statutory scheme. This overrides the insurer’s standard policy language and mandates a uniform process, regardless of the carrier’s national forms or the preferences of the insured. Such uniformity may create unintended legal inconsistencies, especially for policyholders with properties or coverage across multiple states.
Once an appraisal has concluded, the law imposes strict rules for issuing and honoring awards. An umpire must produce a signed, itemized award detailing values and decisions for each category of coverage. Unless both parties agree otherwise, insurers must pay the award within sixty days and provide a detailed explanation of how the payment was calculated and any parts denied. Motions to vacate the award must be filed within thirty days. While these requirements may streamline enforcement, they could also trigger new disputes over form, content, or timing of award documentation.
The bill further complicates matters with extensive conflict-of-interest rules. Appraisers and umpires must disclose any potential conflicts within five business days of beginning work and must withdraw from the case if a conflict arises later. Disqualifying relationships include family ties, prior litigation involvement, financial interest, or even close professional associations. Communication between parties and appraisers is heavily restricted, requiring formal notice and opportunities to participate. While well-intentioned, these restrictions could disqualify capable professionals on technicalities, delay proceedings, and chill informal problem-solving that often benefits all parties.
The duties of umpires are similarly expanded and formalized. Umpires must remain neutral, may not visit damaged properties without prior consent from both appraisers, and cannot delegate their decision-making. They must thoroughly review all documentation, hear both appraisers, and issue a reasoned award. These provisions reshape the umpire into a quasi-judicial figure with obligations and expectations far beyond the traditional role. Some of these rules seem fair and progressive, but they seem to change the umpire to a judge rather than a third party to an appraisal panel.
Appraisers and umpires are also required to keep records of all appraisal activities for at least three years after a claim is resolved. These records must be maintained at the appraiser’s or umpire’s place of business and made available to the Iowa Insurance Commissioner upon request. While privileged legal documents and litigation materials are exempt, the rest must be preserved and open for review. This creates a significant administrative requirement. Independent adjusters and small-town contractors, who have long served as appraisers in good faith, will now need documentation systems more akin to those of insurance carriers or law firms. Records that must be maintained, which reflect all appraisal activities, are going to be a game-changer for some appraisers and umpires.
Finally, SF 619 gives the Insurance Commissioner sweeping disciplinary powers. Over fifteen categories of misconduct can trigger license denial, suspension, or revocation. These include fraud, providing misleading information, failing to report legal issues, or even being behind on student loans, taxes, or child support. Civil penalties of up to $10,000 per violation can also be imposed. The disciplinary system is so broad that even unrelated financial troubles or technical errors could jeopardize a person’s right to serve as an appraiser or umpire. In effect, it elevates the role to that of a highly regulated profession, with all the risks and liabilities that it entails.
Taken together, these provisions represent a monumental shift. Appraisal, historically a fast, informal, and low-cost method for resolving property insurance disputes, will become a highly regulated, procedurally rigid, and compliance-heavy system. While the bill may reduce abuse in some cases, it will also increase costs, create delays, reduce access, and push qualified professionals out of the process. It may reduce careful inspection and investigation of loss by the policyholder’s appraiser, who may have to coordinate with the insurer’s appraiser to do such work. It may also invite more litigation, not less, as parties dispute procedural missteps or contest statutory interpretations of these rules.
This bill was introduced as part of a “disaster relief” package, but it does more to complicate recovery than streamline it. Appraisal is one of the few tools policyholders have to resolve disputes without going to court. SF 619 diminishes that tool, replaces flexibility with red tape, and places unnecessary burdens on those trying to help resolve honest disagreements. If left unchallenged, it could become a model for similar legislation in other states.
The trend is clear. The insurance industry is promoting these new appraisal rules in many state legislatures. Do you think the insurance industry is doing this to help policyholders receive the full amount owed under the insurance policy following a loss?
Former Insurance Appraisal and Umpire Association (IAUA) President and educator Bob Norton made the following LinkedIn post about this bill yesterday:
Iowa Governor Kim Reynolds has an over reaching bill, S.F. 619, which she has pushed; this bill includes unprecedented licensing and a regulatory scheme for the centuries old Appraisal, which exists as the insurance policy provides for it. The 91 page Bill, captioned as Disaster Relief, has most of its pages addressing everything but disaster relief.
Appraisal is an informal, alternate dispute resolution tool which, globally, does not require licensing. Ironically, Gov. Reynolds issued her Executive Order 10, signed 10Jan2023, which required the review and repeal of regulations hindering citizens freedoms to engage in individual, family and business pursuits.
Given her Line-Item Veto powers, I call for her to strike out the unprecedented and burdensome language hijacking the Appraisal Process. This language will add cost, create delays and hinder Iowans ability to use the centuries old informal, alternate dispute process.
Iowa public adjuster Caeden Tinklenberg stated the following:
The drafters of the bill clearly do not understand the appraisal process. We were unable to convince the Division or the Governor’s office to make any meaningful changes prior to this legislation being introduced. Once introduced, there was no stopping it–the political pressure behind ‘The Governor’s Disaster Relief Bill’ was far too strong and the issues far too complex for the legislators to do anything about it.
Insurance industry stalwart Jon Held offered a studied reflection regarding this proposed law and similar laws in other states:
This is clearly becoming a trend. There are few, if any proponents for appraiser licensing on the claims preparation and insurer sides of the business. This issue first came up in Washington State, and ultimately a bill was put forth in the state legislature to correct the wrong interpretation of the existing statute. At that time, I testified before the legislature, who quickly understood that the process of determining ‘amount of loss’ requires expertise, not a license. The bill passed with 100% approval from Dems and Republicans and the governor signed the change into law. States like Louisiana and now Iowa need to obtain a better understanding of the process. Both sides of the claims industry also need to work together to better educate the legislators in these jurisdictions. This is simply a knee jerk reaction to a concern over bad actors abusing the system. This is easily corrected through establishing guidelines and requiring protocols/agreements to appraise prior to proceeding with the process.
I noted how Jon Held successfully prevented a statutory change of appraisal in Washington state in Jonathon Held Argues That Appraisers Should Not Have To Be Licensed Adjusters.
Reading through this law was not easy. Assuming it becomes law, everybody with any property insurance claim in Iowa will need to study this thoroughly. Hastily passed laws like this are inherently flawed. Insurance, an industry cloaked with many details and processes, should not have such claims processes rewritten by statute without in-depth study and discussion.
Thought For The Day
“Bad laws are the worst sort of tyranny.”
—Edmund Burke
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