Midwestern roofing company sues Iowa insurance regulators over crack down on contractors
Portrait of Tyler JettTyler Jett
Des Moines Register
The Iowa Insurance Division has issued cease-and-desist orders and warning letters to roofers who allegedly have offered to help with customers’ insurance claims
Only licensed public adjusters can help Iowa customers fill out and negotiate claims
Shamrock Roofing sued the insurance division in U.S. District Court for the Southern District of Iowa on Sept. 25, arguing that the state’s public adjusting law is unconstitutional
Insurance industry leaders say unlicensed public adjusters take proceeds from customers even if builders don’t finish repair work. But adjusters and contractors say they protect customers.
Responding to a state crackdown on contractors this summer, a Midwestern roofer has asked a federal judge to toss out a key Iowa insurance law.
Garen Armstrong, owner of Kansas-based Shamrock Roofing, sued the Iowa Insurance Division, Insurance Commissioner Doug Ommen and Assistant Bureau Chief David Sullivan in U.S. District Court on Sept. 25, arguing that regulators’ warnings and orders against roofers were unconstitutional.
Armstrong told the Des Moines Register that insurance division employees’ actions were “egregious.” He accused the regulators of threatening roofers on behalf of insurance companies, helping those companies avoid paying full claims for storm damage.
“The IID are straight up lapdogs for the insurance carriers,” he said. “Obviously, they’re not protecting consumers. Otherwise, (regulators) would be going after the insurance companies. They’re not.”
An insurance division spokesperson did not answer a list of emailed questions sent Wednesday, and the division has not filed a response to Shamrock’s lawsuit.
Armstrong sued after the insurance division sent Shamrock a warning letter on July 2, telling the roofing company that its employees may have illegally acted as unlicensed public adjusters.
Property owners can hire public adjusters to represent them when they file claims with their insurance companies, potentially securing larger payments from the companies.
Iowa law requires these adjusters to receive licenses from the state. The law bans companies from acting as both contractors and adjusters on the same jobs.
This year, state regulators have tried to stop contractors from giving insurance advice to customers.
A division spokesperson told the Register in August that regulators sent 65 educational and warning letters to contractors this year. The division also issued cease and desist orders or enforcement referrals against eight contractors who allegedly helped with insurance claims ― or advertised that they did.
Armstrong said the warning letter that Shamrock received in July did not point to specific illegal actions. After a Shamrock lawyer demanded more details, Sullivan outlined a “representative, and not an all-inclusive” list of potential problems in a Sept. 5 letter.
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Sullivan advised Shamrock employees to review their advertisements, websites, social media accounts and internal staff training to make sure they didn’t tell customers that they could help on insurance claims.
Sullivan’s list of Shamrock’s mistakes included reviews on Facebook and Google, where customers wrote that employees helped them file insurance claims or “fight” their insurance company. Armstrong’s website states that Shamrock provides “Insurance Advocacy.”
A Shamrock LinkedIn post, meanwhile, advised readers about questions they should ask contractors, including “Can you assist me with Insurance Claims?”
In Shamrock’s lawsuit against the division, the company wrote that insurance regulators failed to corroborate the customers’ reviews. The company added that Armstrong’s website is for customers in all nine states where Shamrock operates, including states that aren’t as stringent about public adjusting.
The company asked a federal judge to declare Iowa’s public adjusting law unconstitutional ― or to at least order the insurance division to enforce the law differently. Shamrock said the state is violating the First Amendment by punishing contractors’ speech.
The company said the law is too vague and “could encompass any routine statements,” a violation of the 14th Amendment.
Armstrong told the Register that Shamrock expanded to Des Moines five years ago with the intention to add another office in eastern Iowa to cover the Quad Cities region. He said Shamrock has not run into problems with insurance regulators in the eight other states where the company fixes roofs.
He said Iowa regulators are trying to “muzzle” contractors.
The state’s increased enforcement against contractors comes after insurance carriers have struggled financially for the last four years.
Derechos in 2020 and 2021 caused billions of dollars in damage. So did an increase in windstorms, including tornadoes this spring. Western Iowa cities also absorbed major flood damage from rainstorms this summer.
Companies have suffered as an unusually high rate of inflation since 2021 has increased the cost of construction material, making storm damage more expensive. Meanwhile, those companies’ investments were flat in 2022 and much of 2023, when the Standard & Poor’s 500 declined and slowly recovered.
Insurance industry leaders say public adjusters cause more problems to carriers’ bottom lines, accusing some of taking insurance proceeds from customers without ensuring that contractors fix storm damage.
Some contractors and adjusters, meanwhile, say they play an important role in representing customers. Without public adjusters, they argue, insurance companies underpay for damaged property.
“If they shut us up, they keep the customer dumbed down,” Armstrong said. “So they don’t understand their options. They keep (the customers) ignorant.”
He said the state operates with a “double standard,” as adjusters for insurance companies don’t need to be based in Iowa or licensed by the state. He said Shamrock slowed its expansion into Iowa this summer, as a result of the divisions warning letter.
“I didn’t wake up one day saying, ‘Oh, I want to sue Iowa,'” he told the Register. “No. I want to grow Des Moines as a hub and grow the Quad Cities.”
He added: “I need to get clarity on these vague laws that they’re overreaching on and overenforcing on.”…
…Insurance division issued cease-and-desist order against Clive contractor
The insurance division has continued to enforce the state’s public adjusting law this fall.
On Sept. 23, the Iowa insurance division issued a cease-and-desist order against Clive-based All or Nothing Roofing and Construction and its owner, William Campbell.
In the order, regulators accused the company of acting as an unlicensed public adjuster, citing parts of its website that state All or Nothing offers “Insurance Services” and is committed to “ensuring (customers) receive the best outcome from their insurance claims.”
“We’re here to guide you through the intricacies of insurance claims,” another section states.
“Don’t let yourself be unprotected at adjuster appointments, call us so you can be protected and properly represented!” the company posted on Facebook.
Campbell told the Register he will appeal the insurance division’s order.
“We are going to get it handled,” he said. “It’s b*******. I can’t put it any more frankly than that. It’s absolutely b******. We are not adjusters. We document the property. And we do everything up to code.”
Recon Roofing and Construction workers install new roofing on a home Wednesday, May 22, 2024, in Clive.
The insurance division issued similar orders against four roofers in late June. One of those companies, American Dream Home Improvement, signed a consent order with the regulators Sept. 5. The company agreed to change its contracts, websites and advertisements.
Recon Roofing & Construction, meanwhile, has appealed the order. Its case is pending. Reeves Roofing is scheduled to appear for an appeal hearing on Nov. 1.
The fourth company, Exterior + Home and Remodeling, did not appeal the regulators’ order.
Tyler Jett is an investigative reporter for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on X at @LetsJett. He also accepts encrypte