Illinois tells insurers to stop naming public adjusters on association claim checks
Illinois tells insurers to stop naming public adjusters on association claim checks
2026-09-10 · Illinois · Regulation
What happened. On January 9, 2026 the Illinois Department of Insurance issued Company Bulletin 2026-01, “Public Adjuster as Co-Payee,” from Director Ann Gillespie, addressed to Illinois property and casualty insurers and public adjusters.1
It is the most directly association-relevant thing the Department did in this period, and it goes to who receives the money after a hail, wind or water loss.
What IDOI says is happening
Insurers have been adding Illinois public adjusters as co-payees on claim checks regardless of whether the insured agreed to it in the public adjuster contract — and some have been mailing checks directly to the public adjuster where the contract does not so direct.
IDOI calls these practices a violation of consumer rights under the Illinois Public Adjuster Law, 215 ILCS 5/Article XLV.
The statutory basis
The Law provides that a public adjuster contract “may specify that the public adjuster shall be named as a co-payee” — permissive, and contract-dependent. It bars adjusters and insureds from agreeing to terms not in the Director-approved contract form (215 ILCS 5/1575(b) and (j); 5/1590(j)(6)).
The Bulletin addresses the historical confusion directly: the former public adjuster statute, Article XXXI¾, “may have implied that all public adjusters had some special claim to insurance proceeds” — but that statute was repealed in 2021, and the current law says the adjuster's compensation “is the obligation of the insured, not the insurer” (215 ILCS 5/1575(f)(4)).
What insurers are directed to do
Review claims-handling practices so that an adjuster is named co-payee, or sent the check, only where the contract the insurer received contains such a provision.
IDOI expressly says it is not asking insurers to verify that adjuster contracts are on approved forms. Insurers may report adjuster wrongdoing to the Department's producer registration address. The Bulletin names Kathryn Williams, Assistant General Counsel, as the contact.
Why this matters to a condominium board
Because associations retain public adjusters routinely after a significant loss, and the money involved is large. A hail claim on a large Illinois association roof runs into six or seven figures, and the board's control of those proceeds determines whether it can direct the repair, schedule the contractor, and reconcile the work against the reserve plan.
Two concrete consequences:
If your adjuster contract does not name the adjuster as co-payee, the check should come to the association. A board that expected the carrier to route proceeds through the adjuster should now expect otherwise.
If a carrier imposes co-payee status the association never agreed to, the board has a regulator on record. That is a letter to the carrier citing Bulletin 2026-01, not a lawsuit.
Read your own adjuster contract before the loss
The Bulletin makes the contract decisive, which means the contract is now the thing to negotiate — and it is signed at the worst possible moment, days after a roof has been destroyed, by a board under pressure to act.
Three questions to answer before signing:
- Does it name the adjuster as a co-payee? That is a choice, not a default. An association may agree to it — adjusters reasonably want assurance of payment — but it should be a decision.
- Is the fee a percentage, and of what? Public adjuster compensation is the insured's obligation, so it comes out of association funds regardless of how the check is drawn.
- Is it on the Director-approved form? Terms outside the approved form are not enforceable between adjuster and insured.
The wider market context
This lands in a hard Illinois property market. The Department's own data show Illinois homeowners direct written premium of $6.32 billion, up 14.7% in 2024 against an 11.6% countrywide increase, with an Illinois incurred loss ratio of 77.82% versus 63.82% countrywide.
Note that those figures cover homeowners lines including HO-6 unit-owner policies — $251.9 million of Illinois written premium — and not association master policies, which are commercial lines the Department does not isolate. That gap is also why Illinois's new rate-review authority most likely does not reach your master policy.
What to watch next
Whether IDOI follows the Bulletin with enforcement. A company bulletin is guidance; it states the Department's reading of the statute and puts carriers on notice, and the next step if the practice continues is market conduct action.
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