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Insurance Certificates Bill Enacted in Utah

Utah recently enacted legislation that addresses the marketplace problems associated with the use of certificates of insurance and the unreasonable and often illegal demands being...
April 7, 2011

Utah recently enacted legislation that addresses the marketplace problems associated with the use of certificates of insurance and the unreasonable and often illegal demands being placed on independent agents. The law signed by Utah Governor Gary Herbert last Wednesday is based on legislation passed in other states with the help of our PIA affiliates. This legislation is designed to eliminate many of the certificate-related challenges facing independent insurance agents.

"We were having big problems with several large companies demanding that we make certain changes to certificates of liability coverage that we are not authorized to make," said Craig Timothy, an agent and PIA member in Roosevelt, Utah. "We kept telling them that we couldn't alter a certificate form because the policy dictates what coverage's are afforded and the certificate form must reflect that fact. We worked on this legislation cooperatively with several other interested parties that will help us fight fraud and abuse in the industry because it will bring clarity back to what certificates of insurance mean. We are appreciative of the support we received for this joint effort from the agent and the carrier communities and for the diligent manner in which our legislature and governor handled this issue."

The Utah and North Dakota bills successfully made their way through the entire legislative process without receiving a single dissenting vote at any stage of consideration. We are hopeful that as more and more states adopt this legislation, we will have more uniformity and clarity on the issue of certificates of insurance. PIA worked to develop this legislation based a law enacted in Louisiana in 2010, and Utah is not the only state to initiate action on certificate issues this year. Similar legislation has been sent to the governor in North Dakota, adopted by both legislative chambers in Georgia and approved by at least one chamber in several other states.

In addition to developing model legislation, PIA National's Business Issues Committee developed a model bulletin and regulation for the NAIC and also developed a guide for carriers to clarify that the agent issues certificates on behalf of their carriers.

"Addressing certificate-related problems is a significant priority for PIA and our affiliates which is why we are addressing this on a number of fronts. We will continue to pursue our comprehensive education, legislative and regulatory package and other measures that help prevent the misuse of certificates in the marketplace and ensure that they are used only for their intended purposes," said BIC Chairman Susan Sallada. For additional information, contact BIC liaison Patricia A. Borowski patbo@pianet.org for related member and/or carrier practice issues, or Assistant Vice President for Industry Affairs David Eppstein davidep@pianet.org for related state legislative and regulatory issues.