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PIA National Working to Resolve Problems with Certificates

PIA National is working to resolve problems with certificates of insurance that have been festering for decades. The problems for agents have been increasing recently,...
October 12, 2011

PIA National is working to resolve problems with certificates of insurance that have been festering for decades. The problems for agents have been increasing recently, as non-insurance third parties demand that agents issue certificates of insurance that may not accurately reflect the terms of the insurance policy. In an effort to alleviate these problems, the National Conference of Insurance Legislators (NCOIL) is working with interested parties to enact model legislation for states to use. While many states have passed laws, a lack of uniformity has developed so a model law endorsed by the nation's insurance legislators would be helpful.

"Independent agents are increasingly operating in multiple jurisdictions, so it's important that we get some uniformity and certainty with respect to certificates of insurance," said PIA National President-elect Andrew C. Harris during an October 7 conference call of the NCOIL Property-Casualty Insurance Committee. In addition to being the owner of an independent insurance agency, Harris is also a banker and he founded an insurance company. PIA National Director Don Flanders represents New Hampshire at NCOIL and is a member of its property/casualty committee.

The NCOIL model addresses PIA's concerns by clarifying what certificates of insurance are and making it illegal to issue or request a certificate that does not accurately represent the policy terms.  Lenders have also expressed concern that they cannot rely on a binder if a policy is not available, because the binder often contains an expiration date. To alleviate this concern, NCOIL may now consider working on a second model based on New York law that makes it clear that a binder is valid until the policy is issued.

"Taken together, these two models - one addressing certificates of insurance and the other addressing the binder - may be able to fix three decades of problems," Harris said. "The leadership of NCOIL with its extensive legislative expertise is in a unique position to change confusion into clarity on this issue. PIA commends NCOIL for its leadership and commitment to timely action."

Read PIA's press release on certifications of insurance: PIA National Working to Resolve Longstanding Problems with Certificates (PIA 10/12/2011)