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PIA National Working to Resolve Longstanding Problems with Certificates of Insurance

WASHINGTON, October 12, 2011 - The National Association of Professional Insurance Agents (PIA) is working to resolve problems with certificates of insurance that...
October 12, 2011

Two Model Laws Can Fix Three Decades of Problems, PIA's Harris Says

WASHINGTON, October 12, 2011  - The National Association of Professional Insurance Agents (PIA) 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. "Having different solutions in different states just makes things more complicated for us, so we appreciate the role NCOIL can play here. Now we have a unique opportunity to resolve these issues in a manner that works for the agents, carriers and lenders." 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.  During the course of discussions on the NCOIL model, some in the lending community expressed concern that the legislation would weaken the status of certificates to such an extent that lenders cannot rely on them as proof of coverage.

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."

NCOIL plans to hold at least one more conference call on this issue before its annual meeting in Santa Fe, New Mexico November 17-20. PIA National remains committed to advancing common sense solutions to the problems agents face regarding certificates of insurance.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America SM. PIA's web address is www.pianet.com.