PIA Hails NCOIL Approval of Model Law on Certificates of Insurance
Point Clear, Ala. – The National Association of Professional Insurance Agents (PIA) is hailing the passage of a model law governing certificates of insurance by the National Conference of Insurance Legislators (NCOIL). On November 18, NCOIL unanimously approved the model that states can use to help eliminate demands for improper certificates of insurance. PIA advocated for passage of the model and played an integral role in guiding it to approval by the state legislators.
“This is a great achievement for PIA and NCOIL,” said PIA National President Andrew C. Harris. “We are very pleased with this outcome and we appreciate all the hard work the legislators and interested parties put into these models. We believe this certificates model, combined with a binder model, will alleviate some of the confusion we have been seeing in the marketplace concerning certificates for decades.”
Harris testified, urging legislators to act because agents are increasingly being asked to add information to certificates of insurance that may not match the underlying policy terms. Some lenders had expressed concern that the model would make it impossible for them to rely on certificates as adequate evidence of coverage. In order to address these concerns, NCOIL passed a model binder law making it clear that the binder is the proper document for lenders to use as evidence of commercial property coverage, not a certificate.
PIA plans to continue our work with carriers and lenders to craft a special ACORD binder for commercial lending transactions that can be used as evidence of coverage until a policy is available. This concept will essentially merge the ACORD 75 binder and the ACORD 28 certificate, giving lenders a document they can rely upon as evidence of coverage and that also contains some basic coverage information.
Input by Harris was instrumental in brokering a compromise among insurers, lenders and legislators, which led to the successful passage of the model certificates law. Harris is the owner of an independent insurance agency, the vice chairman of a de novo bank in New Jersey and previously served for five years as president of an insurance company. He drew upon this expertise when he addressed the legislators during their deliberations on this issue over the past two years.
“This model is an excellent product that reflects many months of extensive examination by the legislators,” said David M. Eppstein, Esq., assistant vice president of regulatory affairs and a staff attorney for PIA National. “In the end, their work paid off with a model that will make it clear that certificates of insurance can not conflict with the insurance policy itself, and that it’s illegal to demand that an agent improperly change or add to a certificate.”
“We congratulate the legislators and staff of NCOIL for this achievement,” Eppstein said. “The legislators identified a problem in the marketplace, deliberated the best way to solve it and then acted in a timely manner. This shows the strength of state regulation and how well state legislators can react to improve market conditions.”
NCOIL is an organization of state legislators whose main area of public policy interest is insurance legislation and regulation. Most legislators active in NCOIL either chair or are members of the committees responsible for insurance legislation in their respective state houses across the country.
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.