(DeWitt, New York, June 20, 2013) — The Independent Insurance Agents & Brokers of New York, Inc. (IIABNY) won a major victory today when the Legislature passed its top legislative priority — a bill that will put an end to abusive certificates of insurance requests. New York’s oldest insurance producer trade organization called the action a victory for fair treatment of small businesses.
“For too long, honest insurance producers have been forced into an impossible position,” said IIABNY Chair of the Board Andrew Kaufman. “Businesses and government agencies have used certificates of insurance in ways for which they were not intended. They have forced producers to choose between losing clients and breaking the law. This bill will put a stop to that.”
Certificates of insurance are one- or two-page forms that businesses commonly give other businesses or government entities for which they are doing work. These forms summarize the terms of the businesses’ insurance policies.
In recent years, insurance producers in New York and throughout the U.S. have reported increasing demands from many organizations about certificates. Organizations have insisted that producers make statements on certificates to change a policy’s terms. They often insist that certificates promise lengthy advance notice if the insurance company or the insured business cancels the policy or makes any changes. Another common demand is for guarantees of complete coverage for indemnity agreements between the organization and the insured business. Producers are also pressed to make warrantees that the policies comply with all requirements of often-complex contracts. Those who refuse to meet these demands face threats of losing their customers.
IIABNY and others developed the bill approved by the New York State Legislature, S.5804/A.3107-D. The legislation will permit the use of only certificate forms created by insurance companies and recognized industry standard-setting organizations. Special forms for commercial mortgage situations would also be permitted. The legislation also clarifies that a certificate cannot change the coverage provided by the underlying insurance policy and does not confer any additional rights beyond what the policy provides. The bill will also prohibit any person or entity from knowingly:
- Demanding an altered or modified certificate of insurance
- Requesting a certificate that contains terms, conditions or other language that is not found in the policy
- Requiring a producer to issue an opinion letter or similar document that violates any of the bill’s prohibitions
- Requiring a certificate to warrant that the insurance policy complies with the requirements of a particular contract, and
- Requiring a certificate that inaccurately states the insurance coverages, purports to change the coverage, or to grant rights beyond those stated in the policy.
“We want to thank the sponsors in both chambers for their support of this bill,” said Kaufman. “We greatly appreciate the efforts of Senator James Seward and Assemblyman Joe Morelle. We also thank Assembly Insurance Chairman Kevin Cahill for his support and efforts in advancing the legislation.”
IIABNY will be working with the Governor’s staff to see that the bill is signed into law as soon as possible.