(DeWitt, New York, May 19, 2014) — The Independent Insurance Agents & Brokers of New York (IIABNY) today praised the New York State Senate for passing a measure that would curb abuse of certificates of insurance. The bill, which IIABNY played a major role in developing, cleared the Senate by a large margin today.

"For years, some businesses and government agencies have made unreasonable demands for certificates of insurance,” said IIABNY Chair of the Board James Sutton, CPCU, AAI, CIC. “They have forced an impossible choice on insurance producers: Either break the law or lose a valued client. This bill is an important first step toward putting those days behind us.”

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 insurance policies the businesses have purchased.

In recent years, insurance producers in New York and throughout the U.S. have reported increasing demands from many organizations that producers make statements on certificates to change a policy’s terms. Organizations often insist that certificates promise lengthy advance notice if the insurance company or the insured business cancels the policy or makes major 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.

Insurance producers who comply with these demands risk breaking insurance law and incurring fines for issuing fraudulent certificates. Those who refuse risk losing customers.

IIABNY played a key role in drafting the Senate bill, S.6545-A, sponsored by Insurance Committee Chair Sen. James L. Seward (R-Milford). The association also worked with other interested groups to resolve differences over the wording. The resulting bill would prohibit a number of practices, including:

• Altering or modifying a certificate of insurance
• Requesting the issuance of a certificate that contains false or misleading information
• Issuing a certificate that changes the terms or coverage provided by the insurance policy, and
• Issuing an opinion letter or similar document that violates any of these other prohibitions.

Assembly Majority Leader Joseph D. Morelle (D-Irondequoit) introduced a companion bill, Assembly Bill 9590, in that chamber May 9. It awaits action by the Assembly Insurance Committee.

A similar bill passed both chambers of the legislature in 2013. Gov. Andrew Cuomo vetoed it due to concerns about whether generic certificate forms would meet the needs of state agencies. The new bill authorizes the use of industry-standard certificate forms. It also permits forms created by state agencies if the New York State Department of Financial Services has approved them.

“I want to thank Sen. Seward for his work guiding this bill to passage,” said Sutton. “This is an important problem, and we are gratified the Senate has recognized that. We urge the New York State Assembly to pass the bill swiftly and send it to Gov. Andrew Cuomo for his signature.”