(DeWitt, New York, June 10, 2014) — The Independent Insurance Agents & Brokers of New York today commended the New York State Assembly for passing a bill to reform the use of certificates of insurance. The Assembly approved the measure, Senate Bill 6545-A, earlier today.

IIABNY Chair of the Board James D. Sutton, CPCU, AAI, CIC said, “This is a good day for law-abiding insurance agents and brokers. This bill, carefully crafted to address Gov. Cuomo’s concerns, will prevent agents and brokers from having to make an impossible choice – violating the law or losing a valued client.”

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 legislation, sponsored by Insurance Committee Chair Sen. James L. Seward (R-Milford)and Assembly Majority Leader Joseph D. Morelle (D-Irondequoit). 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
• Issuing an opinion letter or similar document that violates any of these other prohibitions, and
• Requiring forms other than standard forms created by the Association for Cooperative Operations Research and Development (ACORD) or the Insurance Services Office (ISO).

A similar bill passed both chambers of the legislature in 2013. Gov. Andrew Cuomo vetoed it out of concerns that generic certificate forms might not meet the needs of state agencies. The new bill requires the use of industry-standard certificate forms. However, it also permits forms created by state agencies if the New York State Department of Financial Services (DFS) has approved them.

“We recognize Gov. Cuomo’s concerns regarding state agencies’ desire to use their own certificate forms,” Sutton said. “That is why we have worked closely with his staff to devise legislation that will alleviate those worries. This measure permits state agencies to continue using their own certificate forms. Doing so in partnership with the DFS will ensure that the forms do not place insurance producers in legal jeopardy.”

“We wish to thank the bill sponsors and the leadership of both the Senate and the Assembly for their swift, decisive action on this bill,” Sutton continued. “Since it addresses the issue that the governor saw in the previous version, we urge him to sign it into law as soon as possible.”