Chris Burand writes over on Big I Virtual University about the ongoing pain in the tuckus that is certificates of insurance, but he puts a spin on it that I had not previously considered:
The changes to certificates have caused widespread carnage, frustration, anger, and virtually every other negative emotion imaginable. One item that is not being discussed much publicly is the difference between agencies following the rules versus agencies that are not following the rules. In particular, the question is whether to issue certificates that violate contracts, copyrights, and regulations. There is no question some agencies are doing so knowingly or, if ignorant, they are living in a deep, dark hole.
Neither companies nor associations nor many regulators (the Wisconsin Department of Insurance is a notable exception and there may be others of which I am not aware) have done much to correct the abusers. The result is that sometimes the agency willing to violate the rules, contracts, and copyrights make sales they would not otherwise make. By being silent on this issue, companies, associations, and some regulators are assisting the irresponsible—and the responsible are paying the price.
As an employee of an association (and one who has blogged about the certificate problem, served on an ACORD working group that deals with certificates, and has taught a continuing education course about them), I must admit that I have never considered my responsbility in all of this. Does IIABNY or IIABA or any state producer association have an ethical obligation to speak out against producers who are contributing to the problem?
And what about producers themselves? Do they have an obligation to speak out against their peers who are ignoring the rules?
I don't have good answers to these questions, but I know I'll be giving them some serious thought. Almost on a daily basis, I hear complaints about certificates of insurance, usually pertaining to some ridiculous demand from a government agency throwing its weight around. The caller complains, I commiserate, and we all hang up feeling morally superior without actually done anything about the problem.
IIABNY strongly supported a bill in 2013 to deal with this problem, but we were unable to get the governor on board. Our efforts in Albany are still in full swing -- we're talking to the Department of Financial Services about regulations, while Sen. James Seward's new certificates bill was approved by the Senate Insurance Committee today. Is that enough? Should IIABNY denounce those who take shortcuts in order to save accounts? Should their peer agents and brokers?
I'm curious to hear what you think. The comments are open.