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One More Myth About New York's Certificates of Insurance Law - Workers' Compensation Forms

Photo by Corrie Barklimore. Used under a Creative Commons Attribution 2.0 license. ​

I have returned this morning from 11 days off. I spent a few days in the Thousand Islands region with some college friends, spent a week with my family on the Jersey Shore, played golf badly, coated myself with SPF infinity sunblock and sat on the beach, read a bunch of books, and pretty much forgot about insurance for two weeks. Today, I bear a striking resemblance to the picture displayed above.

Nevertheless, it's a new dawn, it's a new day ... sorry, lapsed into song for a minute there. But it is a new day, because New York's law governing the use of certificates of insurance took effect one week ago today (I celebrated by taking a nap on the beach in Ocean Grove, NJ.) Accordingly, the questions from IIABNY members have been coming in fast and furious in my absence. There is one question that we've gotten from all corners of the state, so I think it's worth addressing in an addendum to my earlier post about the myths surrounding the law.

The Myths About NY's Certificates of Insurance Law

Image by Brenda Clarke. Used under a Creative Commons Attribution 2.0 license.

In just 18 days, New York’s certificates of insurance law will take effect. The New York State Department of Financial Services has posted an initial list of certificate forms it has approved. We are getting closer to a huge relief for New York insurance producers.

Judging from the emails and questions I’ve been getting, though, there seems to be a fair amount of misunderstanding out there about what this law says and does. So, let’s take a few minutes to dispel some myths.

Insurance Agents: Stop Issuing Certificates of Insurance

Disclaimer: The following is my opinion only. I do not speak for my employer or its board of directors.

Just before I left work one night last week, I got my ear roasted again by an insurance agent frustrated about certificates of insurance. I don't know how many calls I get each week about certificates, but they come in often enough.

According to a 2011 article by Bill Wilson of Big I Virtual University, it costs an insurance agency $7 to issue an ACORD certificate without any customization; adding custom language or terms may double that cost. An agency insuring one middle market construction account that needs 100 certificates annually will spend between $700 and $1,800 to produce those certificates.

Where To Find ACORD 855 NY

Photo by J.D. Hancock. Used under a Creative Commons Attribution 2.0 license.

 

I got a phone call from a member while I was driving to work this morning (disclaimer: I have hands-free access in my car), and it got me thinking that some New York insurance producers need more information. As I've reported in this space before (and discussed in a July webinar,) ACORD introduced a new form specific to New York last May. The form is New York Construction Certificate of Liability Insurance Addendum, form number ACORD 855 NY (2014/05).

Since ACORD launched the form for use, I've received a number of inquiries from members wanting to know how they can get a copy. This morning's caller asked if she should go to the Web site of the New York State Department of Financial Services to get it. This told me two things, one of which I already knew: 1) Agencies are not yet able to download the form from their agency management systems, and 2) some are under the misimpression that the New York State government created and is mandating this form.

Here Comes the N.Y. Twist on Certificates of Insurance

In only a few more weeks, insurance producers who write construction accounts will have a new tool for satisfying demands for certificates of insurance. The form, New York Construction Certificate of Liability Insurance Addendum (ACORD 855 NY), will be available starting in June. IIABNY and a number of other insurance and construction trade groups worked together to create this form last year.

To put it in context, we worked on this form at the same time that the certificates of insurance bill was making its way through the New York State Legislature. That bill permitted the use of only standard ACORD and ISO certificates of insurance. The addendum form was supposed to meet that standard while providing all of the information that New York contractors are frequently asked to provide to third parties.

Time To Speak Out About Certificate Cheaters?

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.