Certificates of Insurance Webinar Tuesday, July 19, 2011 Viewing Instructions: Slides will advance automatically. To

1. 1 Certificates of Insurance Webinar Tuesday, July 19, 2011 Viewing Instructions: Slides will advance automatically. To advance manually, double click with your mouse or press arrow button twice. If advancing backwards, click speaker icon to start audio.

2. 2 PIA National Certificates Webinar David Eppstein, Assistant Vice President, Regulatory Affairs, PIA National Adam Felton, Director of Insurance Services, PIA Services, Inc. Ann Henstrand, Chief Compliance Officer, Government & Industry Affairs, ACORD Kristina Dixon, U.S. Risk Underwriters, Professional Division Keith Savino, Chief Operating Officer, WRG Insurance and PIA National ACORD Representative

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4. 4 What is the problem? Independent agents are receiving demands from non-insurance entity 3rd parties to issue certificates that do not comply with the underlying policy terms. This puts agents in a difficult position because they either have to issue the flawed certificate or risk losing the business. Many departments have issued bulletins making it clear that this practice is illegal and in some cases this has cured the problem but in other cases these demands are still being made.

5. 5 What is the Solution? In 2008 PIA worked with other agent associations, carriers, other interested parties, regulators and legislators in Louisiana to help craft a solution. The legislation, along with the subsequent regulation, issued by the department largely resolved the problem.

6. 6 What does the bill do? The legislation makes it clear that a certificate is for information only and can not change the policy terms. It makes it illegal to demand or issue certificates that do not reflect the policy terms and requires the forms to be filed and approved by the department.

7. 7 Efforts in other states Recognizing the success of the Louisiana efforts we worked with our local PIA state affiliates to help resolve the problems they have. Several states have enacted, or are considering enacting, legislation similar to Louisiana.

8. 8 NCOIL Certificates Model In an effort to bring certainty and uniformity to certificates, the National Conference of Insurance Legislators (NCOIL) is considering a model that contains similar provisions as the Louisiana bill. PIA supports the base model and is working with the legislators on some amendments to improve the model further.

9. 9 NAIC Activity The National Association of Insurance Commissioners (NAIC) has expressed some renewed interest in this issue. We are hopeful the regulators may consider issuing a model bulletin that would complement the NCOIL model.

10. 10 Lender Interests Lenders have a legitimate interest in making sure they have evidence that a property is covered by insurance. In some cases, the policy may not be available so what can the lenders rely upon? The certificate of insurance is not the proper document for lenders.

11. 11 The Binder The certificate of insurance is NOT intended to fully satisfy the needs of lenders. The binder and/or the policy is. If the policy is not available, the lenders should rely on the binder as evidence of coverage.

12. 12 Liability vs. Property Coverage We are attempting to resolve the problems agents have with 3rd party demands for certificates of liability coverage. The issue the lenders have with evidence of property coverage is separate. These are two different problems requiring two different solutions.

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15. 15 Use Approved Forms 13 States Require Approval of Forms and this proposed MBA form would need to be approved by the department before it can be used in those states. ACORD Forms are all approved in each state where approval is required.

16. 16 PIA Supports ACORD The Proposed MBA Form would have to be manually filled in PIA National CAN NOT support the use of the proposed MBA form ACORD forms are compatible with automated agency systems

17. 17 Agency Procedures What happens when agents get a request for a certificate? Have agency procedures in place Check with your carrier When issuing certificates of insurance, insurance agents should consider the following: What is the purpose of the certificate? What does your agency agreement with the carrier/MGA state? Do you have the authority to issue certificates of insurance on behalf of the carrier/MGA?

18. 18 When issuing certificates make sure the appropriate information is represented, e.g. type of insurance/coverage, policy number, policy term, limits of insurance, carrier and if applicable the appropriate additional insured is stated. Where can I get the Latest ACORD Forms?

19. 19 ACORD Highlights � Who We Are Association for Cooperative Operations Research and Development. A global, not-for-profit standards development organization. Membership-driven, serving insurance and related financial service industries.

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31. 31 PIA & ACORD History of Agents and ACORD Industry Participation Future Efforts

32. 32 ACORD Development Process Members Request New Standards Formal Process for a Member to Request a New Standard Reviewed By Member Leadership for Approval Working Groups Create Standard Once Approved Members Meet Periodically to Discuss and Develop the Standard Final Draft Published Once the Development is Complete, A Final Draft is Created Membership Review Members Review and Discuss the Final Draft

33. 33 ACORD Implementation of Development Publication of the Candidate Recommendation Once the Final Draft is complete, a Candidate Recommendation is Published Implementation Testing Begins Several Candidate Recommendations Can Be Published Throughout Testing Final Release Implementation Testing is Completed Final Discussion by Members New Standard is Published

34. 34 ACORD Maintenance Cycle Six Month Cycle of Maintenance Allows Members to Request Changes Members Review All Changes New Standard Published Why Six Months? Quick Support for Market Changes Allows Time for Each Change to Be Discussed and Evaluated Provides a Predictable Pattern for Changes Allows for Incremental Growth of Standards

35. 35 GETINVOLVED!

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