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March 5th, 2009
MIIAB Certificate Bill Advances
One of the MIIAB's legislative goals this session is passage of legislation relating to certificates of insurance. Our bills have been introduced in the House and Senate, House File 534 and Senate File 613. State Senator Dan Skogen, Democrat from Hewitt, and State Representative Greg Davids, an insurance agent and Republican from Preston, have introduced the bill.
The proposal would clearly state in Minnesota law that the purpose of certificates of insurance is only to provide evidence of insurance coverage. The proposal would specify in statute that an insurance agent may not issue a certificate of insurance that amends, extends or alters the coverage afforded by an insurance policy. A certificate also may not provide a third party with notice of cancellation that exceeds the notice of cancellation provided in state law for policyholders.

The bill would require that certificate forms other than the ACORD or ISO forms, must first be filed with the commissioner of commerce prior to their use. Agents would not be able to offer agent opinion letters or other correspondence, in lieu of a certificate, that amends, extends or alters coverage. Any agent that knowingly alters a certificate could be subject to disciplinary action by the department of commerce. The commissioner of commerce could suspend, terminate or revoke an agent's license for violation of this proposed new law.

The MIIAB along with other state associations around the country are trying to address the growing problem of requests for insurance certificates that are contrary to filed certificate forms or that alter the coverage or notification requirements of the underlying insurance policy. Many believe that current law might apply to any changes in certificates as a misrepresentation of insurance coverage which is already an illegal act. The MIIAB hopes that by creating a separate distinct statute on certificates it will clearly send a message to the state's insurance producers and those risk managers, attorneys and others who are requesting altered certificates. Furthermore, this new law, if enacted, could be sent to those third parties who are seeking altered insurance certificates as an explanation of why their request must be denied.

The House bill was passed last week by the House Commerce Committee without a negative vote and was forwarded to the House Civil Justice Committee. Action there should occur within the next two weeks. The Senate is expected to take up the bill shortly thereafter.
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Email Dominic Sposeto
MN Dept of Commerce

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