Holiday Wishes

This will be my last post of 2014, and I thought it would be a good time to  make some wishes for 2015.  First, I wish the Insurance Commissioner’s Office will address the issues that have arisen regarding insurance certificates since the passage of the statute and the issuance of its regulation.  There is still a lot of uncertainty among agents over what information can and cannot be included on a certificate and what law applies when a request for a certificate comes from outside Georgia.

A related wish is for insurance companies in Georgia to take more responsibility for the issuance of insurance certificates in their name.  They need to let their agents know what procedures should be followed and establish systems for making sure they are followed, so those agents who try to “play by the rules” are not put at a disadvantage by others who are not as concerned with doing so.

Nationally, I wish the new Congress will quickly pass the terrorism reinsurance bill (known as TRIA) and the agent reciprocal licensing bill (known as NARAB II).  Both bills had significant bipartisan support and were poised for passage in the recently completed lame duck session of Congress, but were derailed by Senator Coburn of Oklahoma.  Fortunately, he has retired and with the support of the IIABA, which has made quick passage of these two bills a top priority, this wish may actually come true.

I also wish that the economic recovery, which now seems to be reaching Main Street as well as Wall Street, continues its accelerated pace (5% in the third quarter) and that all the insurance agencies and other businesses in Georgia have a happy and prosperous New Year as a result.

If that happens, the job of the new executive director of IIAG, Michael T. Walsh, will be a little easier.  I wish him the best of luck in his new job.  He has some big shoes to fill, but he has a strong resume and a good staff, so the transition should go well.

Finally, I wish that the spirit of the Holiday Season, especially the peace on Earth and goodwill toward men (and women) part, will continue throughout 2015.  If everyone would just show a greater tolerance and respect for others who are different from them, I think that would go a long way toward achieving my last and most important wish.

Insurance Certificates – Another New Issue

Last week I wrote about an insurance certificate issue that was discussed at some length at IIAG’s Commercial Lines Committee meeting.  It concerned the scope of Georgia’s law and the regulation issued by the Insurance Commissioner on insurance certificates.  A related question was also briefly discussed.  Is an insurance agent required to sign an insurance certificate to make it valid?

Like most people, I had assumed that since the approved forms for insurance certificates contained a signature block for the “Authorized Representative”, that someone had to sign the certificate for it to be valid.  Since agents who have signed certificates that became the subject of litigation have been sued, whether an agent is required to sign the certificate to make it valid is an important question.  After reviewing Georgia’s statute and regulation, I am not sure what the answer to that question is under Georgia law.

The instructions to ACORD’s insurance certificate form state that the signature block is for the “authorized representative” of the insurance company whose policy or policies are the subject of the certificate, but they acknowledge that such a signature is not required by the law of every state.  The comment was made at the Commercial Lines Committee meeting that ACORD intended to change its instructions to make clear that no signature was required unless the applicable law said one was necessary.  Georgia’s statute and regulation both define an insurance certificate as a document that “is prepared or issued” by an insurance company or agent.  Nothing is said about whether anyone has to sign that document to make it valid.

In the absence of any specific language in Georgia’s law or regulation, whether an agent must sign a certificate of insurance to make it valid would be governed by the rules of the insurance company whose policy or policies are the subject of the certificate.  Georgia’s regulation requires all insurance companies to “provide to their producers written instructions clearly outlining the insurer’s procedures and each party’s responsibilities for issuing and servicing certificates.”  Those procedures should address whether an agent’s signature on the certificate is required to make it valid.  If not, it becomes an open question whether such a signature is required for an insurance certificate issued for property, operations, or risks located in Georgia.  As noted in last week’s blog, for property, operations, or risks located in another state, the agent would have to look to the law of that state for an answer to this question.

Based on the comments made at the Commercial Lines Committee meeting, it seems there will be an effort made to make some changes to Georgia’s regulation on insurance certificates in 2015.  This subject should be added to the ones discussed at that meeting.

On another note, the Commercial Lines Committee was told that 83 complaints have been made to the Insurance Commissioner’s Office using the e-mail address that is found on its website devoted to insurance certificates.  Of those, five have been referred to the fraud division for investigation.  Not bad numbers for roughly one year of operation. For anyone who may be concerned about the repercussions of making a complaint using that e-mail address, the committee was assured that the identity of all the people who make complaints is kept confidential.

Insurance Certificates – New Issue

As proof that questions about insurance certificates remain and are still a hot topic among insurance agents, the first item discussed at yesterday’s meeting of IIAG’s Commercial Lines committee was insurance certificates.  A new issue that I had not heard before concerned what should a Georgia insurance agency do when one of its insureds is performing work in another state and the person or entity for which the work is being performed asks for a certificate of insurance that contains language which would not be permissible under Georgia law.  The concern was expressed that the issuance of such a certificate by the Georgia agency would subject the agency to the penalties imposed by that law, because it was issued in Georgia.

Although not crystal clear, the Georgia insurance certificate statute does contain language that addresses the above situation.  In pertinent part, it states that its provisions “shall apply to all . . . certificate of insurance forms issued as evidence of insurance coverages on property, operations, or risks located in this state, regardless of where the certificate holder, policyholder, insurer, or insurance producer is located.”  Its that last clause about the location of the persons involved with a certificate that seems to have created some confusion in the minds of Georgia insurance agents.  The first part of the above language tells me that the requirements imposed by Georgia law only apply to certificates of insurance that are issued for things located, or activities taking place, in this state.  If the thing or activity for which the insurance certificate is issued is not in Georgia, Georgia law does not apply to that certificate, even though it is issued by a Georgia insurance agency or agent. Conversely, the last clause of the above language tells me that if that thing or activity is in Georgia, Georgia law applies to the certificate issued for it regardless of the location of the person issuing the certificate, the holder of the insurance policy that is the subject of the certificate, or the person to whom the certificate is issued.

The above application of Georgia’s insurance certificate law is consistent with the constitutional principle that a state government’s laws can only apply to persons, places, or things that are located, or activities that occur, within the borders of that state.  Thus, for agencies that have insureds who engage in business activities in other states, it is important to know what the laws of those states say about the issuance of insurance certificates.  Fortunately, the IIABA has compiled a list of such laws for every state.  That list was last updated in May of this year and can be found by clicking here.

There was some discussion at the Commercial Lines committee meeting about making changes to the regulation that has been issued by the Insurance Commissioner to clarify the scope of Georgia’s insurance certificate law.  Stay tuned for further developments.






What’s New with Obamacare?

It’s been awhile since I wrote anything about the Affordable Care Act, commonly known as Obamacare.  That’s mainly because the rules keep changing, especially for that provision of the law known as “play or pay”, which applies to employers and requires them to either provide “affordable” and  “minimum essential” insurance coverage to their employees or pay a penalty for not doing so.  What constitutes “affordable” and “minimum essential” insurance coverage has not changed, but whether an employer will be subject to a penalty for not offering such coverage in 2015 has changed.

Last year the “play or pay” penalty was delayed for all employers until January 1, 2015. This year the “play or pay” penalty has been delayed until January 1, 2016 for those employers who have 50-99 full-time employees or their equivalents, if they meet certain requirements, and has been watered down for those employers with 100 or more full-time employees or their equivalents.  As I explained in a earlier post, employers with 30 or fewer full-time employees (those who are normally expected to work an average of 30 or more hours a week), do not have to worry about the “play or pay” penalty in 2015 and beyond, because in calculating the amount of the penalty, the first 30 such employees are not counted.  For employers with 100 or more full-time employees or their equivalents, the exemption from the “play or pay” penalty for 2015 has been increased to the first 80 full-time employees.  So, if such an employer has 80 or fewer full-time employees during 2015, it will not pay a penalty if it does not offer insurance coverage at all or even if it offers such coverage that is not “affordable” and “minimum essential.”

For employers with 100 or more full-time employees or their equivalents who offer insurance coverage under non-calendar year plans, there are other ways they can escape the “play or pay penalty” without having to offer “affordable” and “minimum essential” coverage to 95% of their full-time employees, which is what Obamacare initially required. For an explanation of these other ways and the changes made in the “play or pay” penalty for 2015 in general, click here.

In order for employers with 50-99 full-time employees or their equivalents to escape the “play or pay” penalty for 2015, they must continue to do what they have been doing since February 9, 2014.  If they have not offered insurance coverage to their employees since that date, they do not have to offer such coverage during 2015.  If they have offered such coverage on or after that date, they must continue to offer the same coverage to the same employees and contribute the same amount toward the premium for employee only coverage during 2015, but that coverage does not have to be “affordable” or “minimum essential.”

The open enrollment period for 2015 individual insurance coverage runs from November 15, 2014 through February 15, 2015.  Insurance agents and brokers who want to be able to assist individuals in obtaining coverage through the federal insurance exchanges and the Small Business Health Options Program, more commonly known as SHOP, must register or re-register with Centers for Medicare and Medicaid Services (“CMS”).  For a copy of the slides from a recent seminar on that subject that explains the requirements for insurance agents to take part in those programs, click here.

One new benefit for registering with CMS is that an agent’s name and contact information will be accessible from the home page of the website under “Find Local Help.”  For an article about this new benefit and how an agent can change their contact information, click here.