Certificates of Insurance a Priority Legislative Issue for Texas Agents

With a massive hole in the state’s budget and the looming duty to redistrict, insurance issues are likely to be low priority items for the Texas 82nd Legislature, which began its session in January.

Still, nearly 200 bills that concern some type of insurance issue have been filed so far. In addition, the Texas Department of Insurance is up for Sunset review again this year after lawmakers in 2009 were unable to pass legislation renewing the department’s charter. Measures that address problems with the Texas Windstorm Insurance Association may also be the subject of legislative debate during the current session.

The Independent Insurance Agents of Texas is seeking legislative action on a number of insurance issues, including clarification on the use of Certificates of Insurance.

Sen. John Corona of Dallas, chair of the Senate Business & Commerce Committee, has introduced Senate Bill 425, relating to Certificates of Insurance, and the IIAT expects a companion bill to be filed by Rep. Kelly Hancock of Ft. Worth, a member of the House Insurance Committee.

Corona’s bill would require property and casualty certificate of insurance forms to be approved by the Texas Department of Insurance and provides penalties if unapproved forms are used.

It also clarifies that a “certificate of insurance is not a policy of insurance and does not amend, extend or alter the coverage afforded by the referenced insurance policy.”

The IIAT’s stance is that agents are often asked to provide certificates for commercial insurance customers that are not approved by TDI or are not standard industry forms. Such situations place agents in jeopardy of being asked to certify or interpret the availability of coverage that is uncertain, according to the agents’ association.

Under Corona’s bill, an agent or insurance company that attempts to alter or amend an approved certificate of insurance form could be subject to civil penalties.

In addition, TDI could charge a fee of up to $100 when a form is filed for approval.