IREG Update - September 2015


Hot Topic: New York's certificates of insurance law now in effect

The new law addresses long-standing industry concerns and codifies opinions issued by the New York Insurance Department's (predecessor to the Department of Financial Services) Office of General Counsel, dating back to 1995, which generally state that a certificate of insurance may not provide obligations, conditions or coverages not contained within the underlying insurance policy. Article 5 takes a three-pronged approach to the issue, and empowers the NY Department of Financial Services (DFS) to levy fines for violations.

Special restrictions on personal injury and property damage liability insureds

First, for certificates of insurance addressing personal injury liability insurance or property damage liability insurance, Article 5 prohibits any person or governmental entity from “willfully requir[ing]” the issuance of a certificate of coverage as a condition for 1) awarding work, 2) commencing or continuing work under an already awarded contract, or 3) payment unless the certificate of insurance is either a form promulgated by the insurer on the underlying policy or a standard certificate of insurance form approved for use by the New York Superintendent of Financial Services. N.Y. Ins. Law § 502(a).

DFS has published its approved standard certificates of insurance on the DFS website. In addition, requests for approval for additional form certificates of insurance can be emailed to Pursuant to DFS instructions, when submitting a form for approval, the insurer should include an identifying name and, if applicable a number on the form itself so that once DFS approves the form, a person reading the form can identify to whom the form belongs and verify whether DFS has approved the form.

General restrictions on insureds

Second, Article 5 prohibits any person or governmental entity from “willfully requir[ing]” the inclusion of terms, conditions or language in a certificate of insurance that are not expressly included in the underlying insurance policy. N.Y. Ins. Law § 502(b). However, Article 5 explicitly does not prohibit any person or governmental entity from including minimum insurance requirements, coverage limits, terms, or other conditions in a competitive bidding process. Id. Nor does Article 5 prohibit any person or governmental entity from requesting clarification regarding policy terms or endorsements. Id.

General restrictions on insurance agents and brokers

Third, Article 5 prohibits licensed insurance agents and brokers from completing any certificate of insurance that amends, expands or otherwise alters the terms of the applicable insurance policy. N.Y. Ins. Law § 502(c). However, Article 5 explicitly allows insurance agents and brokers to respond to requests for clarification regarding policy terms or endorsements. N.Y. Ins. Law § 502(b).

Potential Penalties

DFS has the power to levy fines for willful violations of Article 5, in the amount of $1,000 for the first violation and $2,000 for any subsequent violations. N.Y. Ins. Law § 503.


For the most part, Article 5 merely codifies current guidance from DFS, but it is important to note the statute's detailed requirements and the direct fining authority it gives to DFS.


Noteworthy links from the past two weeks


  • Hopes for a "covered agreement" between the EU and US relating to reinsurance collateral appeared to be fading [InsuranceERM]
  • MetLife continued its fight against Systemically Important Financial Institution designation by arguing that the company is not a US financial institution [Bloomberg Business]
  • Arizona's Governor named Darren T. Ellingson as new Acting Insurance Commissioner [Arizona Department of Justice]

Life & Health

  • The Centers for Medicare & Medicaid Services delayed its "risk corridor" payments to health insurers [A.M. Best ]
  • Alaska's Supreme Court refused to issue a temporary restraining order against the state's Medicaid expansion under the Affordable Care Act [Wall Street Journal ]

Property & Casualty

  • Pennsylvania, Maine and the District of Columbia became the latest jurisdictions to bar "price optimization"—the collection of big data by insurers to analyze price sensitivity on an individual basis [Insurance Journal: here, here and here]
  • The New York Times reported on the use of credit scores in homeowners underwriting [New York Times]
  • The NAIC considered making insurer audits of TPAs mandatory [WorkCompCentral]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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