While meandering through the Mediterranean Sea, Odysseus, the hero of Homer’s epic poem “The Odys¬sey,” found himself in a narrow channel of water with monsters on either side. On one side was Scylla, (pronounced “Silla”), a fishtailed mermaid with six dog heads that ate sailors who ventured too closely. (I think I dated her sister in college.)
While meandering through the Mediterranean Sea, Odysseus, the hero of Homer’s epic poem “The Odys¬sey,” found himself in a narrow channel of water with monsters on either side. On one side was Scylla, (pronounced “Silla”), a fishtailed mermaid with six dog heads that ate sailors who ventured too closely. (I think I dated her sister in college.)
On the other side was Charybdis (pronounced “Ka rí bodis”), a whirlpool that swallowed whole ships. The channel was not wide enough for Odysseus to steer safely through the middle. Thus, the phrase “caught between Scylla and Charybdis” came to mean a circumstance where you are between two dangers and moving away from one will cause you to be imperiled by the other. From that come the better-known expressions “between the devil and the deep blue sea” and “between a rock and a hard place.” And this is pre¬cisely where agents find themselves when it comes to the issues with certificates of insurance.
Many agents have encountered this nightmare scenario late on a Friday afternoon: A subcontractor client calls you in a panic because his general contractor will not pay him or her for work completed until certain modifications are made to a certificate of insurance that you provided months before. The request involves changes that do not conform to the terms of the policy and may be downright illegal. You inform your client that you are unable to comply with the request and explain the reasons. Your client shares your explanation with the general contractor who then says, “Many agents in town are willing to modify their certificates of insurance, and do so with regularity. Would he like the names and phone numbers of some of those agents?” Now you are pitted against your own client who is desperate to get paid and expects you to solve his or her problem. Indeed, you are now between Scylla and Charybdis!
Some of the more common and egregious requests for changes to certificates include: Changing “endeavor” to “shall” in the notification provision in the event of cancellation or non-renewal of the policy; increasing the number of days of notification for cancellation or non-renewal beyond those prescribed in the policy; demanding outdated forms that have been withdrawn or revised by insurance companies; requesting arcane language no longer used in current insurance policy parlance; demanding additional language that improperly purports to alter coverage or waive rights; deleting exclusions that cannot be eliminated; including words such as “covered for any and all liabili¬ties;” and demanding certification by the agent that the policies in question will be interpreted and will respond in the specific manner the certificate holder intends them to.
Of E&O claims involving certificates of insurance, more than 20% allege representation of coverage in the certifi¬cate that does not actually exist. And the problem seems to be getting worse as more insurance companies put the burden of issuance on agents while certificate holders escalate their demands for improper alterations.
Thus, as a national association, we should render help to our members with this vexation. We are identifying the issues surrounding certificates of insurance that create challenges and potential liabilities for our members. We also will identify possible solutions, including those individuals and organizations that are in a position to effect neces¬sary changes. Some of these may include:
• Create a national association policy that clearly addresses what agents should and should not be expected to do with certificates.
• Create model legislation elucidating “rules of the road” laws regarding certificates for enactment in states that do not already have them.
• Work with the National Conference of Insurance Legislators to pass the model legislation.
• Advocate for enforcement of laws regarding certificates through the National Association of Insurance Commissioners.
• Help our state associations educate members as to the proper use of certificates.
• Advocate with carriers to assure that agents are not burdened with responsibilities relative to certificates that they are not authorized, staffed or compensated to perform.
We owe Big “I” members a strong effort to help remove them from the untenable position of being between a rock and a hard place with their own clients and to thereby reduce their susceptibility to E&O lawsuits.
By the way, Odysseus chose to navigate near the Scylla, who unfortunately ate six of his men. At least Charybdis did not swallow his entire ship and crew. He made the best of a bad situation, and we should too!
Alex Soto
President
