On May 8, 2015, the Division of Insurance issued Bulletin 2015-02, entitled “Implementation of Massachusetts General Laws Chapter 175L Concerning Certificates Of Insurance”. The stated purpose of the Bulletin is to “provide guidance with respect to the implementation of Massachusetts General Laws 175L concerning the issuance of a certificates (sic) of insurance in the Commonwealth.”
Chapter 175L codifies a long-time rule according to the Division
The Bulletin states that one result of the recent enactment of Chapter 175L is the codification of “the long-time rule that insurance certificates may not modify the terms or conditions of the underlying insurance policy that they evidence.” The Bulletin reiterates that the new statute requires that all certificates of insurance be both true and accurately reflect the policy they represent: and that no one may knowingly prepare, issue or require the issuance of a certificate of insurance that contains:
- any false or misleading information or that
- alters, amends or extends the coverage provided by the underlying referenced policy.
Chapter 175L extends jurisdiction of the Commissioner
The Bulletin also reiterates that Chapter 175L applies to all certificates issued in connection with property, operations or risks located in Massachusetts. The Bulletin goes on to point out however that once a certificate is issued that applies to any Massachusetts risk it does not matter where the:
- certificate holder
- policy holder,
- or insurance agent
may be located
Additionally, as the Bulletin warns that, under Chapter 175L, the Commissioner “is authorized to examine and investigate the activities of any person that the Commissioner reasonably believes has been or currently is engaged in an act prohibited by Chapter 175L.” The Bulletin also states that for the Commissioner now has jurisdiction under Chapter 175L over third parties. This new authority of the Commissioner would apparently extend to unlicensed persons, such as such as certificate holders or policyholders, who ordinarily would be outside the Commissioner’s jurisdiction. The Bulletin finally notes that under Chapter 175L, such third parties are prohibited from “requesting or requiring that a Certificate of Insurance contains false or misleading coverage.”
Bulletin suggests agents and others preparing certificates establish specific procedures
The Bulletin further advises that producers and others that prepare certificates of insurance “establish specific procedures” to ensure that:
- all certificates of insurance that are issued accurately evidence the property and casualty insurance coverage at issue; and,
- do not alter, amend or extend the coverage provided by the underlying referenced policies
Bulletin good advice does not have the force of law
As stated by the Division, the Bulletin is “to provide guidance.” The Division of Insurance Bulletins, such as Bulletin 2015-02 do not have the force of law. See Agency Checklists’ August 1, 2011 article: “Division of Insurance Bulletins Do Not Have the Force of Law”. However, as reference this article, Massachusetts courts have held that following the guidance and advice contained in the Division’s Bulletin is evidence of good faith in any contested proceeding.
Accordingly, producers and others dealing with certificates of insurance would be well advised to follow the Division of Insurance’s suggestion and have documentation and protocols within their offices to ensure that certificates of insurance are not issued in violation of Chapter 175L
The Division’s advice also dovetails with the conclusions in the section entitled “Other open questions for agent takeaway on the new statute [Chapter 175L]” in Agency Checklists’ March 1, 2015 analysis of Chapter 175L: “What You Need To Know About The New Insurance Certificate Law in Massachusetts.” Producers and others involved with certificates of insurance may wish to review the more detailed suggestions contained in this article.
Links to Bulletin 2015-02 and to the certificate of insurance law, Chapter 175L
The following is a link to the text of the Bulletin: Bulletin 2015-02, Implementation of Massachusetts General Laws Chapter 175L
The provisions of General Laws Chapter 175L can be found in Agency Checklists’ March 1, 2015 article: “What You Need To Know About The New Insurance Certificate Law in Massachusetts.