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Impossible Certificate of Insurance Compliance? Could it be racketeering? – Acord 25

In the past few years, a new industry has weaseled it’s way into the insurance industry: third party Certificate (COI) insurance compliance verification companies.  They sit between a vendor – such as a pest control provider – and a client – such as a property management company.  They advertise great benefits, sometimes to both the vendor and the client.

Working without pay, lots of red tape

In reality, these ‘certificate compliance’ companies seem to be a bane to everyone involved… except themselves.  Vendors attempting to comply with their customers insurance requirements often find it nearly impossible.  Insurance agents routinely spend literally hours on the telephone – sometimes with foreign support agents that don’t seem to be fluent in English, or weeks trading emails with automated systems.  Meanwhile, a small business owner (Pest Control Provider) is awaiting a job, or worse, payment for a job already completed… and the client and tenants are left without services being performed.

What is being requested

Many COI requirements seem to be simply ‘made up’ and pulled out of thin air, by seemingly well intended but misdirected administrators with little familiarity of insurance coverage.  Compliance companies or risk administrators demanding terms such as NAMED INSURED be added to comments section, with the clients information…. what they’re really after is ADDITIONAL INSURED.  Or adding a comment that Terrorism Coverage included.  Do they know what those terms mean?  There is more… they demand increased umbrella as high as 4 million, Private Workers Compensation coverage – even in states with monopolistic systems like Ohio.  Demands for auto coverage to be marked ALL AUTOS – this isn’t available from any insurance carrier unless you basically have a fleet of vehicles, certainly not for a small business with one or two vehicles. Individual Certificates for each separate location under the same corporate entity.  And if the certificate isn’t worded exactly as the example, it is rejected.  Often without explanation.  To top this all off, some require annual fees from both the management company and the vendor.

It is a great day when we don’t have an insured or vendor request we ‘just fill it out like the example’, without regard to actual coverage in force.

Somewhere the point of an Acord 25 – Certificate of Insurance – seems to have been lost.  It does not guarantee any coverage, it only is a best effort to document what insurance coverage is actually in force.  Being nit picky about specific grammar or meaningless terms does nothing to increase coverage.

Could it be more sinister?  The plot thickens…

While they seem to just over complicate the insurance verification process, there might be a few hidden motives.  I’ve read reports of collusion between the certificate compliance companies and management companies purposely causing problems to delay or avoid paying vendors all together.  Other reports show some might be affiliated with insurance agencies, and make it impossible for an existing agent to comply with their requests… so their affiliate can peddle the solution, a different insurer.  None of it is helping to improve insurance coverage.

Are you an insurance agent unable to comply with COI requests? Vendor losing money or clients because Certificates are not accepted?

Send me an email ([email protected]) describing your situation, we’re making a list and checking it twice.  We have been in contact with several State Department of Insurance regulators, and we’re helping them put the pieces together.

Phil Pavarini Jr
Insurance Agent Since 2006
Private Investigator Since 2003
Email [email protected]



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