Currently, in Illinois, there is no standardization or regulation of certificates of insurance. These certificates are simply supposed to be issued to give people the proof that they need of their coverage and what that coverage is for. However, many insured parties are now requesting these certificates to be altered, changed, or provide information that just isn’t true, putting the insurance agents in Chicago in a difficult spot. Of course, the agent is not completely blameless, as many actually are at fault for attempting to transfer as much of the risk as they can downstream.
There are more than 1,800 insurance companies and over 16,000 agents in Illinois. When it comes to finding the best careers and highest paid positions as an insurance agent, Chicago is the place to be. However, the big city means big competition, and many people will do whatever it takes to keep their largest clients happy, even if that means defrauding the system or creating illegal or illegitimate certificates of insurance when requested. There is a growing need for education, of both insured parties and agents, as to what a certificate of insurance does and what it is NOT qualified to do.
Contractors, project owners, attorneys, government entities, corporations, lenders, and others all assume that this practice of ‘slight modification’ is just a little favor that they can ask for, and most agents see it as a simple way to keep the client happy, because no harm is done.
However, harm will be done when insured parties try to file a claim and don’t get the compensation that they need because their policy was not actually altered and when insurance agents start losing money and work because of their desire to make the clients happy, no matter what it takes. Reputable insurance agents never work with false information like this.
There are billions of dollars spent in the process of issuing certificates and endorsements, loss of business and money by agents who could be doing more productive work, and a loss of understanding of what certificates are actually for. In the state of Illinois, insurance fraud is being combated regularly. However, this practice is not under fire because it’s not typically seen or acknowledged as even existing, let alone being a form of fraud. Until the state adopts a standardization policy like Louisiana and other states have outlining exactly what a certificate is for and what it cannot do, agents and insured parties are going to continue working the system to their advantage simply because they can.
By Jack Fisher