Can a Fee be Charged for Issuing an Insurance Certificate?

I attended the IIAG’s annual convention last week and the subject of insurance certificates was on the minds of a lot of people, including the Insurance Commissioner, Ralph Hudgens. Commissioner Hudgens mentioned the fact that his office had recently issued a regulation regarding the issuance and use of insurance certificates more than once in his Saturday morning speech to the convention. (Click here for my previous blog post on the new regulation and its significant provisions.)  However, the new regulation does not address and Commissioner Hudgens did not say anything about an issue that has come up repeatedly in my conversations with agents using IIAG’s free legal service program and otherwise.

That issue concerns the question posed by the title of this blog post.  In the past, I have been informally told by the Insurance Commissioner’s Office that the issuance of insurance certificates is considered to be an integral part of the placing and servicing of an insurance policy and thus, the Unfair Practices section of the Georgia Insurance Code, which prohibits charging anything more or less than the stated premium “for insurance”, would prohibit the charging of a fee for issuing an insurance certificate.  But what if an agent was also a licensed counselor? Would the issuance of an insurance certificate be considered an “ancillary service” for which an insurance counselor can charge a fee while also receiving a commission on the same insurance policy?

My answer to the above questions is that a good argument can be made that an agent who is also a licensed insurance counselor can charge a fee for the issuance of an insurance certificate if he or she follows the requirements of the statute that allows for the charging of a fee for “ancillary services.” (Click here for an article explaining those requirements.) That is because “ancillary services” are defined in that statute as services “in excess of acquisition services”, and it is clear that the issuance of insurance certificates is a service that has nothing to do with the “acquisition” of the underlying insurance policy.  This is an issue that deserves clarification in light of the increasing burden being imposed on agents who have construction industry and other customers who need insurance certificates issued.  As you meet with your legislators and Commissioner Hudgens or members of his staff, I would encourage you to encourage them to address this issue.