Boy....does this sound familiar! We deal heavily with the non-profit sector, many of whom get their fuding from local and state agencies. This has come up so many times. I simply contact the agency requesting the AI endorsement on the worker's comp. and tell them that the companies do not add AI's on WC policies. I have never had a problem with this. It just seems that these agencies requesting the AI endorsements try to get everything and anything they can. Try not to be so willing to issue AI certs...you'd be surprised how much power you have!
There has never been an issue with our clients receiving their funding. What type of client is asking for this?
The reason why I ask is becasue if it's a contractor adding a sub as an AI, it sounds like they are trying to get around having the sub purchase Comp. insurance (there are so many unlicensed subs in california it's pathetic). If they aren't licensed, chances are they are not insured. Cross-sell and offer to get a comp quote for he sub!