The Association for Cooperative Operations Research and Development (ACORD) and the Mortgage Bankers Association (MBA) have announced the finalization and release of ACORD Form 28, “Evidence of Commercial Property Insurance,” a new standard form that meets the specific needs of the commercial mortgage and the insurance industries.
The two organizations worked together to develop the new form, which the bulletin called “a welcome addition to ACORD’s existing library of more than 500 standardized forms.” Form 28 includes specific references to terrorism insurance, business interruption insurance and mold coverage, and is “expected to have immediate and widespread use throughout the US insurance and mortgage industries.”
“Working with our partner ACORD, as well as our various stakeholders, MBA is proud of this launch as it is a perfect example of improved document transparency that will eliminate confusion over certain kinds of coverage and increase the confidence of our lenders, investors and servicers,” stated Diana Reid, chair of the MBA Insurance Certificate Working Group, managing partner, Beekman Advisors, LLC.
Having determined that there was a need for the form, “MBA representatives met with the Council of Insurance Agents and Brokers (CIAB) to begin a dialogue on refining the process, timeliness and accuracy of commercial insurance information provided to the commercial real estate finance industry,” said the announcement. They created a draft form, which was submitted for review by the ACORD Standards Program members and Forms Pool members. It was adopted after the members reviewed the responses and feedback they had received.
“Our members, the major brokers who place 80 percent of all commercial premiums, are strong advocates of greater consistency and transparency in the national commercial insurance market. ACORD Form 28 is a giant step in the right direction,” commented CIAB president Ken A. Crerar, “and an important new tool for our members. The speed with which this project has been completed is remarkable and a testament to cooperation within our industry.”
Kathleen Dufraine, vice president of risk management and CPCU, GMAC Commercial Mortgage Corporation stated, “ACORD Form 28 is a much needed solution for the timely and accurate recording of evidence of commercial property insurance.”
The bulletin explained that “Until now, there was no form available exclusively to the commercial real estate industry to document evidence of commercial insurance. The standard form available to document personal property insurance information to mortgagees and other lenders was the widely accepted ACORD Form 27, Evidence of Property Insurance. ACORD Form 27 will still be used to document personal property insurance since the type of coverage listed is relatively uniform and few specific details are required—and will be renamed, ACORD Form 27, Evidence of Personal Property Insurance.”
The Co-Chairs of the NAIC Terrorism Insurance Implementation Working Group, Therese M. Vaughan, commissioner of insurance, State of Iowa, and Gary Steuck, director of insurance, State of South Dakota, offered their support to ACORD 28 stating that the “The new form clearly provides helpful coverage information in an easily understandable format. The NAIC is pleased that the insurance industry and the mortgage bankers were able to work together on a solution, avoiding the need for regulatory involvement. This is a good example of private section collaboration that works well for everyone.”
ACORD provides detailed field-by-field instructions through its Forms Instruction Guide to ensure the form is used properly and to eliminate questions or problems. This facilitates its use and acceptance.
John Van Osdall, senior vice president of USI Insurance and ACORD board member summarized the process that he supported throughout its development: “as soon as TRIA became law, members of the insurance and mortgage industries quickly asked for an industry standard to evidence the specifics of the Terrorism insurance coverage being provided. With a real sense of urgency and an understanding of the complex issues, ACORD and MBA worked together with all stakeholders of the financial services industry to evaluate and satisfy their needs. In record time ACORD Form 28 was created, approved and is now being introduced in the marketplace. It is an excellent example the collaborative work environment ACORD is organized to provide. My hat is off to the working parties that have made this possible.”