4 Common Certificate Of Insurance Mistakes (and How to Fix Them with Automation)

Risk managers know all too well the pains of managing certificate of insurance (COI) processes. From manually tracking certificates, responding to requests in a timely manner, and ensuring accuracy and compliance—it’s a time-consuming process that can leave many feeling overwhelmed by administrative tasks.

Fortunately, COI automation is here to help you overcome these existing issues and take back control of your risk management operations. 

In this blog post, we’ll uncover four common COI issues experienced by risk managers—and how more intelligent, automated approaches might be better suited for reducing risks posed by mismanagement or misinterpretation of insurance documents.

The Requiring Company has confusing or over complicated insurance requirements 

For many businesses, understanding certificate of insurance (COI) requirements can be a daunting task. 

Companies require COIs of their vendors and contractors, which outline the coverage they have in place to protect both parties in case of an accident or any other incident. But some companies have overly complicated insurance policies that are not easy to navigate, making it difficult for contractors and vendors to satisfactorily meet their certificate of insurance requirements. 

This leads to unnecessary delays, roadblocks, and frustrations that should be avoided by companies being transparent about what coverage is necessary for their certificate of insurance needs.

Solution: Automation makes it easier to analyze and identify specific requirements that drive the most compliance issues or miscommunication. It also allows Requiring Companies to set up additional groups with more precise requirements to meet the needs of a diverse third-party network. 

The Requiring Company is not communicating requirements effectively, resulting in errors in submitted COIs and creating more work

As the environment for business operations continues to grow and evolve, so too does the importance of ensuring that certificate of insurance (COI) requirements are met. 

Unfortunately, we find a common error around the requiring company inadequately communicating their requirements, resulting in errors with submissions. 

Not only does this lead to more work to correct these mistakes, but it also introduces unnecessary risk to the business as certain requirements may be missed when submitting COIs if they haven’t been clearly voiced.

Solution: Automation helps Requiring Companies customize their communication to third parties, ensuring consistency and clarity. This includes reminder emails and notifications and allowing programmatic enforcement of requirements to drive compliance.

The Requiring Company is making multiple exceptions and overrides to allow non-compliant third parties to stay in-network

The Requiring Company has made multiple exceptions and is allowing non-compliant third parties to be allowed to remain in-network. This accommodation has been extended if the third party provides a certificate of insurance (COI) that meets the minimum requirements for this network. 

Without this certificate, non-compliant third parties may not stay in-network — but with it, they can continue to enjoy these benefits long-term. 

The certificate of insurance serves an essential role in determining whether or not a third party meets the criteria necessary to qualify for these exceptions and overrides established by The Requiring Company.

Solution: More granular and easier-to-create requirements minimize exceptions. Automation supports improved compliance across the board, lessening the likelihood that risk managers have to make exceptions for non-compliant vendors.

The Requiring Company is unable to remedy the compliance gap for the Insured and compliance fails

Compliance fails are complicated and challenging to overcome, especially if proof of the necessary insurance coverage is not available. Even in these situations, however, experienced professionals can find interventions that may help remedy gaps, and gaps that have significant compliance implications will require special attention. 

While it may not always be possible to resolve every failure, understanding and mitigating risk should remain paramount as far as possible.

Solution: Automated identification of gaps and recommended fulfillment for the Insured improves compliance.

Our research has found within the first 6 months of partnering with Evident, Requiring Companies typically see their third-party insurance compliance rates double. Requiring Companies that started out with a 42% compliance rate in December 2021, for example, are now over 85% compliant as of June 2022.

Having a secure and efficient way to manage third-party risk can ensure everyone involved remains compliant with legal regulations and minimize issues. 

Are you ready to conquer third-party risk? Schedule a demo today! For more information about insurance compliance and best practices on managing third-party risk check out our blog or contact us directly with your questions. Our team has the knowledge and experience necessary to get you on track and up to date on all compliance requirements.