How COI Tracking led to improved compliance and faster renewals for 10,000 contractors
COI Management |Case Studies |July 22, 2021
The PlusOne Solutions Certificate of Insurance (COI) tracking and management program takes a proactive approach to compliance by using specialized processors who understand COI’s as well as an automated process to ensure that certificates of insurance are received in a timely and accurate manner. Our unmatched solution ensures your contractor network is fully compliant with your certificate of insurance standards, freeing up valuable time and resources for your organization.
Here is an example of a situation where COI tracking and management program helped a company mitigate their risk and increase efficiency.
Case Study Summary
The Customer, and U.S.-based corporation, is a pioneer in their specific industry providing services on a massive scale and serves more than 30,000 individual consumers every day. Their white-label service solutions are leveraged across 100+ client programs and over 10,000 service providers performing more than 12 million annual events. Using independent service companies, or contractors, in an industry where safety precautions are of utmost importance with a high risk of consumer property damage, leaves the Customer exposed to numerous risks daily.
The Customer’s internal team was struggling to provide accurate compliance reporting as well as receiving timely renewal certificates of insurance, resulting in many expired COIs and gaps in coverage. After multiple legal escalations and denied insurance claims, the company’s legal department decided it was time to outsource COI tracking to PlusOne Solutions to minimize risk and decrease denied claims from their partnering companies’ insurance carriers. Both legal and operations teams needed a partner who understood the nuances around what types of insurance coverage were necessary to mitigate risk for their industry while balancing business needs.
After three months of PlusOne Solutions managing the network’s insurance documentation, the client saw an increase in submitted insurance policies, a faster turnaround time and fewer gaps in insurance coverage. Overall, the program was more comprehensive with both the legal team and operations having gained additional insight on COI tracking and best practices that balanced risk and operations.
Prior to contacting PlusOne Solutions, the Customer’s internal compliance team reported a 98 percent insurance compliance rate across their network of independent contractors – however, the amount of denied insurance claims and lack of COIs on file suggested otherwise. This naturally raised concern from their legal counsel who simply felt the reported compliance rates did not reflect the negative results that were occurring.
After several consultation meetings with the Customer’s business teams and a pilot program, together we identified numerous issues that were leading to the denied insurance claims, which had increased costs to the Customer.
Challenges: Costs and Denied Insurance Claims were the results of multiple underlying issues
During the Discovery phase, several findings were uncovered that resulted in denied claims, increased costs to the Customer, and non-compliant contractors being dispatched without the proper insurance coverages.
Challenge 1: Improper Coverages Resulted in Denied Claims
Identifying proper insurance coverage is more difficult than just assuming proof of general liability coverage is enough or the only option. In this specific industry, the type of insurance coverage needed for the work performed could be written under various policy types and endorsements leaving the false impression of coverage when in fact the specific incident was excluded, or claims were being submitted on the wrong policy type. This resulted in a lack of requesting, tracking and visibility to the correct policies.
Working with the Company’s business and legal team, we identified the proper types of coverages the Company would turn to in the event of an accident and claim. A simple process was developed for each contracting company to determine their type of work and the associated risk level to determine which types of coverage were needed and if these risks were covered under the general liability or if additional policies were needed.
Challenge 2: Handling of Fraudulent and canceled insurance policies
Fraudulent COIs are an issue in all contractor industries because the costs to maintain insurance is often one of the first expenses a contractor may eliminate to free up cash flow. PlusOne Solutions was able to identify an average of six companies per month who had submitted fraudulent information. This information was shared with the Customer and their team trained on how to identify forged documents in the bunch.
The industry also experiences a high policy cancellation rate by the insurance carriers due to non-payment. It was identified that a proper cancellation and reinstatement process was not in place leaving cancelled policies active in the system. To make matters worse, a contractor would resubmit the COI issued prior to the cancellation and the COI was reentered as an active policy leaving the Customer dispatching non-compliant contractors.
Companies that submit fraudulent data and fail to pay insurance premiums are a higher risk than average when it comes to accidents and claims because they are willing to cut corners with their business practices.
Challenge 3: Dispatching work to contractors that did not meet insurance requirements
Although the best practice is to collect and properly verify COIs and coverage before dispatching jobs to the contractors, at times the operational team responsible for fulfilling work requests was dispatching companies without knowing if the insurance coverage was accurate at the time of dispatch.
The inaccuracy of data in the system came from several factors including the time gap between an expired policy and the reentry of a new COI, the various types of coverages that left the contractor uninsured for the type of work being dispatched, the current cancellation and reinstatement processes, and finally the ability for anyone to override a non-compliance decision in the contractor’s record.
This resulted in not only dispatching non-compliant companies and increasing the likelihood of a future claim being denied but also inaccurate percentages of compliance were being reported up to their executive management team.
Solution: Certificate of Insurance (COI) Management Pilot Program for 395 contractors before implementing a custom solution
After several consultations with the Customer, PlusOne Solutions launched a pilot program where results were monitored for a small portion of the Customer’s network. Initially, the Customer provided a list of 395 service providers whose insurance was due for expiration in the upcoming month. An equal number of expiring policies in the same months were retained and worked by the Customer’s internal team.
The PlusOne Solutions insurance team immediately began to reach out with their renewal process, which involves automatic emails to the insurance agent and the provider requesting insurance policies. The process begins at 30, 14, and 7 days prior to expiration along with a phone call if the policy has not been received within 3 days prior to the expiration date. If the policy is still not received, then an additional email is sent only to the provider informing them that the policy has still not been received.
During this time, weekly meetings were held with legal and operations to review the average number of days a policy is renewed, the success rate of a policy renewal, and the number of expirations. Other areas addressed were pain points, discussion around the industry, coverages, and accidents, and changes needed to the overall process.
Monitor Results & Adjust
Using the data that was being tracked, PlusOne Solutions was able to recommend a realistic grace period after expiration before the companies were shut off and could no longer receive dispatches of work. The client began turning off work to incentivize companies to submit insurance that met minimum requirements. Within six months, the network adjusted to the new requirements and expectations.
Weekly meetings continued with the regional managers beyond the pilot to educate them on best practices and address any escalations, especially with high-profile accounts. These collaborative weekly meetings allowed PlusOne Solutions to tailor our approach with the network as we listened and heard pain points relayed by the field managers, as well as the business, legal, and compliance teams. The Customer realized that PlusOne Solutions was a partner who they could rely on to address the concerns of them and their network.
A Return on Investment (ROI) That Makes Sense
Compliance Rates: As mentioned, the baseline reported for the general liability compliance rate of 98% was not accurate. The initial compliance rate identified by PlusOne Solutions for the pilot group was 81% and ended at 90%. During the pilot, some of the non-compliant providers were identified as no longer working with the Customer.
Speed of Renewals: The average time to receive a renewal certificate was reduced by 4 business days. This was critical since they began to shut work off for non-compliant providers.
Closing the Insurance Gap: After analyzing the various types of coverage and the gaps in reported compliance rates, PlusOne Solutions was able to obtain more insurance policies than previously thought might be needed in the event of a claim. Below were the results from the Pilot Phase:
229% increase in Specialty Industry Policy #1 (from 68 policies to 156)
552% increase in Specialty Industry Policy #2 (from 25 to 138)
170% increase in Auto Policies (from 111 to 189)
Cost Savings: The Customer reported a reduction of the total internal time of more than 20 percent.
Budget: With such a large network, the cost to manage their network to such detail was out of reach for their current budget. PlusOne Solutions recommended a hybrid approach that identified their Top Tier and Low Tier companies. Top Tier being those who receive high dispatch volume compared to the rest of their network. This allowed pricing to be differentiated for each group, allowing the program to pay off.
Results: Quicker turnaround time to receive and process COIs, increased contractor network compliance, and minimized risk
After three months of PlusOne Solutions managing the network’s insurance documentation, the client saw an increase in submitted insurance policies, a faster turnaround time, and fewer gaps in insurance coverage. Overall, the program was more comprehensive with both the legal team and operations having gained additional insight on COI Management and best practices that balanced risk and operations.
The PlusOne Solutions’ COI Tracking program is a preemptive and solution-oriented approach that works with insurance agents to receive renewals, ensure they are compliant, and processed in a timely manner. Our goal is to free up your time and resources to focus on what your organization does best.
“PlusOne Solutions not only secures and verifies certificates of insurance from our vendors, but they also confirm compliance mid-policy, allowing us to free up resources internally, and giving us the confidence that our contractor network remains fully compliant without putting in any manual effort,” Conor, a project manager with the company, said. “The best part about working with PlusOne Solutions has been gaining a deeper understanding of our network’s insurance strengths. The team has been invaluable in providing our company with clarifications on the many nuances related to certificates of insurance on a real-time basis. The main benefit of our partnership with PlusOne Solutions is having their Insight Portal serve as the certificate of insurance repository for our company. In prior years, we had stored COIs on-site, electronically, and on local hard drives for reference when necessary. This partnership has enabled us to streamline obtaining COIs while having a singular repository for reference at any time. PlusOne Solutions is a great company to partner with. Their collaborative insurance managers are knowledgeable, and customer success managers are committed to meeting the needs of our company. We’ve seen a reduction in internal resource time on 20 percent of our network since partnering with PlusOne Solutions.”
Contents are provided for information purposes only and should not be construed as legal advice. Users are reminded to seek legal counsel with respect to their obligations and use of PlusOne Solutions services.
About PlusOne Solutions
For more than 16 years, PlusOne Solutions has been an industry leader in the risk management field by specializing compliance programs that meet the complex challenges of geographically dispersed contractors, vendors and employee networks. PlusOne Solutions protects companies from possible financial, legal and reputational risks associated with contractor and vendor relationships while creating safer work environments for everyone and is an Accredited Background Screening Agency by the Professional Background Screening Association.
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