Keeping track of insured compliance is an important aspect of managing your company’s risks. However, there’s a lot of paperwork involved, on top of the certificates of insurance (COIs) that you have to keep track of on a regular basis. And sometimes, the load just becomes too much to bear, and keeping track to detect all risk exposures becomes a downright impossible task.
Simply collecting COIs on your desk. As COIs are basically summaries of insurance policies – i.e. they are not legal guarantees of anything – you have no assurance that your Insureds meet all their compliance requirements, not until you do your diligence and go COI tracking. Typically, you need to be thorough and check for insurance requirements, endorsements, and exclusions by cross-referencing COIs, copies of the policies, and endorsements, among other primary documents.
It is only by being proactive in your COI tracking that you can thoroughly mitigate your firm’s risks. While the process is certainly time-intensive, it’s absolutely worthwhile when you look at the bigger picture. IN view of that, the following are considered the best practices that any compliance team should follow:
The whole point of the process is to manage your firm’s risks, and the greatest risk exposure you should watch for is non-compliance on the part of the Insured. If you find that they are not in compliance, they should be promptly informed and followed-up on the matter. Be it through a friendly call over the phone or by a cordial email, it’s best to let them know right away.
Be Clear on the Coverage Requirements
One thing that you should never do is beat around the bush. Remember that you’re trying to manage risks, and you would do well to not let them turn into liabilities on your watch by taking your time with getting the message across. Tell the Insured the specific terms/provisions that they are not in compliance with, and inform them. Don’t forget to keep a record of your risk assessments and your conversations, just to be on the safe side.
Actually, keep track of everything. One way to stay organized is to set up a system of your own – manual or automatic – that will help you keep track of policy expiration dates so you could give them a call before the policy expires. Remember that disorganization is the enemy: you overlook a proper COI tracking system at your own peril.
Be Proactive with COIs
It bares repeating: COIs expire when their counterpart policies do. Be proactive in checking whether or not the COIs on your desk are still valid, and set a brief monthly appointment with one of the Insurers’ representatives to ask whether or not there have been changes to the policies since the last COI you requested.
Compliance teams certainly have their work cut out for them. But since they’re not in the position to make mistakes regardless of the boatloads of paperwork they have to go through, their best solution is to pass off a portion of their boatload to a machine when they can.