Recently, while preparing to onboard a new customer, it became apparent that there was a need to better explain the complexities of how certificates of insurance (COIs) are tracked and managed. Although there are many other considerations, it all begins with an understanding of the four parties involved:
Each of these participants has a unique role to play, and it is the interaction between these parties that allows the process to work.
Often, there are many certificate holders under the control of the client. The client may also be the certificate holder. Either the client or the certificate holder must provide the essential information for the tracking process to function:
Armed with this information, a request by the certificate holder can be issued to the insured and/or its insurance agent to provide a COI. By law, only a licensed insurance agent of the insured can issue a COI. Upon receipt of the COI by the certificate holder, it is evaluated for compliance by comparing the information on the COI against the insurance coverage requirements for the insured as defined by the certificate holder. Upon evaluation, one of two things must happen:
The COI itself will always be in one of the following four states and the process must have procedures in place to handle each:
As you may surmise, the key to success in any multi-party activity is good communication and willing cooperation. The process can contemplate automated capabilities to enhance communication, but cooperation remains a human factor that can be more challenging. Nevertheless, tenacity will usually prevail. To that end, it is important to identify enforcement mechanisms for both compliance and cooperation, to recognize they are not necessarily the same thing, and to understand where on that busy four-way street you will draw the line.