New & Reviews
Outsourcing the Headaches of Chasing Down Insurance Certificates
By Kathleen Goolsby, Senior Writer
Outsourcing now plays a key role in minimizing the financial risks companies face from the potential of losses due to accidents occurring on their property or injuries resulting from products they have sold. It also reduces the headaches associated with muddling through the process of conveying responsibility to the party who actually caused the loss to occur.
Jeanie Norman, Senior Insurance Manager at Coca-Cola Bottling Co. Consolidated (CCBC), says, "We make every effort to ensure vendors who come on-site have the appropriate levels of insurance, just in case something happens. Otherwise, it could come back to us and be very costly and, depending on the severity, our premium rates might also go up."
The catalyst for outsourcing this process at CCBC was the need to centralize information so the company could quickly locate certificates of insurance when needed. Prior to outsourcing in 2001 to Ebix BPO (Ebix BPO), an outsourcing service provider that manages incoming certificates of insurance for its clients, administrative assistants in approximately 65 CCBC sales branches individually tracked the certificates, along with their other primary duties. Norman says it was "a huge relief" to them when CCBC outsourced the work.
CCBC initially provided Ebix BPO with a list of all the vendors with whom it does business, such as janitorial services, people who check fire extinguishers, and window washers. Ebix BPO then sent notices on behalf of CCBC, asking for the certificates of insurance and providing each vendor with a list of CCBC's coverage requirements.
"They contact the vendor if there is a deficiency in coverage, and they make sure the certificates are current," Norman says. "If IDS REceives no response from a vendor after several attempts, then it ultimately comes back to my area for a decision on whether to cease doing business with the vendor.
Outsourcing the Legwork
Ebix BPO also tracks insurance provided by subcontractors and consultants working on the plans to develop land or actually developing land for a client of Grettie Sutton, an independent risk-management consultant for real estate developers. When Sutton formerly worked as a developer's employee, she recalls searching the Internet for a solution, thinking: "We either need to hire someone to do this all day, or we need to outsource it."
She continues, "Our clerical people didn't really understand insurance, so they didn't know what they should be looking for on the certificates and how to figure out if they met our requirements. Plus, everybody was bogged down and nobody had time to do it. Now, since the legwork is outsourced, we get involved only if we have to make a decision about what to do if somebody fails to get into compliance."
Sutton says she appreciates the fact that she can pull status reports from Ebix BPO' Web site to see who is not in compliance. She also likes the fact that Ebix BPO has a dedicated person and phone number for each client. "When a contractor for one of my clients calls Ebix BPO, they know exactly how to handle it, and it looks like they are part of us," she explains.
The outsourced solution also includes the benefit of Ebix BPO maintaining scanned images of all certificates of insurance received, which are then available via a Web site it establishes for each client. Sutton describes a scenario where this becomes particularly valuable.
"A real estate developer might be sued for a development where all the houses have leaky faucets. The developer can take the list of all subcontractors who worked on that job, pull all the scanned certificates from the Ebix BPO system, and hand that to the lawyers who will tender all those claims to the subcontractors' insurance carriers. That takes the developer out of the loop," Sutton explains.
"Without this solution, the developer would likely need several staff members digging through drawers or boxes of old certificates," Sutton continues. "If they don't find a particular certificate, the developer will have to pay that claim. Even if you have the best in-house filing system, trying to pull all these certificates is nearly impossible."