While commercial insurance is still a very paper-based industry, the issuance and tracking of certificates of insurance (COI) is ripe for innovation. A COI is a document that provides proof of a business's insurance coverage and can be shared with clients and vendors.
COIs are often shared as paper documents or email attachments, which means they can quickly become outdated. They must be checked, re-checked and verified constantly to make sure the information is still valid. This is a time-consuming and inefficient process.
That's where smart COIs come into play. A smart COI is a living, breathing document that contains policies available for real-time monitoring. It uses dynamic data to ensure businesses always have continuous, compliant insurance coverage. Smart COIs are created by agents and remain current as a result of direct connections, via application programming interface (API), with agency management systems. This connection allows for seamless, real-time data sharing.
Thus, COIs move from being static, paper documents, providing a number of benefits for both businesses and insurance agents.
Businesses know their suppliers' current coverage at all times via continuous feeds from their agents' systems, thus reducing risk. This provides several crucial new benefits. For example, businesses can trigger action when suppliers are non-compliant by denying access to systems or buildings, stopping a payment or canceling an order. Businesses can receive notifications when suppliers' insurance coverage lapses, is canceled or is reduced below required limits.
Businesses using smart COIs to share coverage with clients makes them more attractive to do business with. Their clients know that the organization is up to date in its coverage and can check on any particulars in the policy at any time. There is also less manual, paper-based work for internal employees, which leads to greater operational efficiency.
For an insurance agent or broker, smart COIs make their lives much easier and allow them to work more efficiently. Agents know that, if any situation arises, they have the most accurate data available on the COI. They don't have to spend time digging through paperwork or checking and double checking policy information. They can quickly respond to requests and do so digitally, without any cumbersome paperwork. Smart COIs also provide agents with real-time alerts that let them know when their clients may need more insurance coverage and how much.
From a risk management perspective, the current COI process without a smart COI is flawed at the foundation. Time and money go into the review of static COIs, and they are only accurate for 24 hours at most. Is one day of compliance even worth all the headache? The process needs to be transformed, and smart COIs have proven to be the answer.
See also: COI Is a 4-Letter Word; Tech Is the Solution
We often compare smart COIs to smart home security systems. The traditional COI simply renders point-in-time information, like taking a photo of your front porch. It tells you if in that exact moment there was someone at your door. Within seconds, that photo is out of date. Smart COIs, like smart home security systems, can use monitoring to show you who was at the door and when they were there and can track their history and alert you or a third party.
McKinsey says, "For a long time, the traditional insurance business model has proved to be remarkably resilient. But it too is beginning to feel the digital effect. It is changing how products and services are delivered, and increasingly it will change the nature of those products and services and even the business model itself. We firmly believe that opportunities abound for incumbent insurance companies in this new world."
Insurance is not often thought of as an overly innovative industry. Every aspect of the insurance process can't be transformed overnight, but there are areas where digital innovation can immediately begin to provide value. Smart COIs are one such area. They eliminate risk, ensure compliance and reduce costs for every stakeholder in the COI process.