Tag Archives: certificates of insurance

Quest for the Holy Grail in Workers’ Comp

Quotes from only five data points, or even fewer? Name your number, and you can find an insurer looking to transform the sales experience to match. We have seen a great deal of this momentum in personal lines with increasing attention in small commercial lines. And the line of business delivering today is workers’ comp!

Insurers writing workers’ comp – including insurtech startups – are innovating in many areas, including quoting, servicing, claims and the overall customer experience. There is high potential for emerging technologies, including AI and wearable devices, to enable these advancements and tremendous benefits to be gained from external data sources as well as the untapped data already within an insurer’s systems. Together, these circumstances have created fertile ground for innovation.

Both established and greenfield insurers are taking advantage of the possibilities that advanced technologies bring to the workers’ comp sector. This year’s SMA Innovation in Action Awards gave us two excellent examples of how both types of companies are approaching these new opportunities – in the digital MGAs Cake Insure, which was incubated by Pinnacol Assurance, and Pie Insurance, a greenfield venture. They demonstrate two different approaches to the same goal: leveraging new technologies and external data to create a seamless digital experience for customers.

See also: 3-Step Approach to Big Data Analytics  

Pinnacol Assurance is a workers’ comp insurer that is more than 100 years old. They wanted to reinvent the purchasing experience for workers’ comp by emphasizing digital and leveraging new technologies such as AI to condense the entire process into five minutes or less. Cake Insure, a digital MGA, is the result.

Cake’s online platform gives consumers a responsive, mobile-friendly experience that requires only a few data points to generate a quote. An AI-driven policy classification engine uses natural language processing and machine learning to enable straight-through processing for more than 90% of new policies. This technology enables Cake customers to simply enter a description of their business in their own words to get a quote, with no industry jargon or class codes required. Certificates of insurance can be generated and shared immediately via the Cake client portal or email. Cake’s success demonstrates how an established insurance company can embrace greenfield thinking and reinvent the customer experience.

Greenfield insurers and MGAs are also pursuing the transformational possibilities of workers’ comp. Pie Insurance is a full-stack digital MGA for Sirius Group that set out to change the workers’ comp market for small businesses, an underserved and often overcharged business segment.

Pie uses predictive analytics and high-quality data sets in real time to give small business owners a seamless, mobile-friendly way to find the coverage they need at the right price. According to Pie’s proprietary data, 80% of small businesses overpay for workers’ comp, often by as much as 30%. The company provides consumers with a detailed breakdown of the coverage and pricing that is appropriate to their risk and offers an online quoting experience that is as easy as getting an online quote for personal lines insurance. The savvy use of third-party data combined with predictive analytics gives Pie the ability to quote a new workers’ comp policy in minutes.

See also: Predictive Analytics: Now You See It….  

These companies are simply two examples of how the workers’ comp market is transforming. Both established and greenfield insurers and MGAs are making headway in this area. We can expect further changes to come as insurers find even more ways to bring new technologies to bear on the customer experience. So, stay tuned.

For more information on the SMA Innovation in Action Awards program and this year’s winners, please click here.

May the Forms Be With You!

“Star Wars” first appeared in theaters on May 25, 1977, unleashing one of the great, galactic pop culture tsunamis ever seen. And while there has been an explosion of technology and innovation since that time (one that would rival the explosion of the Death Star), virtually nothing has been done regarding the way insurance information is shared via forms, certificates of insurance, driver ID cards and the like.

Workers’ compensation may be leading this backward trend.

It’s no wonder that workers’ comp insurance draws a lot of attention. Covering more than 90% of the workforce, with more than $45.5 billion in total premiums from both private carriers and state funds and a combined ratio of 94%, workers’ comp is one of the few bright spots within the commercial lines market.

With payrolls rising $316.5 billion by year-end 2016, not to mention $1.16 trillion in construction projects, there will be billions of dollars in new premiums for workers’ comp coverage. If economic growth and hiring continue as projected, workers’ comp exposure is likely to remain among the faster-growing major commercial P/C lines of insurance in 2017 and beyond. And this positive outlook takes into account that workers’ comp fraud is 25% of the P&C industry-wide annual fraud problem of $34 billion.

Many are investing heavily in new systems and technology to reach this rich marketplace. Carriers, brokers, agents and third-party service providers are all positioning themselves for a larger slice of the workers’ comp pie through innovative and forward-thinking technology.

However, with all the technology available within the workers’ comp ecosystem, it consistently takes a giant leap backward when it comes to requesting, generating and delivering proof of insurance. Form-based certificates of insurance are universally produced and passed like a hot potato between different stakeholders, yet they provide no real proof of insurance. As one industry pundit put it, “At best, it’s just a piece of paper that shows proof of coverage at the time it was issued. At worst, it’s fraud.”

Some are touting the ability to request proof of workers’ comp coverage from a mobile device. Yes, through an app, you can request a workers’ comp QR code that can be used to request a certificate PDF. But this PDF has all the usual limitations: no updates, no notice of cancellation, no ability to compare data with coverage needs, no exception processing.

See also: How Should Workers’ Compensation Evolve?  

Because the form-based certificate of insurance has been the forum for exchanging dead data, people have been attempting all sorts of subterfuge to require wording on the certificate in a vain attempt to make it say something that is not in the workers’ comp policy. It’s important to realize, from a business and insurance standpoint, that a certificate has many inherent limitations and weaknesses. For example, a certificate CANNOT:

  • Extend or modify policy conditions or rights to the certificate holder. The insurance policy is a contract, and changes to those terms can only be accomplished by following proper procedure as outlined by the insuring company. Extending policy rights, such as additional insured status, can only be accomplished by properly endorsing the insurance policy in question.
  • Guarantee a policy will not be canceled in accordance with the conditions of the insurance policy. Cancellation of a workers’ comp policy is controlled by state statute and cannot be modified by a certificate.
  • Provide insurance coverage to the certificate holder. The insurance certificate only indicates coverage found in place on the policies in force at the time the certificate is issued. A certificate of insurance coveys no insurance coverage to the certificate holder; only proper endorsements to the insurance policy can achieve that.

There are many large industries that are totally dependent on workers’ comp coverage and proof of insurance — construction, transportation and agriculture, to name a few. Roads, bridges and buildings don’t get built or repaired without workers’ comp insurance. Nothing moves across our highways without workers’ comp insurance. Crops, fruit, cattle and food do not get produced, harvested or delivered without workers’ comp insurance.

As we move forward into a 21st century economy, more companies and workers are shifting into the gig economy where workers’ comp is either not there at all or has substantial holes. Under current definitions, gig economy workers, sometimes called on-demand workers, are neither employees nor independent contractors. If a rideshare driver is attacked by a passenger, sustains severe injuries and cannot work for a long period, how is his or her income replaced? For that matter, if any on-demand worker is injured on the job (accident, repetitive motion injury, etc.) how is his or her income replaced? And with the current state of health insurance, or the lack thereof, how are his or her health bills paid?

While there are a number of instances where coverage verification is needed for workers’ comp alone, many times other lines of business need to be verified simultaneously. General liability, commercial auto, commercial property and other types of insurance also require verification at the same time with workers’ comp, by the same stakeholders. These coverages may be within a single business owners policy (BOP), or they can be spread across multiple policies, written by multiple carriers, with different effective/expiration dates.

See also: Five Workers’ Compensation Myths  

Rather than pushing around forms filled with dead data, workers’ comp deserves a digital ecosystem where all stakeholders can securely connect and share coverage information. Online and continuing coverage verification automatically validates that insurance in force. Additionally, the needs of each stakeholder are evaluated, alerting stakeholders on an exception basis.

It’s time to move forward from, “May the forms be with you” to “Let the data be with you.”

This is GAPro’s vision and mission.

Insurance Coverage Porn

Now that I have your undivided attention.

Justice Potter Stewart famously said during a pornography case before the U.S. Supreme Court: ” I know it when I see it” (Jacobellis v. Ohio, 1964.) The same can be said about insurance coverage porn.

Since the idea of insurance coverage porn may be new, let me explain. I define it as creating a fanatic view of insurance coverage. An over-the-top, exaggerated, excitedly hyped or false illusion designed to distract, distort and divert attention from reality. The result is to leave sanity and common sense about coverage at the door.

Here are four examples that I’d like to explore:

1. Performing “Unnatural Acts” With Coverage

This is where someone tries to make a policy say, do or cover something that it was never intended to. While there are many different people and organizations who dabble in this type of insurance coverage porn, the real addicts are third parties. They require insureds and agent/brokers to include language on certificates of insurance to give them both additional money and assurance that they will be paid and paid first. Sometimes these unnatural acts require additional language on the certificate that is in direct conflict with the policy, not to mention insurance theory or regulation.

In many of these cases, the insured is at the mercy of the third party. Construction can be held up waiting for specific language or punctuation. A subcontractor cannot start work or get paid till the third party is completely satisfied. Truck drivers cannot go onsite until the certificate is signed off.

The simple fact is that the policy is a contract. It is what it is, and no amount of finagling on the certificate will change it. The certificate itself has a warning in CAPITALIZED BOLD print saying that it is informational only and does not amend the policy. Asking it to perform “unnatural acts” is insurance coverage porn, leading everyone to frustration, wasted time, energy and money.

See also: Jurors and Questions on Insurance Coverage  

2. The Big Tease, a.k.a. The Image Has Been Enhanced for Your Entertainment and Enjoyment

Many of our daily tasks and jobs require insurance. To drive a car, you need proof of insurance. To sell insurance, you need insurance. You need proof of insurance to renew many types of licenses.

Yet all you need is a piece of paper that says there is insurance. When I walk into the DMV to renew my vehicle registration, all I need is a driver ID card that says I have insurance. To use the auditorium or gym at the local high school, all you need is a piece of paper that says you have coverage. If you need to show proof of insurance to perform some kind of work, all you need is a completed form.

And the best, or worst, part is that most organizations requiring proof of insurance now tell you exactly what they need on their website. Now I know that this is done to be helpful, but it actually becomes a by-the-numbers “how to” guide to potentially perpetrate fraud. Some of these websites provide step-by-step instructions on what form they require, what numbers they need in specific fields, what wording is to be included.

It is beyond simple to Google and find all sorts of proof of insurance documents. Certificates, driver ID cards, company specific forms, you name it. Find the form, follow the web site instructions and you’re good to go.

One enterprising insured needed to provide annual proof of insurance for the coming calendar year. Taking the current forms, the insured employed Wite-Out to hide the dates and typed in new dates. The form was accepted, until an expert noticed that one of the forms had been out of use for a long time. This insured had actually been using Wite-Out for a number of years. It worked last year; let’s try it again….

Providing a form to prove insurance is one thing, but some organizations require even less. Some only ask that you check a box indicating that you have the appropriate insurance. The bar can be set even lower. One executive told me that while his insurance agency relationship demands that he purchase E&O insurance, the executive’s organization does not ask for any proof or indication that insurance is in place. The organization simply assumes that it exists. I wondered if this is the insurance equivalence of, “Don’t ask, don’t tell.”

3. Coverage Cover-Up, a.k.a. I Buy the Magazines for the Articles, Not the Pictures

Insurance applications used to be on paper. This meant that agents and the insured wrote down information for carrier personnel to rate/quote policies. Agents and insureds could not repetitively manipulate information, trying to get a better price without a paper trail. Today, both agents and insured have direct access to websites and carrier systems to speed quoting, eliminate paper and reduce cost.

Now, no one in their right mind is suggesting going back to paper applications, but think about what is now possible. Whoever is entering information has the opportunity to “tweak” amounts and drop down selections, options and other information to reduce the premium. Unless the software prevents repeated updates, it’s like giving the user an unlimited number of pulls on a slot machine until the right number comes up.

One agent was trying to insure a very nice log cabin home for his customer. You know, the ones pictured in magazine ads. But his traditional insurance carriers would not accept the risk, which was outside normal underwriting guidelines. Finally, out of frustration and needing to get the house insured, the agent changed the construction type from “log” to “frame.” The risk was accepted, and a policy was issued. Later, the home caught fire and burned to the ground. You can imagine the claims adjuster’s surprise, expecting to see the remains of a frame house. Regardless of whether the insured properly stated what the construction type was, the agent knew, so the carrier paid the resulting $540,000 loss. This payment was immediately followed by a claim against the agent under his E&O policy.

4. Scantily Clad Coverage Cover-Up, a.k.a. Bait and Switch

Having an agent manipulate information is one thing, but giving direct data entry to the insured opens up greater opportunities for insurance coverage porn. One study confirms that 51% of insureds are willing to misrepresent their insurance information to get a better personal auto price. Think about that for a moment. What other industry has a business model where more than half of their customers admit to not telling the truth?

Here’s another example. Anonymous national surveys find that about 16% of the general population smokes. So how come, on health and life insurance policy applications, only 7% record that they smoke? Health insurance carriers charge 50% more for individuals who use tobacco on a regular basis. Everyone knows that they have a better chance of being accepted, and getting a lower premium, if they deviate from the truth. This is insurance coverage porn.

See also: Broad Array of Roles for Disability Coverage

With their desire to make writing policies easy for consumers, carriers have invested significant time, energy and dollars into their web sites and mobile apps. And while they are to be congratulated for making insurance more accessible, one unintended consequences is that applicants may be able to manipulate data to reduce the price.

Justice Stewart may have known it when it saw it, but that isn’t enough in insurance, where we need to exercise leadership within our organizations and throughout the insurance community. The “we’ve always done it this way” attitude is an open invitation for another person, another organization to take our customers, marketplace position and distribution channels.

The Big Problem With Certificates

I really like the word “hypocrite.” Not because of what it means, but because of where it came from.

One of my hobbies is etymologies, which is exploring word origins and the way their meanings have changed over time. I especially enjoy word origins that have a vivid picture behind them, and “hypocrite” has a fascinating historical word origin and picture.

“Hypocrite” comes to us from the Greek word hupokrités (ὑποκριτής) and was commonly used of actors on the stage. Because Greek actors performed behind a mask, the word came to mean two-faced, someone whose profession does not match his practice, one who says one thing but does another, whose words and actions don’t agree.

While the comparison may sound outlandish, isn’t hypocrisy what we do when we send out a certificate of insurance?

In our desire to simplify and summarize policy information, we are inserting a filter that potentially hides and distorts the truth. Rather than directly show data from the policy, we put something in between, resulting in cost, delays and confusion.

See also: Certificate of Insurance Management — Essential Protection Against Unexpected Liability

At least three independent studies indicate that 40% to 50% of all certificates that indicate additional insured status are incorrect. Would you knowingly allow an insurance document with your name, and that of your organization, on it to go out with errors? At best, what happens with certificates deserves a D- grade and a stinging, costly indictment of the industry as a whole.

Today, the bulk of the certificate burden falls on the agent/broker. But with carriers desiring to directly enter the small commercial insurance marketplace, the effort, cost and potential liability of certificates will now transfer directly to carriers.

Certificates are not harmless or benign; they are expensive, ticking time bombs creating confusion and cost at best, soiled reputation and financial ruin at worst. Certificates also open up a Pandora’s Box to add wording in conflict to the policy, implying that coverage is in place when it actually is not.

Let me give you a real life example:

An insured received a certificate for a rodeo. After the event ended, some bulls got loose, sending several people to the hospital. An average professional bull is about the size of a small car, weighing in at between 1,600 and 1,700 pounds. Not until the injured patrons sued was it discovered that the special events policy excluded coverage for bodily injury or property damage caused by animals. It sure sounds like someone dropped the ball: a policy to cover a rodeo that excluded losses caused by animals?

See also: How to Apply ‘Lean’ to Insurance

Issuing certificates is looked down on as a clerical, workflow or technology issue by many. Get a request, merge the data, email it out, done.

But issuing a certificate is more than just clicking on a web site button to mindlessly generate a PDF. It’s more than a limit amount; it’s understanding and explaining what is covered and excluded.

Insurance is oh so much more than technology or workflow. It’s a promise to understand needs, matching coverage and protection. It’s a promise to help and restore in time of trouble or loss.

A next-generation solution to replace certificates is needed to continually verify coverage and compliance. The solution must also understand policy language, alerting all stakeholders to what is and is not covered.

It’s time to take off the hypocrite mask of certificates. Marketplace conditions and technology are now available to replace the hypocrite certificate with information directly from the policy!

Some Things Are Too Important for Paper

A little while ago, my 92-year-old mom said that she was tired most of the time and was taking more and more naps. After several doctor visits and tests, the diagnosis was that her pulse was around 40 beats per minute, as opposed to a normal rate of 60. Her cardiologist recommended a pacemaker to improve her heart function and quality of life.

When she checked into the hospital, it had all her records, history, blood work, EKG printouts, etc. Everything was correctly recorded on physical and digital paper.

The staff still hooked her up to an EKG and blood pressure cuff to get moment-by-moment readings.

You see, some things are just too important for paper.

Before she went into surgery, her pulse was 42, and her blood pressure was very high. The staff gave her two courses of blood pressure meds, which brought it back into range so the surgery could take place. When they wheeled her back into her room after surgery, her pulse was 60. Her blood pressure was starting to creep back up, so they continued with some additional meds that brought it back into range. They kept her on the EKG and blood pressure cuff until she was discharged.

I am so thankful that she went home and is back to her old self; out of the house at least five days a week, playing bingo three of those days. My 95-year-old dad still drives them to doctor appointments and worship on the weekends, followed by McDonald’s. To celebrate special occasions, my dad drives them to Chick-fil-A or the Olive Garden.

While having all documentation, forms and information available in paper or electronic image is helpful to a point, it’s just not good enough. The hospital staff needed something more. They needed to continually monitor my mom, checking her pulse, watching her blood pressure and other vital signs.

See also: New, Troubling Healthcare Model  

Some things are just too important for paper.

Now that she’s back to living a full and active life, a technician has come to her home to set up a device that communicates with her pacemaker. It monitors information on her, the pacemaker and her vitals. On a daily basis, this information is collected and forwarded to her doctor via a secure website.


The insurance industry has invested untold billions in technology, and who knows where hand-held devices, wearables, wireless high-speed communications, etc. will eventually take us? But there is one boat anchor of a technology that is dragging down speed, accuracy and efficiency while adding cost and waste.

That technology is the ubiquitous paper form.

Like any form, certificates of insurance are D.O.A. (dead on arrival). Now this might sound harsh, but the reality is that forms are created with information as of a point of time. Because the form is cut off from any possible changes or updates, the cert is potentially out of date by the time it’s delivered.

A host of possible changes and informational updates can invalidate the cert. Mid-term endorsement, renewal, changes in limits or forms, cancellation for non-payment and AM Best rating downgrades are but a few of the possible changes that can nullify the cert.

It makes absolutely no difference how the form was created (agency, company or third-party software and service providers), everyone creates D.O.A. forms. The delivered method is also irrelevant: Paper, fax, web address link, mobile phone, table, PDF and other digital images all have exactly the same problem.

The fact that forms are not plugged into and alive with information pronounces them D.O.A. There is no continuing re-verification of the policy status in conjunction with the needs of the insured and the third-party that needs verification of coverage.

Islands of Misinformation

There are four stakeholders involved in any proof of insurance, and they are isolated on individual information islands. The carrier, agent, insured and third party are involved with the certificate, yet no one can monitor or have control over the entire process. Each organization has its own needs and desires and its own email system. There are also no controls, follow-ups or monitoring of the process. Everyone hits the ubiquitous “reply all” email command, creating an unintelligible spaghetti string of text that is unmanageable and unintelligible.

Business and insurance islands are not known or documented at the beginning of the process. Requirements normally leak out during the process, wasting precious time and money while raising frustration.

I’m familiar with an agency that diligently and professionally worked to get a cert out for a client. Everyone was happy when the process was finished — then the third party sent out yet one more notification, saying the use of “N/A” for “Not Applicable” was not acceptable and needed to be changed to “N.A.” Time and good manners do not permit me to retell the loud and colorful commentary that was heard throughout the agency for a good 15 minutes.


It will take significantly more than a smart mobile device or cloud-based system to solve the systemic problems once-and-for-all. There needs to be a fundamental shift in the way the industry thinks about proof of insurance.

See also: Customers’ Digital Expectations  

We need to declare the certificate D.O.A. and move toward a data-driven digital solution of the sort we have developed at GAPro: a single source where insurance information is automatically housed, updated on a daily basis and integrated with data from all stakeholders in the insurance ecosystem. Carriers send electronic versions of policy transaction data and attached forms for new, renewal, mid-term change, cancellation, reinstatement and billing status to GAPro. GAPro stores and matches policy and form information with data from other insurance-related resources, including AM Best, agency licensing and other sources. Risk profile information describing the insurance business and content needs of agents, insureds and third parties is collected and integrated on a per-policy basis.

See also: Can Risk Management Even Be Effective?  

It’s time for continual monitoring and notification leveraging 21st century technology and insurance-specific capability, wrapped in an easy-to-understand interface.

Insurance conformation and compliance verification are too important for paper.