Certificate of Insurance Tracking
Because the use of outside service providers through outsourcing and subcontracting is usually driven by expectations of potential cost savings without considering the “risk exchange” taking place, it becomes a major source of uninsured contractual liability, default and breach of contract risk. Companies usually forget that contractual liability is a standard exclusion of a general liability policy, and that the vendor’s certificate of insurance alone does not provide contractual liability coverage to the certificate holder. This is because the people in the company buying the services are usually “project” oriented, and only care about cost, time and performance. It is someone else’s problem to protect company assets and mitigate the risk they are creating: The Risk Manager.
Contractual RM© provides tools to create a contract each time the company uses an outside service provider, vendor, and to verify that the vendor is in compliance with company’s insurance requirements. Then the system will send email alerts to the risk manager (or anyone else setup in the system) each time a contract is created or about to expire; the vendor’s certificate of insurance (COI) is uploaded, entered in the database, or is about to expire. All these alerts are also stored in the “Alerts Manager” for later review.
Contractual RM© keeps (in a web-based password protected environment) images of signed contracts, vendors’ quotes, drawings, certificates of insurance, and other job related documents.
Benefit from Using Contractual RM©
- Reduction in insurance premiums by using vendor’s insurance instead of own
- Reduction in cost of litigation by transferring it to vendor’s insurance carrier
- Reduction in legal fees by using the company’s attorneys’ templates multiple times with our web-based contract generator
- Reduction in of loss exposures from premium audits
INSIGHT approach to outsourcing
INSIGHT’s ultimate goal is to have the vendor signing our client’s contract and complying with its insurance requirements before a purchase order is issued. If the outsourcing activity requires that our client signs the vendor’s contract (utilities companies, government, etc.), the On-Site Risk manager (ORM) will review the contract and produce a “Risk Alert” with its recommendations. If needed, the ORM will contact the client’s legal counsel.
“Sample of a Contractual Risk Management Process”