Some topics are sure-fire conversation-killers at cocktail parties—your juice cleanse, recent dental procedures and your bottle cap collection, for example. Document management systems may fall into that category. While industry professionals may find shop talk engrossing, the eyes of the average person almost certainly will glaze over after only a few minutes of imaging and versioning chatter.
Efficiently managing documents may not be sexy, but it is vitally important to organizations. Knowledge workers often feel overwhelmed by the amount of information they must process daily: CIOInsight reported that 83% of professionals believe that today's "accelerated pace and connectivity of business" require them to produce, share, manage and distribute more documents than before. Inadequate systems and overwhelmed employees result in process inefficiencies, suboptimal decision-making and heightened business risks.
Certificates of insurance (COIs) present a particularly vexing document management challenge for risk management professionals. Tracking COIs—documents that confirm that adequate amounts of the right kinds of insurance from satisfactory insurers are in place—is essential to ensure that organizations are protected against losses resulting from contractors, vendors, tenants and others. But the sheer volume of COIs to be cataloged and reviewed, and the time and resources required to analyze and respond to them properly, can be overwhelming. Document management tools and processes are essential to effective COI administration.
Document management is mundane – but don’t fall asleep at the wheel
Document management enables organizations to effectively capture, distribute, track, store and retrieve electronic documents, ensuring that everyone in an organization has access to reliable, up-to-date information when and where it is needed.
Risk and insurance management has always been a document-intensive process, and diligently handling the information has long been an essential skill for every risk management organization. Over the lifecycle of a typical commercial insurance relationship, hundreds, or even thousands, of documents are generated by internal stakeholders, the broker, the insurer and service providers such as claims administrators. For companies that rely significantly on contractors, vendors or tenants, managing certificates of insurance can be a full-time role. It certainly won’t be the “chest-beating” part of the business, but not giving it the appropriate attention can lead to disastrous consequences, including failed risk transfer, leaving undeserving companies (and their insurers) with a claim.
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Companies now have an array of options for improving their document management practices. Off-the-shelf and customized document management software solutions can help tame the blooming, buzzing document jungle in which many risk managers find themselves. They make creating, sharing, storing, retrieving, securing and reviewing documents easier. They also can enhance productivity, reduce the risk of document misuse, augment data security and improve compliance with regulatory requirements.
Managing certificates of insurance
Organizations routinely transfer certain types of risk through contracts with vendors, contractors, tenants and others. COIs—which capture all the essential details of an insurance policy in an easy-to-read, standardized format—assure an organization that its vendors, contractors or tenants can meet their liability obligations under these various contracts.
For many organizations, COIs are the largest category of documents managed by a risk management department. Big companies—especially large contractors—may track tens of thousands of COIs, insurance forms and often complete policies. Making sure that insurance coverage is adequate, appropriate, current and from acceptable insurance carriers is complex and time-intensive. Industry experts estimate that one full-time person is required to track every 1,500 COIs properly. In many cases, risk management departments cannot afford the staffing to do the job adequately.
Properly managing COIs requires more than simply verifying the existence of insurance policies. Ensuring that the policies provide adequate coverage that complies with contractual terms requires specialists in insurance policy wording who can determine whether insurance coverage is appropriate for the risks assumed by a vendor, contractor or tenant. Maintaining this level of expertise in-house may be beyond the means and budget of many risk management departments. An outsourced solution is often the most cost-effective way to ensure that COIs are properly managed.
Achieving superior document management
The typical risk management department has enormous responsibilities and limited resources. Efficiency is essential, but so is accuracy—mistakes can have damaging and far-reaching consequences. Effective document management can help to simplify routine activities, accelerate processes and ensure that all stakeholders have access to up-to-date, accurate information as it is needed. Risk managers often struggle to justify new expenditures in the competition for budget allocations, but an effective document management system should be seen as a long-term cost-reduction exercise with the potential to lower the overall cost of risk.
Effectively administering COIs and related insurance documentation is one of the most substantial benefits of a disciplined approach to document management in a risk management department—but also one of the biggest challenges. Some organizations manage thousands of COIs, and a single mistake can cost millions of dollars. COIs demand constant attention from contracts and insurance coverage experts. Risk management departments should consider outsourcing this function to specialists who can cost-effectively provide both process efficiency and domain expertise.
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If history is a guide, the needs of risk management departments will only increase as risk managers are called on to do more without a corresponding increase in budget or resources. They cannot squander precious time by chasing after documents or questioning whether they are working with the most up-to-date information. They also cannot afford to make avoidable mistakes caused by inadequate, incomplete or out-of-date information. Document management may not make for sparking conversation at a cocktail party, but it can make all the difference in the world in improving the efficiency, effectiveness and accuracy of risk management processes.
