Why COI Tracking is Important when the Economy is Down    

Consumers may not realize that when the economy suffers, insurance rates go up. To avoid claims and keep your rates low COI tracking is necessary. 

The reason for insurance rates rising is largely due to insurance carriers being unable to subsidize rates with their investment returns. Besides being aware of increasing rates, it’s important to keep track of Certificates of Insurance (COIs). 

Let’s explore why COI tracking is important, especially during an economic downturn.  

How Does the Economy Affect Insurance Rates?  

Many insurance carriers generate cash flow by investing in other companies. Insurance carriers need to make a return on investment (ROI) from these companies. If insurance carriers invest in a company that is suffering, their investment is unable to be recovered. When investments can’t be recovered, the insured’s rates go up to cover the losses. 

When the insured files an insurance claim, the insurance company must make a payment. If there isn’t enough cash flow from investments, the insurance company must raise premiums to cover these claims.

What Problems Should I Expect When the Economy is Down?  

Several problems for insureds come up when the economy is in crisis. Below are some problems solved by using SmartCompliance for COI tracking.   

Rejected or Delayed Insurance Claims  

When the economy is down insurance companies must recoup money from lost investments, so claims get scrutinized and turned down more often than normal. This can be difficult for small businesses if the insurance company litigates a claim to delay or decrease the amount to pay.  

Having a system in place to track COIs will help protect businesses from an insurance company denying subrogation or delaying claims.   

Cutting Expenses  

When the economy is in crisis, businesses look for ways to save money. Some do this by dropping insurance coverage or lowering insurance limits. 

Using SmartCompliance will make certain that insureds haven’t dropped coverage without notifying the proper parties.  

Being Dropped Without Notice  

Sometimes when the economy isn’t doing well insureds will go to “B rated carriers.” These carriers are more likely to be unable to recover from an economic downturn.  

When B rated carriers don’t have enough money to cover all their clients, they are put in a position where they must decide which clients are most important. When carriers are forced to make these decisions, key accounts get special treatment while others are dropped without notice.  

Insureds need to make sure they have a premium insurance carrier to avoid being dropped without notice.  

Keeping track of and staying up to date on COIs is important when clients are dropped without notice. Tracking COIs allows a business to fix the coverage issue before an accident occurs.   

Use SmartCompliance for Your COI Tracking Needs  

In times of economic turmoil, it’s even more important than normal to know if a client has the proper insurance coverage, is maintaining coverage, or is managing risk.  

With SmartCompliance uploading COIs, creating dashboards to view metrics and increasing compliance is as easy as ever.   

See for yourself how SmartCompliance can help you stay on top of COIs and increase compliance so you don’t miss out on critical changes in coverage. – schedule a free demo here.  

Video Transcription

Howdy folks, James Benham CEO of SmartCompliance and your InsureTech Geek. I’m here today just to chat about this blog post because it’s a really important topic to think about when the economy is down, what happens to insurance rates? 

Typically, they go up because the carrier’s return on their investments go down. They have to make that up somehow and you usually see rates rise, but you’ll also see a lot more incidents where you have more opportunities to subrogate claims and you’ll need to drive your cost of risk down and the only way that you have the opportunity to do that is if you have been collecting your certificates of insurance and really analyzing them on both your vendors and tenants. They all need to be reviewed, analyzed and evaluated.

You have to make sure you have current certificates of insurance. There’s a lot of reasons why right now is the perfect time to get your COIs under control and to make sure that you understand all the risks that you have that you can subrogate out to your vendors when it really may be them that’s responsible for the loss. You need to make sure you can appropriately subrogate that claim to their policy.

I just wanted to highlight the really big points here from this article. I hope you enjoyed reading it and please give us a call if you need anything. Thanks a bunch.