Most third parties are not meeting insurance verification needs
A new study shows that 75% of third parties are not meeting the insurance requirements of companies they work with.
A new study from Evident shows that both performance and process for verifying and improving insurance coverage for third parties vary greatly, with 75% of third parties not meeting the insurance requirements established by a company requesting verification.
The insurance verification-as-a-service provider conducted the study amongst customers and the partners, vendors, suppliers and franchisors for whom they verify coverage.
“In order to be certain that coverage is active and in place, enterprises expend a great deal of effort to verify their third parties’ proof of insurance. Evident’s findings indicate that many enterprises struggle to perform this function and, hence, have a significant amount of vicarious liability hidden within their own third-party networks,” said Evident in its report, “The State of Third-Party Insurance Verification” that details the study’s findings.
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A key finding from the study highlights the challenge companies face when attempting to communicate with insureds. Study participants said 23% of insureds did not respond to requests for proof of insurance. More than half failed to be certified compliant of those that did respond, and about 9% of insureds who were previously complaint no longer met requirements. When undetected, the latter statistic is a risk for companies requesting verification, Evident said, adding that it is ”typically due to a failure to renew policies, change in business circumstances for the insured, or simply as a tactic to reduce total spend.”
However, there are ways companies can reduce their exposures and increase their compliance rates for third-party insurance verification. Evident suggests three principles to focus on:
- Right-sizing insurance requirements: According to Evident, third-party requirements that are too specific or strict can lead to an inefficient exception process.
- Customer experience: An efficient and automated process focused on the customer experience can make the verification process easier for insurers and partners.
- Partnerships: Including other insurance partners, such as agents and carriers, can help streamline the verification process and provide accurate coverage status.
For more findings from Evident’s study, including tips on how to verify third-party insurance, check out the infographic below.
