If you’re in construction, you’ve probably managed your fair share of certificates of insurance (COIs). COIs should be required from every party working or stepping on a construction site. The incredibly high level of inherent risk on a construction site means they are one of the most critical pieces of information construction managers and general contractors can collect.
Most construction management teams understand the importance of COIs and recognize their role in mitigating risk. Yet they tend to track them alongside other project details and timelines in a spreadsheet. Let’s be real: construction teams are not the only ones using spreadsheets to track critical information! In fact, it’s one of the most common ways corporations and project teams track enterprise risk management (ERM).
Spreadsheets are a double-edged sword. Their easy use makes them a go-to for quantifying and tracking metrics. However, many gaps exist where critical information can slip by. Plus, a study conducted by a University of Hawaii IT professor found that nearly 90% of all spreadsheets contain errors! For construction teams, COI tracking solutions not only replace spreadsheets, but also eliminate the need for manual data entry—and all the errors that go along with it.
So where do spreadsheets fall short? Here are three reasons construction teams should look to automated solutions instead of spreadsheets to track COIs for risk management:
Reason #1: Manually gathering data wastes time and resources
Spreadsheets operate as the baseline for metrics tracking and project planning for a reason. They are easy to use and offer numerous out-of-the-box options for managing data. However, they also require substantial manual work and time.
Construction teams dealing with hundreds or thousands of vendors, suppliers, and contractors must hunt down a COI for each one. That means entering when every COI was requested and from whom in the spreadsheet. Once the COI is in hand, the insurance compliance data gets keyed into the spreadsheet, including the all-important expiration date. At a minimum of five minutes per COI, add up the total time manual entries consume. The number shocks most teams.
While spreadsheets are good for data, they fail at being alarm clocks. So, compliance team members must set reminders to follow-up on COIs. Each COI must be on file before work begins and the affiliated insurance policy verified as active throughout a project. We commonly see reminders set by sticky note or calendar. Think that’s not a major problem? Think again. Here’s a real-life example of why:
A general contractor’s project manager hired a plumbing subcontractor for its $25 million construction site. The project timeline was 18 months. The company didn’t validate the plumber’s COI before they began work because of quickly approaching project deadlines. The plumber caused a flood and injured a worker on the job. The plumber’s insurance had expired leaving the general contractor responsible for both losses. The amount of the claims increased the GC’s insurance premiums for several years. The contractor’s bids became less competitive with its increased operating costs. The time delays to repair the flood damage also added up. The two-week delay cost nearly $650,000. In total, a failure to verify one COI lost this general contractor more than $1 million.
Even a lapse of 24 hours can open the door to a catastrophic claim. Are you willing to bet on desktop notes and individual calendar reminders for protection? If not, COI tracking software automates COI requests, captures insurance information without manual entries, and offers workflows to streamline the process. myCOI users report a 40% reduction in manual work related to COI compliance.
Reason #2: Spreadsheets are error-prone
While nobody likes making mistakes, we’re all human. It happens. If your company relies on people to enter COI data into a spreadsheet, or even just check COIs against liability coverage requirements, things can—and will—slip through the cracks. Making matters worse are the infamous formula errors that even spreadsheet wizards sometimes create.
Spreadsheets like Excel also contain another major limitation: no edit history. Once you enter data into the spreadsheet, any past information is lost. Without an automatic save option, one wrong click could lose everything. Finding an error among hundreds of COIs becomes nearly impossible. The problem magnifies if multiple people use the same tracking spreadsheet. To hammer this point home, we’ll share another painful example:
A small compliance team for a commercial construction company tracked COIs across multiple active projects within one spreadsheet. The team updated the spreadsheet daily. One wrong click of the enter key left a staffer adding data to the wrong lines, which resulted in hundreds of rows of bad information. A claim occurred a couple of years after a project concluded related to faulty materials used by a contractor. The compliance team spent hours looking through old files to find a physical copy of the original COI to identify the insurer and policy period to file the claim. Had the company not been able to locate the original COI, they likely would have had to foot the bill directly for the loss.
COI tracking software eliminates these problems completely. Systems like myCOI store COIs digitally and capture compliance details making claims management much easier. The platform automatically detects COI deficiencies or errors so the risk management team can immediately work to rectify the exposures.
Reason #3: Automated solutions help ensure 100% compliance
Construction is an inherently risky industry with plenty of room for liability. Tracking COIs and other relevant information in a spreadsheet limits a team’s ability to identify and respond proactively to critical data without advanced programming. A secure online COI tracking solution like myCOI can aggregate all insurance data, giving companies the ability to create dashboards and compliance reports. The platform proactively generates alerts of pending compliance issues giving staff time to respond before a potential liability becomes a massive loss. Spreadsheets are “okay” until a big “oh no!” The following example illustrates the power of saying “sayonara” to spreadsheets.
A Florida-based real estate development company managed insurance compliance with a team of two. Manually cross-checking every COI against contracts and policies left critical details missed. The labor-intensive process produced a compliance rating below 20%. The poor score proved costly with the company paying thousands of dollars in uninsured claims. The real estate developer then adopted myCOI and within months had completely automated the COI compliance process. The platform helped the team proactively identify noncompliance, make better decisions for risk mitigation, and leverage the finer details of insurance coverage. The company reduced manual work, costly errors, and preventable claims.
Shed the Spreadsheet and Move to myCOI
If your team is wasting time and resources with spreadsheets, it’s time to turn to a streamlined solution. With myCOI’s robust software and platform options, you are guaranteed efficiency, accuracy, and centralization to fit your organization’s needs. With myCOI, your team can manage all aspects of the COI tracking process with more ease and less worry. Learn more about the new standard for insurance compliance tracking with a myCOI product demo.