The Real Cost

December 27, 2011

We’re often asked by those who are considering using ecertsonline as a solution to streamline their business processes and improve their customer care: ”Do you know how much it actually costs to issue a Certificate of Insurance?”

A good place to find the answer to this question would be at the Big “I” Virtual University’s Certificate Resource Center; a great online resource for learning more about risk managing your certificates-of-insurance exposure.

Bill Wilson Director, IIABA’s Virtual University in PropertyCasualty360 a national underwriter website provides us with a bit of insight regarding this cost analysis question. He writes that one of the most daunting—and often reviled—tasks facing agencies today involves the processing of certificates of insurance. This is an activity that typically generates no revenue for the agency but creates significant operational costs and dramatically heightens the agency’s E&O exposure.

One consultant estimates the cost to issue a plain-vanilla ACORD 25 document at $7; and if some customization is required, it could be as much as $15-18. This figure could go even higher when responding to requests that insist upon the completion of some sort of “compliance checklist” that consists of dozens of broad, vague, generalized questions about policy coverages.

Another agent estimates that 3 percent of the firm’s commercial-lines revenue went to pay for certificate operations last year. That’s a big chunk of agency profit being invested in an activity being provided to third parties virtually free of charge. The agent estimates the cost of issuing certificates is double the cost just three years ago due to the increase in, and complexity of, requests.

Wilson concludes by saying costs associated with certificates of insurance are not trivial, whether you’re considering operational expenses or potential E&O claims. Read the entire story: Opinion: The Real Cost of Certificates of Insurance by Bill Wilson PropertyCasualty360.

This article appears in the August 15, 2011 edition of National Underwriter P&C.