How to Choose a Certificate Management Solution

Why is Certificate of Insurance (COI) Tracking Important?

The rise of the on-demand economy has added layers of moving pieces to every supply chain. With the increased importance on Trust & Safety for on-demand platforms, and Know Your Customer (KYC) audits gaining momentum, effective risk transfer has become a core focus for many organizations – from enterprises to the on-demand platforms, staffing services, and MSPs that manage their contingent workforces. The only way to reliably transfer risk down the supply chain is with liability insurance. So, it’s no surprise that risk managers and legal teams are taking a second look at their certificate of insurance verification, tracking and monitoring practices.

Transferring Risk: Why Your Contract Doesn’t Cut It

There are many popular strategies for transferring risk down the supply chain. Every contract you read will have lengthy sections on liability, limitations, and indemnification. However, none of this is truly effective in the event of an accident without liability insurance (even if you use all caps). For example, let’s look at a classic supply chain scenario:

An enterprise has contracted with a talent management platform to hire freelance videographers for a commercial. The videographer does not have insurance. During the shoot, someone trips over their tripod and breaks their leg. They sue the enterprise for the cost of their medical bills.

Naturally, the enterprise has a clause in their contract that transfers this risk to the talent marketplace, and they have a clause that transfers liability to the freelancer. However, the freelancer simply does not have the money to pay for the medical bills. 

Where lawsuits are concerned, liability will typically flow into the deepest pocket. If the first layer is flat, the lawsuit will move up the supply chain until it reaches a link that can pay. That’s why liability insurance is so important.