Due Diligence and Ongoing Monitoring

Hi, I recently learned our contracted Insurance Broker for our company reviews the Certificate of Insurance we receive for all new third parties. I have not heard of this before. I am familiar with our broker reviewing insurance on the bank or as part of new real estate transactions the bank owns/leases, but not for every new third party.  Does anyone else use their key insurance broker to review all new COIs on their vendors? How do you manage this?  Would love feedback on what others do or if you risk prioritize what is shared.  Thank you!

Thank you for raising this important question regarding the review of vendor certificates of insurance. While involving the company insurance broker can be valuable in certain aspects of vendor insurance compliance, there are key considerations to address before deciding if it is appropriate for the broker to review vendor certificates of insurance.

1. Certificate of Insurance vs. Contractual Requirements:
   The primary purpose of reviewing a vendor's certificate of insurance is to ensure it aligns with the insurance requirements outlined in the vendor's contract. This includes verifying that: The types of insurance specified in the contract are included on the certificate.
   
   Coverage limits meet or exceed the contractual requirements.
   Policy terms, including expiration dates, align with the duration of the engagement.
   This review should confirm compliance without unnecessary exposure of vendor information to third parties.
   
   
2. Privacy and Confidentiality Concerns:
   It's important to consider that a vendor's certificate of insurance may contain private or sensitive information (e.g., policy numbers, insured parties, or other details). Since the vendor does not have a direct agreement with the company's insurance broker, sharing the certificate with the broker could raise concerns about the unauthorized disclosure of the vendor's information. This could potentially violate confidentiality clauses in the vendor agreement or applicable privacy regulations.
   
   
3. Role of the Broker:
   The company insurance broker can play a valuable role in advising on insurance types and coverage amounts during the contract negotiation phase. This ensures the contractual requirements are appropriate for the nature of the vendor's services and adequately mitigate risk. However, once the contract is signed, the review and approval of the certificate should ideally remain an internal process unless there is a clear contractual basis for involving the broker.

While the broker can provide valuable input during the contract negotiation phase, sharing vendor certificates of insurance with them post-contract may not be appropriate due to privacy and confidentiality concerns. In my practice we always kept the review process internal and never involved an outside party.  I'd love to hear the process others use to review certificates of insurance.