From COI Tracking to a Compliance Engine: The Manhattan Construction Story

Pete: Welcome everybody to today’s Jones webinar, From COI Tracking to a Compliance Engine. My name is Pete Rawlinson, and I run marketing at Jones. For any of you who are not aware of Jones, we are a technology company providing insurance compliance technology to contractors and to commercial real estate organizations. Every few weeks, we do a webinar on topics we think are really interesting and salient to the audience, and we’ve had a lot of requests for this one, based on a really interesting case study from one of our customers, Manhattan Construction. Before I introduce our guest, I’ll just set up the intention of the next 30 or 40 minutes. What we’re going to talk about is COI tracking, and why in the built world today it is becoming increasingly insufficient to run a cohesive insurance compliance process. Going on a journey from just checking that your COI is okay, which typically doesn’t fully cover you, all the way through to operationalizing compliance within your organization. As we’ll see from Manhattan, that enables you to scale your business more effectively, make sure subcontractors are getting onto projects in a timely way, getting paid, insurances being renewed correctly. But you’re not here to listen to me. Let me introduce Jessica Allen, Insurance Manager with Manhattan Construction. Manhattan has been a customer, and Jessica a good friend of Jones, for a long time now. Jessica, I’ll let you introduce yourself, talk about Manhattan and your role there, and we’ll take it from there.

Jessica: Hi, I’m Jessica Allen, Insurance Manager for Manhattan Construction Company. We have been with Jones for three years now, and we have absolutely changed the way we do our insurance process. We are a vertical construction company, but we also have sister companies: road and bridge, concrete, painting, glass and glazing, and waterproofing. Our 800-pound gorilla is the vertical construction company. We do about $2.5 billion worth of construction a year, and moving to Jones has changed how we’re able to manage our risk in other areas, because it’s taken the workload off of us and we know they’re looking at our certificates.

Pete: Thanks, Jessica. Just so we know the scale of this: how many subcontractors, how many projects on the go at any one time?

Jessica: Right now we have about 3,000 subcontracts in place, with 3,000 insurance certificates being looked at. There are a few moving pieces to our operation.

Pete: How has that scaled over the past five years or so? Has Manhattan grown significantly?

Jessica: Over the last five years, we’ve probably increased from about 2,000 to 3,000 subcontracts. Over the last 20 years, it’s gone from about a half a billion dollar company to two and a half billion. We’ve definitely grown significantly.

Pete: Congrats, that’s impressive. I know you’ve been on a journey with Jones, but you were also on a journey before you partnered with us, moving toward operationalizing insurance compliance. Can we go way back? There are a lot of people we talk to, maybe some on the webinar today, who are trying to get their hands around how to scale what they have now, which in some cases is manual COI checking and tracking. Can you take us back to when it was very much a manual process? What were the challenges back then?

Jessica: Way back, before we started our insurance journey, we just made sure we had a certificate of insurance on file with sufficient limits, and checked a few boxes. We didn’t really get into the nitty gritty of the details. Over time, as we continued to grow, we knew the importance of making sure we had proper coverage for our subcontractors on site. We started adding requirements: requesting additional insured endorsements, waiver of subrogation endorsements, making sure we had primary and non-contributory wording. We grew from making sure we were covered to actually getting into the details, making sure we were truly covered by getting the endorsements and other items behind our certificates. We started with just a piece of paper, and then my boss and another person in the company created our risk management department and grew it to what it is today.

Pete: And what is that department today?

Jessica: There are six of us, and we take care of not only insurance compliance but our insurance program for the whole company. We do builders risk, we do bonds. We manage as much risk as we can for the company.

Pete: Going back to the manual days, you were in the seat looking at COIs. Can you give us one or two examples of the kind of thing where you look at a COI and think, that’s good, that’s good, and then something where it’s, whoa, I need to check the additional insured or the waiver of subrogation? What could the gotchas have been if you didn’t pay attention?

Jessica: A lot of times we would get certificates where the additional insured coverage was written on the certificate. But when you got the additional insured endorsements, they were truly only covering the person they had a contract with, or maybe that person and the owner of the project. On a lot of our projects, we require additional insured status for Manhattan, the owner, the lender, the architect. We have a broad range of everyone we want covered. So we would get certificates that had the wording on them, but when we got the endorsements, which are the true policy forms, they weren’t covering them. Requesting more than just the certificate, getting the endorsements, helped us make sure the coverage is actually in place.

Pete: And if there was a discrepancy, how were you interacting with the contractor, with the broker? What was that mechanism of communication, and could it be pretty prolonged?

Jessica: It did used to take a while. We would get the certificate from our project team, tell the project team what corrections we needed, they would go back to the subcontractor, the subcontractor would go to their broker, the broker back to the subcontractor, and the subcontractor back to us. Every time there was something wrong with a certificate, it typically took a week or two to get to the end result we wanted, because of all the back and forth over email with everybody involved. It wasn’t us straight to the broker most of the time. There were a lot of middle people. It was a cumbersome process.

Pete: Did that impact your relationship with your subs? Did they just expect a back and forth on insurance?

Jessica: A lot of subcontractors expect it, and you run into a lot of people who say, we build buildings, we don’t know what insurance is. It does delay the project, though, because we won’t let subcontractors on site until they have their insurance in place. Depending on how much back and forth there is, they’re eager to get started and we have to make sure the proper coverage is in place. Speeding that up and getting them going earlier has always been the goal.

Pete: We talk about that a lot. The goal here isn’t check-marking a document as compliant. It’s a decision that progresses business: it enables a subcontractor to start working, enables you to start building. And when it comes time to pay the sub, you need to make sure insurance is in place too.

Jessica: We actually won’t release payments until an insurance certificate is compliant. You get your initial certificate before they start, but all our subcontractors have different renewal dates, one coverage could expire here and there, so it’s a moving target. They may be compliant one week and not the next. We don’t want them on site without compliant insurance, and we won’t pay them without it, because insurance is that important.

Pete: It’s in the path of a project being ready and progressing. I imagine you’d go back and forth on an issue with one sub, then go through the same thing with another. Was there a commonality, where it’s here we go again, same issue, different broker?

Jessica: Same issue, different broker. And we’re in eight regions: Oklahoma, Texas, Florida, Georgia, the DC area. Some areas, you’re working in a small town in Oklahoma, and those subcontractors aren’t as insurance-savvy as the major subs in Dallas or Houston. You run into the issues of your demographics, depending on where you are, what brokers you have, and who’s going to look at you and ask, insurance is what? It’s a broad spectrum of subcontractors.

Pete: How did you actually keep track of all of that, before you operationalized and partnered with us?

Jessica: Manhattan actually had an internal database that we created prior to moving to Jones. We tracked all our certificates in it. It was definitely not as sophisticated as Jones, and not as pretty, but it was our tracking beast, because we had gotten too large to keep it all on a spreadsheet, which I know a lot of people do. But since it was an internal database, there were no integrations with our accounting system. Risk management tracked it in our database, then we’d send the information to accounting, who tracked it in their database. It was cumbersome, changing between all the different systems.

Pete: Still, you decided to build something and start to operationalize. There must have been a point, probably a Monday morning, when you thought, we can’t do it like this anymore. Was there an event? A big deal, someone leaving the business?

Jessica: It was our growth. The director of our department helped create the database. We continued to grow and get the mega projects, and it was too much to handle outside of a database. She worked directly with the vice president of our department and created the database that started tracking our insurance. We went from a half a billion dollar company to 2.5 billion. You can’t run a large business the way you run a small one.

Pete: At that time, did you feel insurance compliance could become a bottleneck? It’s natural to think, it’s just a document, I check that it’s compliant and it’s good to go. But the ramifications of it not being compliant, and the work required to make it truly compliant, can be significant. Did you see compliance as something you had to get more efficient at?

Jessica: We did. While I’ve been with Manhattan for 24 years, I’ve only been in our risk management department for about five and a half. It started as a department of one, and now there are six of us. Back then, three of us did it part-time and one person full-time, and all she did was spend her days looking at insurance certificates. Then you’d get to the large renewal periods, where hundreds of certificates flood in, and there were only three and a half of us doing it. It would definitely slow down the process, because as efficient as we tried to be, there were way more certificates than people to look at them.

Pete: Those must have been long days.

Jessica: Definitely. 12/1 renewals, quarter ends, you get flooded with certificates. All hands on deck, and unfortunately you spend more time on certificates than on other items that still needed to be done.

Pete: The people looking at these certificates, what roles did they have? Were they trained in insurance and compliance?

Jessica: Everyone who looked at our certificates had insurance knowledge. A lot of them have insurance certifications and the ability to look deep into the endorsements and know what they’re looking for. They weren’t a typical person who doesn’t know much about insurance. That’s why all our project teams sent certificates to our department instead of looking at them themselves.

Pete: Let’s continue the journey. You started with a manual process, Manhattan was growing, and you moved into a database. Was there an intention to say, we’ve got to make this a more streamlined process, we can’t keep doing this in an ad hoc, manually intensive way?

Jessica: We had a chain reaction of events in our department. The person doing it full-time announced her retirement. Meanwhile, we were still growing, and those of us in the department needed to spend our time elsewhere. That’s when we decided to look around and see what was out there to help with insurance compliance, so it wouldn’t hurt as badly when she retired. Then a gentleman left us, and me and another co-worker who were also doing it had other items we needed to do. So we went on a hunt for something to backfill the position and help us keep up with the certificates, because we continued to grow. Just in the last three years with Jones, we’ve added another 700 records from where we started.

Pete: Which is great. So you made the decision to make this more operational. Moving into something more automated can be a headache. How was that transition?

Jessica: Going from the old manual spreadsheets into our database took a little time, because it was such a manual process before. Moving into the database was less clunky, everything in one spot, everyone had the ability to look at it. And I think our database really helped when we transitioned to Jones, because we already had it all in one place. It wasn’t trying to grab from here, there, everywhere. Transitioning from just checking the box to actually looking deep into the insurance, there were growing pains, but it went pretty smoothly.

Pete: You probably went into this with objectives. Some are obvious, a central place for all the COIs, a streamlined operation. What were you looking for in terms of the benefit of operationalizing compliance, not just moving to Jones specifically?

Jessica: We were trying to make the process move faster. If a certificate expired, we didn’t want it to take a month to get everyone back in compliance. We wanted to speed things up, so when you have your big renewals, it wouldn’t cripple you, with 20% of your subcontractors suddenly no longer compliant and everybody scrambling. We were trying to make renewals go smoother and faster so we could keep going. Because insurance expiring doesn’t mean our project schedules get extended. We’ve got to keep building.

Pete: So the obvious next question: did that work? Did you realize those benefits?

Jessica: We had a pretty good process at Manhattan already, but switching to Jones while growing at the same time, we’ve noticed that because of automatic renewals and reminders requesting renewal certificates, it’s definitely sped up the renewal process. We have a compliance rate in Jones that tells you how many of your subcontractors are compliant, and you can see it dip on major renewals, but it comes back.

Pete: Do you know what your compliance rate is at the moment?

Jessica: We’re almost at 93 percent. I think we’re at 92.5 percent compliance out of 3,000 certificates.

Pete: That sounds like a great number, but what does it mean to Manhattan? What does it mean to your business?

Jessica: It means we can keep our projects going, keep building, keep everybody moving, and keep our subcontractors happy, because when we get funded from the owner, they’re going to get funded quicker because everything’s in place. We also have an integration that saves us a lot of time: Jones talks to our accounting database, so it automatically updates dates and everything. It helps the process move smoothly, gets subs paid, keeps them on the job site, and keeps them working.

Pete: I’m looking at questions coming in, and there are loads, which is really good. What about the operational side? One of your objectives, even moving to the database, was to do more with less. How was that impacted?

Jessica: We only have one person who really gets into our insurance now and reviews gaps, as they’re called, whenever someone doesn’t get it right. We went from three or four people looking at it to one person who jumps in for an hour or two a day to see if there’s anything that needs our attention, because we’re the ones who have the ability to waive insurance requirements. It’s definitely scaled back how much time we spend reviewing certificates. We have Jones do it for us.

Pete: Was that a cost-saving exercise, or are the people who were doing that doing something else now?

Jessica: They’re doing something else. At the time, we were also focused on prequalifying subcontractors. Freeing up people in our department has allowed them to focus more on prequalification and other items that are just as important in the compliance world. We just needed more people to be able to do it.

Pete: As you look to the future, where are you on this journey? Have you arrived, or is there more you could do?

Jessica: I think the sky’s the limit. Manhattan’s been around for 130 years, so we’re going to keep growing, make the right decisions, and do the projects that are right for us.

Pete: Do you feel like you’ve built an operational cadence into the way Manhattan manages insurance compliance?

Jessica: Over the last 20 years we’ve definitely been able to make sure we have the right insurance and everything is in place, and it keeps our program going. We’ve been able to cut back on the people doing it so we can focus on other areas. I think we’re in a really good place when it comes to insurance.

Pete: And if you had to describe the journey, from the huge number of COIs you were manually checking to where you are now?

Jessica: There were growing pains, but mostly it was a smooth transition, and we were grateful for our database. We loved our database. But moving to where we are now with Jones, we’re even more grateful, because we have so many more certificates, we’re tracking so much more, and we’re doing it with fewer people. We’ve gone from keeping track of 500 subs to 3,000, with fewer people, and it gets into the auditing requirements, the nitty gritty. We’re making sure we’re getting endorsements, making sure everything’s still there. It’s been a great experience.

Pete: That’s important. We’re not talking about fully handing everything off. You still have oversight. You’ve got to make sure you ultimately have oversight over what’s going on, but you don’t have to get involved in the details. Would that be right?

Jessica: Yeah. We’re never going to let it completely go from our hands. We still like to oversee it. If there are exceptions being made, we’re the ones making them, because it’s our baby, it’s our world. But it’s also helped us because when everything is there and it’s right, we don’t have to worry about it. It’s freed up time and helped us keep the oversight we want, while ensuring that what we’re asking for is actually there.

Pete: This may be a little more specific to Jones, but does it help that there’s human oversight on the Jones side as well? That you have human eyes looking at these documents on your behalf?

Jessica: It’s definitely helped, because we did look at a bunch of different options. AI is great, AI is wonderful, but it’s still not going to replace a human. Insurance is such a niche world that one word can change the whole meaning. So it’s been helpful that AI looks it over, but then there’s an actual person who looks at it for us, and they’re going to catch the small things and point them out as a gap that AI may not have caught.

Pete: Absolutely. What we say here is, AI is a hugely valuable tool for us, but AI can’t be accountable. At the end of the day, this is all about accountability. It’s about trusted decisions, not just a compliant document. There’s a lot on the line. I’m going to wrap up in a bit, but there are some really good questions coming through, so do you mind if I fire some at you? And for everyone listening, if you want to ask a question, put it in the chat. Anything we can’t get through this afternoon, we’ll get to you in an email afterwards. Lauren asks: how do you use Jones to hold back payment to your subs?

Jessica: We have an integration with Vista, our accounting software. Jones talks to our system by sending the dates from Jones to Vista. If the dates aren’t current, our payment won’t be released, because the dates have to be in place. The integration has been a wonderful tool in our compliance, because as certificates get updated in Jones, it updates automatically in our accounting system. That’s what holds back payment or not.

Pete: This is from Barbara: once Jones outreach is complete, how are non-compliant vendors managed?

Jessica: If a sub becomes non-compliant, we review what’s not compliant and use Jones to push the request for corrections. They get an automatic email from Jones, and if they don’t upload within about three days, they get another email. They get three emails before they’re marked non-responsive in the system. Jones is doing that follow-up, sending them emails to make sure they know corrections are needed.

Pete: This is from an anonymous attendee: is the 93% compliance rate based on simply having a COI on file, or is it that the limits are compliant, the endorsements were provided, and so on? We get plenty of COIs, but most are not fully compliant.

Jessica: A 93% compliance rate means they have their endorsements on file, they’ve provided their waiver of subrogation, they’ve provided all the proper wording, and they have all the limits. There are two things tracked in Jones: your collection rate and your compliance rate. Compliant means they’ve checked all your boxes and provided all your endorsements. Our collection rate in Jones is about 99%, meaning 99% of our subs have uploaded a certificate. They’re not necessarily compliant, which is why the compliance number is a little lower, but it does a good job of at least getting the certificate reviewed so we can see if anything’s wrong with it.

Pete: A lot of people are asking what accounting system you use, and we’ve answered that. How does Manhattan use the integration from Jones to your AP platform? Are vendors automatically put on hold?

Jessica: Yes. The integration integrates the dates, and if the date isn’t current when they go to release the check, it automatically holds that vendor so the check can’t be released. The date is the determining factor. Jones tells Vista when the dates are complete, and we also have an overall compliant box that has to be checked in conjunction with the dates. That overall compliance box is what makes sure the endorsements are there.

Pete: One more, and it’s a long one: how do you verify that submitted documents are authentic and that the policy remains active? Does the process check carrier ratings, cancellations, or potentially altered certificates and endorsements?

Jessica: It checks for the majority of those things. Our setup requires an A.M. Best rating of A minus or better, and Jones does that check for us. When we get cancellation notices, we upload them into Jones so it automatically knocks them out of compliance, and if we get reinstatement notices, we upload those too. Sometimes brokers will put them in there themselves. And since there’s a person actually looking at the certificate, if it doesn’t look authentic or looks altered, it gets flagged, and we understand something is wrong. I’ve had to call a broker before and say, we got the certificate but it just doesn’t seem right, and the broker said, we didn’t issue that. That’s a whole other problem. Thankfully, it’s come up one time in the five years I’ve been here. Most of our subs are honest people. I’m not saying everything could be caught, because with technology today people can edit things, but if it’s a little fishy, it’s definitely going to be caught.

Pete: Last question: how did Manhattan bring existing subs and active projects into the new process without creating a wave of payment holds or mobilization delays?

Jessica: We already had all the dates in our accounting system. When we started getting Jones ready, if we already had approved certificates, we worked with Jones during onboarding to make sure they weren’t knocking them out of compliance. We set up a system where we sent our approved certificates to Jones, and Jones uploaded them as compliant. Once the renewal came in, that’s when they started doing their next review, because we were confident in our reviewing abilities prior. They worked with us to automatically make them compliant during the onboarding stage.

Pete: Great answer. That’s it for the questions for now. If you have more, email them in and we’ll get them back out to you. One final question, Jessica, before we wrap up. If there’s anybody on the line thinking about operationalizing insurance compliance, not necessarily Jones, and they’re at the stage you were at with the manual headaches, do you have any advice for them?

Jessica: Do your due diligence, look around, and find what works for you. But make sure you’re finding something that’s constantly innovating, constantly trying to get better, and really is a partner with you in the process. There are some that will basically just be the person collecting the certificate and not actually reviewing it. So do your research. We have found a wonderful partnership with Jones, and they’re doing a phenomenal job. The one thing that’s amazing about them is they keep growing. When you don’t think they can get any better, they come up with a new idea that enhances something you didn’t realize needed to be enhanced. It’s been a wonderful journey for us.

Pete: Thank you, Jessica. A lot of those ideas come from our customers, so we’re listening to you. It’s great to see the numbers you have and the journey we’ve been on together. You’re massively busy despite being operationally compliant, so we really appreciate the time today. For everyone on the line, we have a couple of leave-behinds we’ll mail out to you: a checklist of what Jessica shared about operationalizing compliance, and the Manhattan case study, because it’s a really interesting story. Let us know if you have any questions. Jessica, thank you again.