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One Midwest-based 3rd party property management company found themselves in this exact scenario after Jones came on to manage their COIs and endorsements. Collection and compliance rates went up since they started working with Jones, but they were still having an issue securing all the right Additional Insureds on vendor and tenant COIs.
Fortunately, the Jones Risk and Compliance team is available for strategy calls in situations like this. They help property management teams improve compliance rates with suggestions for improving their insurance risk strategy based on data from portfolios across the US. The property management team went ahead and booked a call with Jessica Lopes, Director of Risk and Compliance at Jones, to see if she could help come up with a solution for their AI issue.
How Their Initial Portfolio Compliance Looked
Jessica went and dove deeper into causes for Additional Insured noncompliance to better understand what was holding this third party manager’s compliance rates back.
Coverage Gap Analysis
Jessica quickly noticed that one major reason this company was struggling with AI compliance was the huge amount of different Additional Insured names that were required. One primary reason for this was the corporate structure of the 3rd party manager. They had different entities conducting business in different states, plus a brokerage wing that they required indemnification for.
The 3rd party manager also required vendors to list building owners as AIs. However, as many of their buildings were owned by different LLCs or REITs they ran into the issue of requiring a wide variety of Additional Insured names. This also meant that a vendor with a compliant COI for one property couldn’t go work on a property with a different owner without producing a COI with a different set of Additional Insureds.
Finally, there was human error involved in the listing of AIs as well. Jessica shared that her team often sees “misspellings of Additional Insured entity names caused by broker involvement, which creates back and forth when trying to obtain a compliant COI,” which was also a factor for this property management company.
Jessica’s diagnosis of the situation was that too many different Additional Insured names being required was causing confusion and negatively impacting portfolio wide compliance, alongside human error. With this in mind, she recommended a solution Jones has seen many customers successfully utilize: encouraging the use of Blanket Additional Insured language.
Solution: Accept and Encourage Blanket Additional Insured Language
In general, the Jones Risk and Compliance team feels that accepting Blanket Additional Insured language is the best way to address Additional Insured status if contracts are in place with tenants and vendors. Blanket Additional Insured endorsements grant Additional Insured status to all parties as required in a written contract. Let’s look at some examples of Blanket Additional Insured verbiage.
As Jessica told us, “The key to risk transfer lies in clear contractual language. By referencing the contract wording with the Blanket Additional Insured clause, the vendor/tenant’s coverage aligns with the agreed-upon risk transfer terms defined by you.”
Seeing as this 3rd party manager had contracts and indemnity agreements in place with their vendors and tenants, Jessica felt they’d be a good fit for Blanket AI.
How Their Portfolio Compliance Looked After the Change
After adopting Jessica’s recommendation that they start encouraging the usage of Blanket Additional Insured endorsements, overall portfolio compliance went up by 15%. By making the process of conferring Additional Insured status easier, the 3rd party property management company managed to improve compliance rates by reducing friction for vendors and tenants.
Want to learn more about how Jones Strategy Sessions have helped property management companies boost compliance rates? Get in touch with us via the form below.