Fraudulent Certificates of Insurance

Public sector procurement risk management begins with a review of potential risks in a solicitation and steps to mitigate the risks. Most importantly, risk management should be accomplished holistically, engaging all relevant stakeholders within the organization. The first line of risk identification begins with documents and certificates received from a bidder, such as the Certificate of Insurance (COI). This certificate, also known as Accord 25, recognizes the Accord Certificate as the one used most often by insurance companies.  

While unfortunate, fraudulent COIs are a reality, and many of us may not have an agency Risk Manager who reviews and approves the submitted COI. Given the ease of use of Photoshop and Artificial Intelligence (AI), fraudulent certificates are on the rise. TransUnion reported a 150% increase in insurance fraud between Q2, 2021, and Q2, 2022.1 Even in cases where agencies do have a Risk Manager on staff, procurement should be engaged in reviewing the submissions.  

To minimize risk and determine the validity of a COI, take the following steps:   

1. Review the Certificate: Carefully examine the certificate of insurance provided to you. Ensure it contains all necessary information, including the name of the insured, policy number, coverage limits, effective dates, and types of coverage. Look for typos, inconsistent formatting, and incorrect information regarding the insurance company.  

2. Contact the listed Insurance Agent/Broker: Reach out to the insurance company listed on the certificate. You can find their contact information on the certificate itself. Confirm with the insurance company that the policy is valid, active, and covers the appropriate types and amounts of insurance. 

3. Verify Insurance Company information: Visit the AM Best Company's' website to verify what the COI states and what the agent has told you. AM Best is the largest provider of insurance information and ratings. You may access AM Best at https://ratings.ambest.com. You may also set up a free subscriber account to gain access to insurance company information. After subscribing, a report would look like this: https://drive.google.com/file/d/1mRH59W92oSqtNHvgA9xirpVtY2vsqPr6/view?usp=share_link  

4. Check Coverage: Ensure the coverage outlined on the certificate matches your requirements. Depending on the nature of the insurance, it may need to cover liability, property damage, workers' compensation, or other specific risks. 

5. Verify Endorsements: If specific endorsements or additional insureds are listed on the certificate, make certain they are accurately reflected and covered under the policy. If you are suspicious of any information, ask for the policy itself.  

6. Request Additional Documentation: If necessary, request additional documentation from the insured or insurance company to validate the coverage provided further. 

7. Consult Legal or Insurance Professionals: If you have any doubts or concerns about the validity or sufficiency of the insurance coverage, consider consulting with legal or insurance professionals for guidance. 

8. Record Keeping: Keep a record of the certificate and any correspondence related to its verification for your records. 

Remember, validating that the insurance coverage meets your requirements and adequately protects you or your organization from potential risks is crucial. If you're uncertain about any aspect of the certificate or its coverage, seek clarification before proceeding.