A new study from Evident found that inadequate third-party insurance coverage averages $1.875 billion in risk exposure for large enterprises. These findings are the result of two years of research with the automated insurance verification provider’s customers and the partners, vendors, suppliers and franchisors for whom they verify coverage.
In studies completed in 2021 and 2022, Evident found that organizations typically only have an average of about 25% of their third-party vendors that are adequately covered. Of the 75% that failed to meet the requirement commitment, 25% failed due to not having the appropriate coverage at all. This is due to a failure to purchase the coverage or coverage that existed was allowed to lapse, either on purpose or through error. An additional 24% had some coverage but did not meet the limits specified.
From EIN Presswire:
- The new study provides an estimate of the cost of risk associated with non-compliance. Evident estimated the combined limit requirements for each insured to produce a total required coverage limit.
- The top 5 segments at risk across industries and their total combined limits for coverage required on average for third parties are:
- Transportation with an average of $6.6 million for each third-party
- Convenience Stores with an average of $5.5 million for each third-party
- Governments & Municipalities with an average of $5 million for each third-party
- Construction with an average of $4.4 million for each third-party
- Restaurants with an average of $4 million for each third-party
- Following implementation of automated insurance verification solutions, third-party insurance compliance rates for an organization doubled within 6 months.