Insurance Isn't Broken—Your Compliance Infrastructure Is

I remember the landlord who walked into my office convinced his insurance was garbage.

Three claims denied in 18 months. All contractor-related incidents on his properties. He was furious, ready to switch carriers, talking about how insurance companies just look for reasons not to pay.

Classic story.

But when I started digging, the problem wasn't his insurance at all.

His contractors weren't maintaining current certificates of insurance. He had a filing cabinet full of expired COIs. Some were two years old. He'd collect them at the start of a relationship and never look again. So when incidents happened, his contractors either had lapsed coverage or were underinsured, and suddenly he's exposed because there's no valid additional insured endorsement.

He was blaming the insurance product when the real issue was that he had zero system for tracking contractor compliance. No reminders. No verification process. No real-time visibility into who was actually covered on his properties at any given moment.

He was operating blind. He didn't even know it.

That's when it clicked for me. Most of what people call "insurance problems" are infrastructure problems. The coverage was fine. The system for maintaining compliance was nonexistent. And because that gap is invisible until something breaks, everyone defaults to blaming the insurance.

The Industry's $19.7 Billion Misdiagnosis

The data shows insurers denied 19% of in-network claims in 2023. The most common denial reason? "Other" at 34%.

The industry can't even properly categorize why claims fail.

That's not an insurance problem. That's infrastructure chaos.

Providers spend about $19.7 billion a year on claims reviews, and more than half of that ($10.6 billion) is wasted arguing over claims that should have been paid from the start. The staggering part? Most payment denials were caused by human error during manual claims processing reviews and system processing errors.

The insurance products work. The systems managing them are broken.

I see this pattern every day across rental properties, contractor networks, and commercial operations. Most people purchase insurance at the beginning and then focus on running their business. They never reevaluate their contractors. They never verify coverage remains active.

Sometimes contractors purchase insurance just for one project, cancel it, then keep using that certificate of insurance everywhere. And the person hiring that contractor? They don't call the insurance agent listed on the certificate to verify it's still valid.

The Certificate of Insurance Crisis Nobody's Talking About

Seven out of 10 collected COIs are noncompliant. 70%.

Contractors and property managers are operating with documentation failures they don't even realize exist. Not until a claim gets denied.

It takes about three follow-ups to make a certificate fully compliant. Collecting, tracking, and verifying subcontractor certificates of insurance is time-consuming and manual. The gap between issuing a certificate and maintaining active compliance is where liability exposure silently accumulates.

I've watched this play out. I dealt with one client where we sent certificates back and forth for a whole month straight. A construction client doing excavation work, trying to get approved by a company.

They kept saying they hadn't received the certificate. Then they'd ask questions about it. Then they'd say they received it but something needed editing. Once we made the edits, they'd request different changes. Different language. Different specifications.

If someone's busy at that moment, those changes go hours or days unanswered.

By the end of that month, the client switched to a whole different policy and sent in a whole different certificate. That finally satisfied the requirement.

We had to swap out coverage just because of infrastructure failure.

When Speed to Contract Trumps Coverage Quality

This happens more often than you'd think.

I'm dealing with business owners trying to secure higher contracts and bigger jobs. That's why they're getting insurance. And if it's easier to get a whole different policy and pay the money so they start securing jobs (because they know this company offers a lot of work), that's what they're going to do.

Even though it's not the best situation in my opinion.

But they have to do what they need to keep the lights on.

Business owners are making insurance decisions based on certificate acceptance instead of protection needs. They're optimizing for speed to contract instead of coverage quality because the compliance process is so broken. It's easier to change coverage than fix the system.

The industry has normalized this dysfunction. We've accepted that certificate tracking takes months. We've accepted that contractors recycle expired documents. We've accepted that property owners operate without real-time visibility into their risk exposure.

We've been solving the wrong problem.

Construction Defects and the Accountability Nightmare

The real risk? Unpaid claims and construction defect claims.

With all these new builds going on, if you don't have insurance enforcement and you're not checking compliance, you're setting yourself up for failure. You're hoping a project gets done based on assumption rather than due diligence that coverage is being maintained.

Construction defects create some of the most expensive and complex claims in the industry. Water intrusion causes mold damage. Structural failures require complete rebuilds. These generate millions in repair costs and litigation expenses.

This is how the breakdown happens:

Sometimes months or years after the project, the owner hires a property inspector. This happens a lot after purchases. The inspector looks at the property and sees that things weren't done right. HVAC issues. Electrical problems. Plumbing failures. Build defects.

Lots of different things that weren't taken care of.

And now the question becomes: who's to blame?

You don't know who did the work first. You don't know who was working at what time. Were they working simultaneously? There are so many questions that have to be asked to identify who's truly responsible.

That's where it becomes a hassle. A risk. You can't get in touch with contractors who did the work. That contractor probably went out of business. There are so many risks involved when you're not checking on insurance compliance.

Standard liability insurance often provides little protection when contractors need it most. Not because the coverage doesn't exist, but because compliance documentation wasn't maintained.

Building Infrastructure That Makes Compliance Invisible

When I build compliance infrastructure for clients now, I focus on creating the trail before the project even starts.

I use a certificate online manager system where contractors purchase policies directly and property managers, owners, or anyone associated with the project gets real-time tracking of the certificate. If a policy cancels, they get notified immediately.

When it comes to additional insured endorsements, I make sure everybody has the most accurate contact information. Anytime something happens with policies (endorsements, changes, renewals), the information gets transmitted in a timely fashion.

I make sure there's clear communication where all hands have access in a streamlined manner. It's not taking too much time or creating hassle for the business.

I also check my accounts and update clients regularly.

The system is free. Completely free. I include it in my email signature because I want to push this as the way we make sure everybody stays in compliance so work gets done in a way that protects both the person getting the work done and the consumer who will eventually live in that home.

It eliminates the cost barrier and positions me as the infrastructure layer clients depend on.

When Compliance Data Becomes Competitive Advantage

When clients start using this system and see real-time compliance data for the first time, something changes:

They can see which contractors they don't want to work with because those contractors always have lapsed insurance. They know why certain claims weren't paid. They see a pattern of how these contractors' insurance lapses. They know who to work with, who's more reputable.

It keeps them from dealing with the risk of hiring people who won't deliver great workmanship.

They're using compliance data as a contractor vetting system, not a liability shield. The infrastructure is changing their hiring decisions.

And that helps them save money on claims that won't be paid out. At the same time, it brings peace of mind knowing that the contractors they're hiring are covered.

The Numbers Don't Lie

I can answer this question very easily: I've seen claims decrease by 20%.

I had claim denials at zero for a whole year dealing with certain customers who had contractors that didn't perform work the way it needed to be performed.

I made sure I protected revenue. I made sure that for a year there were no claims, no claim denials, and loss ratios dropped by 20 to 30%.

The average loss ratio of leading insurers is 47%, compared to 73% for laggards. The difference isn't better products. It's superior operational infrastructure. 60% is typically a carrier's break-even point for losses, meaning clients with poor compliance systems are operating in the red zone without realizing it.

When I explain this to clients and paint the picture, they get it fast.

Let's say you're hiring an electrician or plumber for your apartment complex. You've been thinking this is the best guy with the prices, but a lot of claims you submit get denied. Even though some get approved, many get denied.

You don't know why they get denied.

It's because the contractor possibly doesn't have coverage at that moment, or his coverage lapsed. The claims that did get paid? His coverage was probably active during those incidents.

When clients start recognizing that pattern, they realize: "Okay, now I see why I don't need to work with this guy. It's costing me revenue."

Then they look at another contractor. This guy has no claim denials. He's performing work well. Revenue is increasing because they're not having to pay out of pocket for damages they didn't cause.

This is a strategic asset because it lets you focus on contractors who will help you keep generating revenue rather than having to dish out revenue to pay for damages you didn't create.

Why the Industry Hasn't Shifted

When I look at the broader insurance industry (all the agents and brokers still operating with filing cabinets and email chains), I see a fundamental misalignment.

It all depends on the agent and broker you're dealing with and what their goals are in this industry.

I came into this industry knowing nothing. I had to learn. And anything I get into, I want to learn the ins and outs.

I saw that there was a problem. As a broker, I have to act in the best interest of my clients rather than the insurance company. Insurance companies definitely have all their systems in place to make things easy. That's why you have captive agents. That's why they're marketing.

But I figured out that in order to act in the best interest of my clients and keep them in a peace of mind state, I have to offer solutions benefiting them. Not solutions that say they benefit them but benefit the insurance company.

That's why I present the certificate manager. That's why when I'm looking at whole life insurance, I do 10/90 blends where 10% goes to the insurance company and 90% goes toward the consumer. Or if I have to blend it differently, I always make sure more of the percentage goes toward the consumer.

I'm not here for a commission. I'm here to make sure you're taking control of your financial future while building generational prosperity.

That's what business insurance and life insurance should be about—having that competitive advantage of understanding that anything we're doing with insurance is meant to protect you and minimize risk. It's supposed to be strategic. It's an asset.

For the industry to stop treating compliance as an afterthought and start building it as foundational architecture, agents and brokers really have to act in the best interest of the consumer. They need innovative thoughts about how to make this easier for their clients.

If you make it easier for your client and act in their best interest as your North Star (with customer obsession as your value), then that's something agents and brokers need to adopt to achieve this foundational architecture.

If that's lacking within an agency or within their values, they will never achieve the architecture I'm achieving.

And I'm still continuing to build. I'm looking to create an app that will be a competitive edge against Credit Karma. It will offer many different things because we're partnering with organizations like Rock Financial to offer business funding solutions. We have Insure Tax that insures tax penalties on notice.

Every solution we're looking to offer helps the business owner and the consumer.

The Infrastructure You Didn't Know You Needed

Insurance isn't broken.

Your compliance infrastructure is.

The difference between those two statements? It changes how we solve the problem. One leads to endless policy shopping and carrier switching. The other leads to building systems that protect people before they know they're vulnerable.

The gap between issuing a certificate and maintaining active compliance is where liability exposure silently accumulates. The gap between purchasing a policy and verifying ongoing contractor coverage is where claim denials originate. The gap between what the industry accepts as normal and what actually works is where revenue gets lost.

Those gaps are infrastructure problems, not insurance problems.

And infrastructure problems require infrastructure solutions.

Real-time tracking. Automated notifications. Clear communication channels. Accurate contact information. Systems work invisibly so clients focus on running their businesses instead of chasing down certificates.

Clients who adopt this infrastructure see 20-30% drops in loss ratios. They see zero claim denials for entire years. They see patterns in contractor reliability hidden before. They make better hiring decisions. They protect revenue instead of losing it.

They stop blaming insurance and start building systems.

The industry needs this shift. From viewing compliance as paperwork to recognizing it as the strategic asset determining whether coverage works when you need it most.

From accepting dysfunction as normal to demanding infrastructure eliminating friction before it creates problems.

From chasing volume to building ecosystems.

The insurance products work. They've always worked.

We need to build the infrastructure so they do what they were designed to do: protect people operating in complexity.