Not long ago, the subject of insurance compliance was not something that commercial real estate executives discussed on a strategic level.
At best, it was viewed as a matter of pesky paperwork being handled by somebody on a property management team.
Today, the economic climate has brought about a paradigm shift. Insurance premiums are rising, tenants demand a seamless experience everywhere, and budgets have tightened dramatically.
Omri Stern, CEO of Jones — a compliance software solution for real estate and construction — has noticed that, within the last six months, the topic of insurance compliance has made it to the C-Suite.
“The titles of folks who talk to us at conferences and join meetings with our sales team are changing. Leadership is concerned with derisking portfolios, optimizing budgets and delivering a great tenant experience under tough market conditions — and so, every operational process in the building is now being scrutinized at the highest levels. This includes insurance compliance.”
Michael Rudin, executive vice president of Rudin Management Company, concurs. “Current market conditions mean that owners, more so than ever, need to be extra focused on maximizing NOI. To ensure this, we are constantly analyzing every process across our portfolio, including insurance compliance.”
As execs examine what impact the insurance compliance process has on the bottom line, the conclusions are, oftentimes, disappointing.
These companies are asking themselves:
- • What are the expectations of my Class A commercial tenants when it comes to getting vendors approved in the building?
- • How long does it actually take my team to get a vendor approved?
- • How do the costs associated with vendor approval affect payroll?
- • How confident am I that property management is making error-free decisions that protect the portfolio from claims?
For some companies, these questions bring in a sobering realization that their current compliance process simply does not cut it. It wastes valuable time and causes frustration for everyone involved.
The problem, however, is so much deeper than “We just need to buy software.” Stern believes that there is no true difference between managing insurance compliance with spreadsheets and using a “COI tracking tool.” It’s the process that is inherently flawed.
“This might seem counterintuitive — Jones, after all, was created as a COI software tool — but after talking to customers for years, we came to the realization that Jones has been digitizing an outdated and fundamentally broken process.”
A deeper look at the day-to-day compliance process reveals a lot to be desired.
Property managers spend hundreds (sometimes thousands) of hours collecting and reviewing insurance documents from the same vendors multiple times over.
This is a huge inefficiency that causes duplication of work and increases operational costs — an unnecessary waste of time and talent, especially on a task that property managers are often not qualified to perform. That is simply not something any COI tracking tool can actually fix.
If your team of 50 employees spends thousands of hours on insurance compliance, and you reduce the workload by even 20 percent, how much would you gain by reallocating the team to more strategic tasks? In other words, can’t we expect proptech to improve the real estate business model in addition to the cost reductions that clients have come to expect?
It is time we held proptech to the same standard as that of the whole real estate industry. In the words of Michael Beckerman, CEO of CREtech, “In order to help real estate customers manage the tough economic climate, proptech companies must: a) cut operational costs by radically improving processes rather than just optimizing them, b) be agile, c) integrate with core systems and platforms, and d) move towards data transparency.”
What would this practically mean?
That is the question that Omri Stern and his company are trying to nail down. In September 2022, the company launched The Jones Network — a single source of truth for verified insurance data.
To be exact, Jones does still provide software to automate insurance compliance. The recent breakthrough is that Jones is powered by a network of tens of thousands of vendors and their verified insurance data that is analyzed by AI and accessible to every customer.
“We just want to give the industry — and the teams that propel it forward — a compliance solution that actually makes sense,” said Stern. “Your property managers will be able to go on Jones, look up anybody’s insurance profile in seconds, and make informed decisions based on this data. Your team will no longer need to collect the same certificate of insurance twice — they will share access to this data across your portfolio. None of these concepts are novel. This is basically like LinkedIn, but for insurance information.”
The Jones Network has been implemented in hundreds of commercial properties in New York City, and the initial results are promising.
“We’ve been managing insurance compliance with Jones for years and recently implemented The Jones Network in our properties. We already see cost optimization and even higher service standards for our tenants,” said Jonathan Kaufman Iger, president & CEO of Sage Realty.
“We also finally have visibility and control over such areas as vendor procurement. Jones tells the team how likely a vendor is to be compliant in seconds, so they can make truly informed decisions and plan accordingly.
“The idea of building a network of vendors and insurance data has a huge potential to enable our managers to operate more intelligently. It will allow us, as an industry, to provide a level of service that commercial tenants expect and be smarter about focusing on more meaningful tasks instead of reviewing COIs. This is what modern-day CRE standards require, and what modern-day proptech solutions should look like.”
The Jones Network is currently available for properties and construction projects based in New York City. The company plans to expand The Jones Network nationwide beginning in 2023.
Omri Stern can be reached at email@example.com.