How to Prequalify a Surety ― and Why It’s So Important

This publish is a part of a collection sponsored by Outdated Republic Surety.

Any insurance coverage company that has a e book of surety enterprise can use the data right here about prequalifying a surety firm.

The variety of surety corporations represented in any area could make the duty of prequalifying or differentiating amongst them difficult to say the least. Many bond brokers and brokers have entry to greater than 30 surety firm markets, and there may be necessary distinctions between every of them that needs to be understood earlier than a variety happens.

The three most important methods to qualify a surety firm

The next sources make it simple to make certain that the surety firm you might do enterprise with is respected and licensed to do enterprise in your state:

1. Federal Treasury Restrict (T-Itemizing): It’s a good suggestion to make use of this federal web site, which signifies the dimensions restrict of a single job the surety is certified by the federal authorities to bond. The location additionally signifies the states during which the corporate is licensed to put in writing bonds.
2. AM Greatest Firm: This insurance coverage business score service supplies data on monetary power and insurance coverage scores for events. You’re required to join this service in an effort to entry the data, although oftentimes surety corporations will present their brokers with copies of their most up-to-date scores from AM Greatest Firm.
3. Monetary assessment websites: Firm web sites similar to Commonplace & Poor’s, Moody’s and different score providers for publicly traded surety corporations can present helpful data when qualifying a surety. The websites present firm annual reviews, 10-Ks and different stockholder and investor data.

Bond customers also needs to confirm the validity of bonds they’ve obtained as a part of the prequalification course of:

1. Examine powers of lawyer: Homeowners/obligees examine powers of lawyer to make sure they’re present, dated concurrently, and are legitimate, matching with the identify on the connected bonds.
2. Confirm filed bonds are legitimate: Some obligees contact surety firm representatives to confirm bond numbers and filed bonds, and likewise verify company powers of lawyer are legitimate by acquiring confirming documentation from the surety corporations.

A very powerful features to search for in a surety firm

Knowledgeable company surety bond consultant will help help within the prequalification course of through the use of their information and relationships to match a contractor or different celebration with the correct surety based mostly on:

• Underwriting capability, flexibility, urge for food, particular packages out there and their phrases (i.e., fast bond packages).
• Price filings and standards, indemnity and subordination settlement language.
• Declare division insurance policies and dealing with.
• Further providers provided, similar to bond-ability letters, peer assessment and analytical instruments for shoppers.
• Repute, pending claims or litigation, giant surety losses, personnel adjustments and firm acquisitions or consolidations.

Along with the above, the next sources are useful when researching surety firm data:

• Business associations
  • SFAA (Surety & Constancy Affiliation of America): This website lists firm members and worker involvement in native and nationwide chapters. Firm personnel and brokers can often present surety firm rankings, written and earned premium, paid loss and mixed working ratio underwriting efficiency data. This may be proven for a number of years as an instance the pattern evaluation of an organization’s fee of development, loss historical past, and many others.
  • NASBP (Nationwide Affiliation of Surety Bond Professionals): This website reveals firm members, strategies for networking and sources for schooling and advocation.
• State licensing websites
  Websites like this one for Florida, for instance, verify firm and company licenses and permit the consumer to validate the agent is displaying as an energetic licensed agent with the corporate.
• Surety firm web sites
  These websites present personnel, expertise, underwriting urge for food, bond courses the surety could help and typically a specialty buyer.
• Social media
  Websites like LinkedIn could present further particulars in a search of surety corporations and their personnel positioned regionally and nationally.

Many events depend on company representatives to pick the very best surety firm for his or her wants. Usually, this may be one of the best ways of prequalifying the surety past the licensing, T-listing and score company ranges talked about earlier.

For these with vital bond wants, it’s strongly advisable to have a face-to-face assembly with the surety representatives servicing your bonds previous to choice and a minimum of yearly thereafter.

Utilizing the following pointers for prequalification will help with choosing the proper surety firm that may suit your wants now and into the longer term.

When you have any questions on something relating to surety, contact an appointed agent, or attain out to an Outdated Republic Surety department nearest you.