Translating the Top 5 Most Cringeworthy Surety Conversations

This submit is a part of a collection sponsored by Outdated Republic Surety.

As an unbiased insurance coverage agent, you’ve most likely had an ungainly second or two with shoppers. They’re good studying experiences. On this article, a seasoned surety bond supervisor shares his personal awkward conversations with shoppers and what they actually meant. You’ll discover them instructive as you start to construct your company’s surety e-book of enterprise.

As bond managers, we at all times search for methods to assist our brokers, contractors and mission homeowners higher perceive surety. It may be a fairly arcane topic, and never everybody who has a hand within the course of is acquainted with bonding. However that doesn’t imply we nonetheless don’t get the occasional cringeworthy second! It simply underscores how obligatory schooling nonetheless is within the bonding world.

Listed here are my high 5 cringeworthy surety conversations and their “translations.” Perhaps you will have your individual checklist as properly.

1. “We don’t want a bond. We solely want a prequalification letter.” Translation: Why purchase the cow when you may have the milk without cost?
   On this case, the mission proprietor desires the surety to prequalify the contractor with out securing a bond. House owners have this notion that if a surety has checked out an account, it have to be safe. Nevertheless, prequalification letters don’t present the identical in-depth underwriting required for a bid or efficiency and cost bond. The idea for these letters may be so simple as a credit score report. There isn’t a contractual obligation as there can be with a bond. And within the occasion of a default, there is no such thing as a safety.
2. “The proprietor solely desires a bond for a sure proportion of the contract.” Translation: The proprietor desires safety however doesn’t need to pay for the protection.
   Our follow-up query is normally, “Precisely what a part of the mission are you asking us to bond (which we’re completely happy to do, in case you break it out into its personal contract)? As a sensible matter, bonding a proportion of a mission doesn’t make sense. The surety is on the hook for all facets of the contract, and that’s how we’ll underwrite and value the bond. Furthermore, the associated fee for the bond is probably going being handed on for the entire contract, not only a proportion.
3. “Right here’s the account. Give me your greatest provide.” Translation: This account goes out to a number of sureties, and will the most effective firm “win.”
   Profitable from what perspective? Capability? Relationship? Experience? Did anybody ask the shopper what profitable means to them? Did they get an opportunity to fulfill an underwriter and really feel snug? Just a few issues to notice:
   • Charges are virtually at all times handed on to the proprietor as a part of the job price.
   • Price variations not often decide whether or not a contractor is the low bidder.
   • If an account was picked up based mostly on fee, it can probably be misplaced on fee. Competitors is wholesome in any business, however contract surety shouldn’t be handled as a commodity.

4. “Are you able to quote this bond?” Translation: The agent will not be acquainted with the surety underwriting course of.
   We normally hear this as a result of a lack of awareness, not due to ranking. Surety corporations have completely different appetites and enterprise capacities, and skilled bond producers know which firm would be the greatest match for a contractor. Establishing bond credit score (and finally agreeing on a fee) is a course of that’s constructed as a lot on character and relationships as it’s on monetary capability. The worth of a surety-dedicated producer is of their figuring out what underwriting inquiries to count on and dealing with the surety to get the most effective general match.

5. “I simply want a decline on this.” Translation: I do know this contractor received’t qualify for a bond, however I want to have the ability to inform them I’ve checked with just a few sureties.
   Generally explanations from a surety as to why a bond can’t be written are useful. Much more helpful are the steps they’ll implement to acquire surety credit score. In sure instances, we are able to get inventive and discover a approach to write the account, or on the very least advocate a producer or market that focuses on difficult-to-place enterprise.

Outdated Republic Surety enjoys working with all ranges of experience. The extra we are able to educate everybody about our business, the larger the worth we are able to generate. Let’s hear your cringeworthy moments, however let’s do what we are able to to eradicate these conversations.