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Performance Bonds – Be Wary of New Company Personel




The insurance companies the underwrite surety bonds almost universally tout the importance of the “relationship”.   The surety underwriters like to come out and meet the contractor, conduct an annual meeting, or talk about the big job coming up.   While there is nothing wrong with developing a relationship with the underwriting company, do not fall into the relationship trap.  What I mean is always try to keep your company as attractive as possible to any underwriter  not just the company you are with now, and by all means, hire a professional surety bond broker to work on your behalf.

Case in point about one of the contractor accounts this agency handles.  It is not a “normal” contractor, doing bricks and sticks construction, the company has a high tech component which makes  the underwriting a lot more complicated.  Our agency went out to the market place and found a surety company willing to work with us to understand the nature of the business, analyze the risk and offer a large enough surety program to allow the company to execute its business plan.  This meant building a relationship with the contractor, understanding the unique components of the company and making an informed underwriting decision.  The underwriting process took months to complete and in the end, everyone was happy.

Fast forward a year, the underwriting company establishes a regional office and transfers all the accounts to that office.  Even though it is the same surety company, the new branch office decides it does not like the account and has asked that it be re marketed.  The new office had no relationship with the account and had no desire to develop one.  An underwriting process that took months, a significant amount of time and energy spent developing the surety relationship  and what is the end result?  We are now back to square one.  So much for the relationship with the surety company.

We are a professional surety bond agency, we will find another market to handle the performance and payment bond needs of the account. The lesson of the day, if you or your company is a regular user of surety credit,  find a professional surety bond agent because chances are that relationship with the surety company is not with the company at all, it lies with the individual employees of the company.  When that employee or employees go away, the relationship goes away with it.

 

 

 




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