The Relationship between You, Your Agent and Your Surety

No matter what business you are in, you may need a surety bond at some point in time. This could range from a simple business services bond to a multi-million-dollar performance bond. In either case, the relationship you establish with your surety agent and your surety bond provider is crucial.


The National Association of Surety Bond Producers (NASBP) confirms that a company’s bond producer (broker or agent) plays a requisite role in a firm’s growth and success, particularly in the construction industry.

Whether working with a small local agency, a national broker, a specialist or a generalist, one size does not fit all and there is no right or wrong answer. The best fit typically comes down to who understands your business objectives and exposures — and ultimately, who do you trust to have your best interest in mind? This is also the case in selecting a surety provider. All parties in the bond relationship have expectations, but trust and expertise are its key components. What other factors contribute to a strong relationship?


Open Communication


There is a saying within the surety industry, mainly associated with contract accounts, that emphasizes the three “C”s of underwriting: character, capacity and capital. We would add one more “C” and that is communication.


It’s important for you to recognize that the surety is a co-signer to your bonded contractual obligations — and therefore the surety must have complete and accurate information.

Make a commitment to communicate regularly and transparently with your surety agent and surety bond provider. For example, contractors should provide regular updates on financial information such as projected results, as well as updates on projects, whether they are positive or negative. That commitment will always bolster your company’s relationship with your agent and bond provider.

A firm’s surety agent should also be aware of significant changes in the executive team or management roles or perhaps even future acquisitions, expansions or relocations; all could play a significant part in future surety requests.


Business and Technical Expertise


The right surety agent understands the details and processes involved in bond requirements and bond underwriting, which also helps determine which surety company may be the right partner for your business and its bonding needs.


Dedicated surety agents often have extensive expertise in a specific industry, from either an operations or underwriting standpoint. For example, many surety agents who specialize in construction-related bonds have demonstrated expertise in the construction industry, including a background in analyzing construction industry financial statements. This background is essential when they are consulting with the contractor to prepare for the surety underwriting process.

Firms in other industries, such as engineering, energy, healthcare, or various business services, also benefit from working with a surety agent who understands their specific business operations and the type of risk exposures associated with their industries.


Risk Management Role


A surety agent and surety provider can often enhance a client’s risk management plan or program. They can play key roles on your company’s external business advisory team, along with your CPA, legal representation and other insurance professionals.


As part of that team, they will coordinate to help in the evaluation of your company’s insurance needs and contract obligations, such as general liability, workers’ compensation, subcontractor risk management, contractor’s liability, or inland marine. They may help you to identify and rectify gaps in insurance coverage. For example, a company that is required to have an ERISA bond in place may also need fiduciary liability insurance or cyber liability coverage. In summary, they can help you rest easy, knowing that your business is adequately covered in case of a loss.


Long-Term Surety Relationship and Growth


If your company’s growth is tied to its bond capacity — regardless of your industry — a collaborative and proactive relationship between your business, your surety agent and your surety provider will help you meet your long-term operational and financial goals.


Your surety provider and agent want a strong relationship with you. Why? When you’re successful, they are successful. They are eager to help with your long-term business and risk management strategy.


If you have any questions about anything regarding surety, reach out to the Old Republic Surety branch nearest you.

Eric Kirchner

Eric Kirchner is National Director of Strategic Relationships for Old Republic Surety. He is responsible for creating, managing and directing commercial surety programs along with growing existing business by enhancing agency relationships. Eric has over 28 years of surety experience. He was an underwriter and also has developed a strong marketing strategy involving business growth within existing accounts and successful development of program business.