JW Surety Bonds

Positive Outlook For Surety Bond Industry

The surety bond industry has weathered the storm of the hardest bond market seen to date. The Surety & Fidelity Association of America (SFAA) reported that the surety bond industry as a whole returned to profitability in 2005 after repeated years of record losses. The SFAA’s report included both contract and commercial surety bonds.

Mcgraw Hill Construction’s Engineering News-Record provided a special on suretyship in the June 2006 issue. The article listed the views of many industry top executives for the future and current status of the industry. Almost every executive editorial asserted the same opinions, surety capacity is large enough for current demands. However, they were all quick to note that the capacity available was only for qualified contractors.

Surety capacity is readily available for small to medium sized contracts, but there is a lack of willingness to guarantee larger contractors and so called mega-contracts. Several years ago, our agency was the test agency for Western Surety-CNA’s Fast Track program, which was the first to offer contract bonding based on personal credit for small contractors. At present, Western Surety-CNA has over 12 new competitors to the program they began several years back. The Fast Track program is an excellent example of how the surety market has grown for the small contractor.

Surety associations throughout the country have been pushing to expand bond awareness in the private sector. It appears their efforts are quite successful, as a good amount of growth for the industry is from bonds requested in the private sector. However, there is still a common misconception that bonds can be used to guarantee financing. Surety bonds are a product that guarantee performance, not financing.

2005 proved to be the best year the surety industry saw in many years. Carriers should continue to see profits and expanded growth for years to come, provided they show enough restraint to reserve capacity for those who qualify, not simply those in need. Inflation is a concern for the industry, but there is nothing that analysts can currently forecast that should be of great worry.

A New Look For JW Bond Consultants, Inc.

In the upcoming weeks, our company website is going to get a new look. The redesign will not only be more aesthetically pleasing, but will allow visitors to easier navigate the wealth of information throughout the site. The site has seen some minor cosmetic changes since the original launch in early 2003.

Our agency has always made a great effort to provide our clients with a wealth of information. Over the years our site has grown to literally thousands of pages. We have done our best to organize the large amount of information, but recently decided it would be best to do a complete overhaul. The information doesn’t do any good if you can’t properly find what you are looking for.

The new design will be made available to the public before the end of the month. Feel free to bookmark our site and visit us again at the end of September. We encourage any feedback on how to improve the current or new site.

SFAA Surety Bond Form Library

The surety bond industry has and still is struggling to categorize commercial bond forms required throughout the nation. A surety bond is made up of the bond form attached to a power of attorney. The bond form contains the language of the guarantee, telling you exactly what the bond is guaranteeing. Unfortunately, there is an astounding amount of different bond forms throughout the country. Think of how many different professions there are throughout the nation, everyone from mortgage brokers to auto dealers need bonds in order to legally operate in most states. Now take into consideration that the Federal Government, each state, and local municipality requiring a bond will have their own form. A mortgage broker in New Jersey needs to post a separate bond if they plan in operating in Maryland as well. A contractor may have a bond to file with their state license and a separate bond for their local government. I think you get the picture.

The Surety & Fidelity Association of America (SFAA) has taken on the task of creating an online database of bond forms. The database is constantly growing with additional bond forms being added from industry professionals throughout the states. You can search the bond form database free of charge. The abilities of the search are quite versatile. One can do a broad search for types of bonds or extremely narrow for a specific bond form.

The SFAA has done the surety industry a great deed by taking the time to create such a system. However, there are some unavoidable downfalls to the system. The disclaimer is as follows, “The BNI is not intended to be a source of bond forms to submit to obligees. It assumes you have the proper bond form and need its number to aid in the submission of an electronic execution report. Although SFAA makes every reasonable effort to keep the BNI up to date, the number of bond forms used in the marketplace makes it impossible to assure either comprehensive coverage or incorporation of every change to an existing bond. SFAA, therefore, must disclaim any responsibility for the accuracy, completeness or currency of the BNI. By using the BNI you agree: (a) that you release SFAA from any liability arising out of such use, (b) that you will take appropriate steps to verify that the bond form you propose to use is the form required for the transaction, and (c) that you will tell SFAA if you discover that a bond form in the BNI is no longer current or is otherwise incorrect.”. This means that you can not count on the system to ensure you are using the most up to date copy of a bond form. Unfortunately, obligees do not notify the SFAA when a bond form is updated. Relying solely on the SFAA’s system could result in a rejected bond due to use of an incorrect bond form. One might ask what good is the database if you can not count on the bond forms being up to date. I believe the system is currently good to find a clean copy of a bond form. I am more so hopeful for the future of the database, in hopes that obligees will eventually take the responsibility to update the system to make the bond process easier for all.

Surety Association of America Changes Name

The Surety Association of America (SAA) changed their name to The Surety & Fidelity Association of America (SFAA) earlier this year. The name change was made effective on May 18, 2006. The association has always been involved with surety bonds and fidelity bonds, but the name change clarifies that there is a difference between the two.

Many assume that fidelity bonds are a type of surety bond. It is easy to understand why one can misinterpret a fidelity policy as a surety bond. Typically any agency that offers surety bonds also offers fidelity as well. There are numerous different surety bond types, which only adds to the confusion. Rather than memorize a plethora of bond types it is easier to simply learn how each bond type works.

The two products are quite different. A surety bond is a three party agreement involving a principal (who is being bonded), obligee (who is requiring the bond), and carrier (who is backing the bond). The surety bond guarantees the performance of the principal to the obligee. Make no mistake, surety bonds are not insurance, as the bonding company will look to the principal for payment of the claim. This makes a surety bond more of a form of credit than insurance. Traditional surety underwriting is done with the idea of a 0% loss ratio. Fidelity bonds are more of an insurance product, as the principal purchases the policy to insure themselves. There are only two parties, the principal (who is purchasing the bond) and the carrier (who is backing the bond). If a claim arises, the carrier pays out to the principal, who is the beneficiary when it comes to fidelity.

Hopefully the name change of the Surety & Fidelity Association of America will help many to realize that surety and fidelity bonds are not one in the same.

Surety Bond Industry Closes Early For The Holiday Weekend

The majority of surety bond companies and agencies are closing their doors early today for the holiday weekend. JW Bond Consultants is no exception. Our doors will be closing as of 1:00pm eastern standard time. We would like to wish a safe and enjoyable weekend to all.

As always, our website is open 24/7 to handle all incoming applications. One can obtain an online approval with many commercial bonds. You can also research bonds online in our bond information section or post a question in our online forums.