I have numerous meetings with multiple carriers every year. To my delight, the year has been surprisingly good for every carrier. Some of the carriers write larger contract bonds only, while others only deal with smaller license surety bonds.

During the start of 2008, JW Bond anticipated a decrease in revenue throughout the year due to the troubles stemming from the housing market. There is no doubt our economy is in some turbulent waters, as our agency is seeing a larger amount of cancelled bonds than ever before. Usually, the policies are cancelled due to the principal going out of business. That’s the bad news. On the bright side, our agency is also seeing a record amount of new incoming applications due to new companies being formed. Similar to our carriers, our agency should still show a small increase in revenue for 2008, as well as an increase in overall policies within our book. In other words, we are seeing more start-ups being created than companies going out of business. Hopefully a sign for the general health of the economy.

The study was published in December of 2007 and can be found at: Mortgage Broker Regulations That Matter: Analyzing Earnings, Employment, and Outcomes for Consumers

The process ultimately self-adjusts according to the individual case, but this entry should provide some general help and basic orientation. The most important aspects involve communications: immediate, concise, thorough and frequent contact with surety claims personnel; the complete disclosure of information; and continuous, real-time status updates. Surety claims persons are expected and required to treat all parties fairly, ethically, thoroughly and within legally prescribed time frames and in a courteous, professional manner. Give them all the information they request, in addition to what you would like them to have, and do it as soon as possible. Never be afraid to ask questions throughout the process. Like you many, if not most surety claims professionals had never heard of this obscure subject matter until shortly before they got involved with it. So, they are typically tolerant of what you may feel are “stupid” questions.

Search the Internet for situations similar to your own. Talk to your peers to the extent possible. Browse and ask questions here, you may find an answer if you seek only basic information. Oftentimes, the bond obligee, agent, broker or underwriter can help as well, especially with finding the correct claims contact at the surety. If a statutory bond is involved, often the governmental entity requiring the bond can assist.

Depending on the ramifications of the outcome of the claim, you may need to obtain highly-specialized surety claims experts, e.g., legal, accounting or construction consultants. This may not be the time for old buddy who went to law school, but to get on the search engines. Most find that this is money well spent. Look at it this way: Four Minute Oil Change is not the place for the 90,000 mile tune-up, no matter how well-intentioned. Sometimes, you have to go back to the dealer, who put the thing together. If you are facing a tough situation, you should be aware that others involved may consider it routine. Prepare accordingly.

There is a fair amount of printed matter available on the law of surety claims, but much of it concerns complex construction and is prepared for the benefit of the surety itself. These books tend to be weighty tomes, nationwide in scope, written by and for specialists. But they may also be very helpful orienting the layperson and should not be overlooked. Despite the fact these are “law books” mostly written by surety attorneys, these
American Bar Association (ABA) publications - scroll down to “Fidelity and Surety Law” may be worth your while.

For construction contract surety claim matters, a concise (and free) resource is available, An Overview of the Contract Surety Bonds Claims Process thanks to the Associated General Contractors of America (AGC) and the Surety Information Office (SIO.)

If your surety claim involves highly technical construction issues, in addition to legal ones, you will have to search accordingly. For example, often construction contract surety claims may involve liquidated damages (LD) due to delays. Books like: Construction Scheduling: Preparation, Liability and Claims by Wickwire et al, Guide to Construction Contract Surety Claims Schwartzkopf et al., are excellent points of reference. Internet searches within bookseller sites of may yield similar titles.

Unfortunately, surety bond claims happen. Typically, they are not painless, nor are they insurmountable. The above resources can give some guidance and a rough template of how to proceed.

Guest Author: Surety Insider, LLC