The difference between bond producers can be night and day. A good producer knows the surety industry and the construction industry (for contract bond producers). For contractors, a bond producer is a key to the door of suretyship. The differences in contract producers could be the difference of approval and declination, bond line size, collateral requirements versus no collateral, etc. A good bond producer can make all of the difference in the world to an active contractor. A good bond producer can also make a difference when it comes to commercial surety. A good commercial producer will be mindful of the owner(s) personal credit, obtain the best rate possible, and be able to offer a variety of solutions when necessary.
A contract bond producer should have an interest in seeing his/her accounts grow. The producer will give the contractor the best advice possible and should be seen as part of the company. A contractor should look for a new producer if they feel the current bond producer cares more about booking premium than the contractor’s future. Make sure the producer has a genuine desire for the contractor to be successful. Contract bond producers need to have intimate knowledge of inter workings of the construction industry. A producer will not be very effective in contract surety without knowledge of both suretyship and the construction industry. The producer will need to possess knowledge of contracts and construction law. A good producer will also be aware of local and national construction markets.
Suretyship is an industry built on relationships; commercial and contract bond producers must have good relationships with their principals and their underwriters. Underwriters will likely be more open to new ideas and various risks of a producer that they respect and are friendly with. Whether people like it or not, a producer that has good relationships with his/her underwriters are more likely to obtain approvals and or lower rates. Principals should expect honest evaluations from their producers, not empty promises of what can be done in an attempt to keep business. It is obviously time to look for a new surety source if a producer is consistently failing to provide what is discussed.
The most important capability any producer can possess is proficiency in accounting and finance. A producer that can adequately evaluate an account prior to sending to his/her underwriters is worth their weight in gold. If a producer does not know how to interpret the information at hand, the application will more than likely be submitted to every resource available. One might think it is a good idea to do this, as this will give the principal a better shot at a reduced rate. Unfortunately, that is not the case. Underwriters are going to be more favorable to agents that consistently send them accounts they feel comfortable writing. A good producer knows their markets and what they are willing to write. Therefore, a professional producer will not waste their time or their underwriters by submitting applications that are destine for declination. What is the harm in a surety declination? Well, there are multiple problems. For one, numerous submissions will also generate numerous credit pulls, lowering the owner(s) credit scores. A bigger problem is that once a surety has declined a bond, they will not review it again. Some sureties will decline a bond just because they have received an application more than once. They feel that the principal is shopping around a lot and therefore, in a desperate situation. A paper pushing bond producer is not a good route for any intelligent principal.
The most professional bond producers have networked throughout the surety and construction industries, creating lasting relationships that will assist them. A good bond producer is also proficient when it comes to reviewing financial statements and other bond application requirements. The producer will think about the best solution for an account rather than simply submitting it to every market they are appointed with. A bond producer can make a huge difference when it comes to the future of a business. Choose your producer wisely, and bring them on board to your company for years of success to come.
