Just to play devils advocate on claim rates for contractors new to public work…We find that smaller contract programs based solely on credit typically outperform fully underwritten bond line claim ratios. Typically, contractors that fall under those programs are new to public work. Perhaps the good claim ratios are due to contract size rather than anything else?

Just as an update, I posted another article about the pros and cons of the stimulus package for the construction industry. See: http://www.jwsuretybonds.com/blog/stimulus-package-pros-cons-for-the-construction-industry/

Some surety bond claims areas are indeed booming right now, e.g., subdivision claims. General building in the private sector is way down, and I expect more and more failures there as things continue to dry up and the effects resonate.

The article I posted on the thread: http://forums.jwsuretybonds.com/surety-bond-news/2330-stimulus-bill-hastens-switch-away-private-projects.html mentions a few factors to consider. The fast-track of many of these stimulus projects may complicate matters, and contractors new to the public arena often face new challenges, e.g., slower payment and more red tape. It’s one thing to lien a private project and quite another to fight city hall. I’ve seen many contractors fail simply due to switching from primarily private to public, and vice-versa. Underwriters should be wary.

In time, the reinvigorated SBA program will likely generate more claims business. While these are typically much smaller matters in dollar value, the volume is fairly high and they are often quite complex. The SBA claims-handling rules must be followed carefully, as the taxpayers’ money is at stake and the sureties are audited. These are typically not massive losses where you can simply throw money at the problem. This will certainly generate claims business for those familiar with the program.

Read more about that over at: http://forums.jwsuretybonds.com/surety-bond-news/2331-stimulus-surety-too.html