Union Wage & Welfare Bonds: Difficult To Place

Union Wage & Welfare Bonds have become increasingly difficult to place over the years. What is it about this bond class that is scarring away so many bonding companies? In order to answer this question, we must first learn what a wage & welfare bond guarantees. In this article, you will read about what wage & welfare bonds are, and why they are so difficult to place. We will also review some tips for obtaining a wage & welfare bond.

What is a wage & welfare bond?:
A wage & welfare bond (also known as a union wage bond) guarantees the payment of union dues. This means the bond is a type of financial guarantee. If the principal fails to pay union dues for a given time period, the union can file a claim on the bond and collect their dues. Each union has their own specific bond language and union dues. Therefore, a separate wage & welfare bond is needed for each union requiring one.

Why are bonding companies hesitant to write wage & welfare bonds?:
Bonding companies took a major hit during the turn of the millennium. A domino effect brought on the end of the “soft market”. Numerous bonding companies closed their doors for good, some were downgraded to junk status (no longer allowing them to issue bonds), and the remaining became much more conservative in their underwriting. Bonds with historically higher loss ratios were no longer being issued as freely. In particular, many financial guarantee bonds were all but a thing of the past (unless 100% collateral was provided). Wage and welfare bonds, a type of financial guarantee bond, is one of the few financial guarantee bonds still being written. These days, bonding companies that are still willing to write them do so at higher rates than other bond types.

Tips on obtaining wage & welfare bonds:
The end of the “soft market” made it much more difficult to place a wage and welfare bond. However, this does not mean they are no longer being written. Being that these bonds are more difficult to place than a typical commercial bond, one should look to an agency that specializes in bonding. Your average property and casualty agent will not have the proper surety bond markets in order to properly place the bond (which is why many broker the business to a bond only agency). You may want to read, “What Makes A Good Surety Bond Producer” to help you find an agency that will meet your needs.

A wage & welfare bond is a type of financial guarantee, a bond class that has become harder to place since the end of the “soft market”. Many financial guarantee bonds are no longer being written due to their loss ratios, but wage & welfare bonds are fortunately still being written. The bonds are more difficult to place than in the past, and should be written by an agency that specializes in surety bonding, otherwise you risk an increased rate or even worse, declination.

Eric is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog. He has held a range of different roles within the surety industry, from agent assistant to bond issuer, which gives him a unique insider perspective on surety related topics.


Jessie Casarez

Hi, I am an agent looking for a market to place a difficult Employer’s Wage bond and Employer’s Fringe Benefit bond. Our insured is being cancelled by Great American due to open bond claim. They also have issues with their credit, but have an alternate signer they can use. Please contact me and let me know if you can help. Thank you.

Eric Weisbrot

Hey Jessie,

I’ll forward your message to our sales team and they will reach out to you.


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