The Surety Forms Working Group Needs You!
On the wall in my office is a bond, pictured here, that begins:
Know all men by these present… The entire bond was hand written on June 18, 1848, and guarantees the construction of a bridge across Ludlow Creek in Ohio. Except for using personal sureties (corporate surety had not developed yet in 1848) and having a contract price of sixty-five dollars, the bond reads almost the same as one we would issue today. In the 166 years since that bond was written out by hand, we have taken a huge step forward: bond forms are
now printed.
Sarcasm aside, at least one state still requires that bid bond forms be filled out by hand for the Department of Transportation lettings. The bond department is the only one in our agency that has (or needs) a typewriter. While several sureties have developed online systems to process and to report bonds, for the most part, their proprietary systems do not communicate with agency-based systems. As a result, agents need to learn multiple carrier systems to conduct business – in addition to their own agency system. For agents using separate bond processing programs, the data entry is often tripled–once for the surety, once for the bond processing program, and once for the agency accounting system. I could go on, but I have not met anyone that argues that the surety industry is the model of efficiency.
You do not have to go far to see a better way of doing things. In 1970 insurance industry representatives formed what is now known as the Association for Cooperative Operations Research and Development (ACORD). Its goal was to standardize the thousands of forms used by the insurance industry. That mission evolved into issuing standards for the electronic transmission of information so that the insurance application entered into an agency processing system could be shared with multiple insurers with their own proprietary systems. Even surety-only agencies are familiar with the ACORD forms and their use throughout the insurance industry,except for surety. It’s time we joined the 21st century.
The NASBP Automation & Technology Committee is leading an effort in conjunction with the Surety & Fidelity Association of America (SFAA), surety companies and industry vendors to help develop ACORD standards with the Surety Forms Working Group. Since bond form language is not centrally regulated by state insurance departments as insurance policies, standardizing bond forms is not on the agenda. We have to walk before we can run. However, sureties are standardized in the underwriting information they use. NASBP developed the paper forms to capture that information in a standard format–that is the Contractor Questionnaire and other NASBP Producer Toolkit forms. We are long overdue in converting the forms to an electronic data standard. Our immediate goal for the Working Group is to focus on the universal information needed to underwrite and approve bonds. The Working Group had its first meeting in Chicago in November and expects the first ACORD form to be published in January 2015–-a standard contract bid bond request form. However, in order for this effort to succeed,
we need you!
As the leading surety professionals on the agency side, NASBP Members are critical to this process. Your support is needed in two ways:
1. Input: Take a seat at the table. You do not need to know XML or http or XYZ. You are needed for your understanding of the industry and how bond producers work. This means producers; what information is important to get to the surety? It also means CSRs; how does the data flow to the sureties? I strongly encourage you to volunteer by completing the volunteer form
here.
2. Support: All the standards in the world are useless if no one adopts them. Encourage your vendors and sureties to integrate the ACORD Surety standards in their system as they are issued. Encourage them to actively participate with the process and join the Surety Forms Working Group themselves. Pictured is the recent ACORD forms meeting held in Chicago, Illinois.
The time commitment won’t be huge, but the benefits will be. By doing these two things, you help insure that the standards are effective and widely adopted. The resulting increased efficiency will have a direct impact on your agency’s bottom line. Throw away the typewriter and welcome to the 21st Century!
For more information on this topic, direct questions to Dave Golden, NASBP Director of Technology, at dgolden@nasbp.org.
This article was written by Robert M. Coon, who is Vice-President of Surety for the NASBP Member firm of Scott Insurance in Greensboro, NC. Coon focuses exclusively on the surety industry and has over 30 years of experience as both an underwriter and agent. Based in Greensboro, NC with clients throughout North Carolina and Virginia, Coon works with contractors ranging in size from startups to Engineering-News Record 400 companies to maximize their surety program both in the USA and internationally. Coon serves as Vice Chair of the NASBP Automation & Technology Committee.