Experts in the surety and legal fields at the NASBP Annual Meeting on Tuesday examined the concept of a “promise” in relation to surety bonds and how a claims handler can best serve as a “promise keeper” in a variety of situations.
The panel examined contract-surety claims scenarios ranging from “simple to highly complex,” said panel member Rick Levesque, a director with Hartford Bond. Those scenarios included a typical bond-payment scenario aimed at fostering the audience’s understanding of who made a “promise” and what reasonable expectations should be in such a case, Levesque said.
The panel featured a producer, an underwriter, a claims attorney and two construction surety lawyers who examined their various roles, obligations and expectations in each scenario, he said.
“That type of framework isn’t explored that often when you have the whole surety ‘food chain’ at one table,” he said.
Levesque emphasized that the bond spells out the surety’s legal obligation, which “is what it is.”
“The obligation of the surety needn’t change, nor should the product. What might be changed is to simply enhance the process of independently investigating these claims and rendering decisions,” he said.
The producer is the party most likely to have had contact with the contractor and conveyed what the surety bond “is all about,” Levesque said. Improving claims processes “really raises the bar” and provides the perception within the marketplace that the value of surety bonds has been enhanced.
Some companies have already committed to this, he added.
Sureties might be able to make such changes by using the “EURECA” concept, which spells out potential practices that claims departments could follow, he said. Under the concept, the “promise” would be that a surety is “fully committed to staffing claim situations with surety professionals” who have traits represented by each letter in the acronym:
--Experienced
--Urgency
--Responsive
--Enterprising and innovative
--Collaborative
--Act with integrity
In essence, all that would change is the process of “getting from point A to B” in order to reach decisions faster, Levesque said. An example of this would be responding to the concerns of a general contractor, subcontractor or project owner about a surety’s speed in replacing contractors.
To address issues more quickly, surety companies could take steps such as increasing their staffing, ensuring that employees are geographically positioned in a strategic way, and committing to “having resources out quickly and with the right talent,” Levesque said.
The key is to speed up the process without diminishing the quality of a surety’s work, he said. The EURECA concept wouldn’t change the surety product, but simply aim to enhance how sureties serve their clients, he added.