Today’s professionals have been fortunate to live in a time when technological advancements are developing at a rapid rate. The plethora of available tools, which provides everyday efficiencies, allows professionals to get more done in less time. Unfortunately, that’s a double-edged sword because consumers have just as much access to these technologies. Because of these efficiencies, consumers have become less patient. They expect instant gratification in just about everything they do. While applying for a surety bond is a much more involved process than purchasing consumer goods online, consumers still have the expectation that the process will occur just as quickly. On top of that, most people think of surety bonding as an insurance product. With the emergence of large rating platforms for personal lines insurance, again, consumers are receiving instant gratification and have the same expectations for surety. The surety bond industry is behind the times in this regard but has been making leaps and bounds over the last few years to help surety producers streamline their processes to support faster turnaround times. The most prominent technological advancement is the “new” ACORD initiative that is now being widely supported by the surety community.
What is ACORD?
The Association for Cooperative Operations Research and Development (ACORD) is a global, nonprofit insurance standards association the mission of which is to facilitate the development and use of data standards for the insurance, reinsurance, and related financial services industries.
What is the goal for this initiative?
The goal is to take commonly used forms, used by surety professionals, and establish data standards to facilitate a seamless data exchange between producers, sureties, and obligees, regardless of the underlying systems that each party might be using. This is not referring to bond forms. This is referring to forms used during the submission (i.e., application submission) and reporting process (i.e., report of execution).
What has been accomplished to date and what organizations have been involved?
This “new” initiative began way back in 1996 with the NASBP, SFAA (formerly SAA), and ACORD when various NASBP and SFAA committees came together and decided it was time to develop surety data standards.
As a result of this NASBP and SFAA collaboration, the Joint Automation Committee (JAC) was formed in the year 2000. The committee’s objective was to identify and explore technologies to streamline processes, reduce redundancies, and increase productivity in the surety bond process. The bond process spans the application, submission, execution, and reporting of surety bond transactions.
After a few years of collaboration, ACORD form 501 (Surety Report of Execution) was completed and made public in summer 2004. JAC members then spent the next several years discussing the possibilities with ACORD. At the 2014 NASBP Annual Meeting, a decade after ACORD form 501 was publicly released, a survey was introduced to the industry asking surety professionals if they would be willing to show their support for the surety industry data standards initiative. 52% of respondents indicated that it would be useful or very useful to be able to input data using ACORD standards.
According to Dave Golden, NASBP’s Director of Technology, “When we first sent the survey out, at the NASBP Annual Meeting in 2014, we had just introduced the NASBP Automation and Technology Committee’s re-commitment and role working with ACORD. It was a bit of a reboot and we believed we had renewed energy. Under the leadership of Nick Newton, Robert Coon, and Jenni Waggoner, we felt we could achieve significant advances in a short amount of time.”
With the industry’s strong support, and the right leadership in place, the Surety Forms Working Group was immediately formed. The size of this group grew rather quickly and is comprised of individuals from agencies, sureties, ACORD, and various technology vendors. Its first initiative was to create a bid bond request form. After a number of discussions and working sessions, including a well-attended face-to-face meeting at Applied Systems’ offices in Chicago, the working group successfully created ACORD form 502 (Contract Bond Request Form). This form was made public on March 31, 2015.
Okay, so a form has been created. That sounds great, but what does that mean?
For non-technical folks, this means:
The form itself (layout and information requested) has been agreed upon.
The data fields (also known as form fields or e-labels) for each “blank space” on the form have been agreed upon.
With this in place, when a producer or principal completes a request form, it can be submitted to the surety for the company’s system to “read” the form electronically and “understand” each piece of information in the submission. One single form can be completed and, if the surety has supported these new standards, they can simply send it in without having to re-key information into each carrier’s proprietary system. This not only reduces agencies’ operational expenses, but also improves application turnaround time, which will result in an improved agency customer experience.
What can carriers and surety bond software companies do to support this?
This should be fairly simple. Data standards are common and have been around for many years, just not in the surety industry. IT professionals and software vendors are very familiar with how standards work. Speak with your IT departments or software vendors and introduce them to these new standards and push for their immediate adoption. Sureties and vendors should allow for the intake (upload) of these forms into their systems instead of manual data entry. If the surety requires that the data be manually entered into its proprietary system, then, at the very least, allow the producer to export his or her application onto the ACORD form so that he or she can have it on hand in case the producer needs to submit it elsewhere. Supporting agencies in this fashion will be much appreciated by agency principals and personnel.
What is happening next?
In fall 2015, the surety forms working group will get together for another face-to-face meeting, with the specific goal of reviewing and collaborating on the commercial surety bond application. The group will update the surety community as it makes progress.
Greg Davenport, Senior Vice President of Operations & Strategy for Liberty Mutual Surety, says, “The key to adoption will be on two fronts, in my opinion. Those with systems will need to see the business case to implement the e-label technologies. Our hope is that e-labels are faster, cheaper, and easier to implement than the real-time B2B transmissions for all ROE transactions. And, of course, we hope the case will be bolstered because the same technology can be used for contract and commercial bond requests. The second front is promotion by NASBP and the surety carriers. We need to promote the forms as being the standard and ask that they be used. Only if they are used will we be able to get the data off of them.”
If you are interested in joining the Surety Forms Working Group, click here
. The group is open to all industry professionals, including vendors, and is not a technical group, but a combination of surety professionals with various ideas and skills to enhance the efficiency of our industry.
The co-author of this article is Alexander J. Buckles, who is the President & CEO of The Bond Hub, Inc. He has been serving the technological needs of the surety bond industry for nearly a decade and continues to provide innovative software solutions to surety bond agencies, MGAs, and carriers. Buckles may be reached at firstname.lastname@example.org or (800) 931-5373 X515.
The co-author of this article is Greg Davenport, who is Senior Vice President, Global Operations for Liberty Mutual Surety. He is a 34-year veteran and currently serves as one of the Leaders of the Surety Forms Working Group. He is Past Chair, SFAA e-Business Advisory Committee, ACORD Surety Working Group, and ACORD Global Standards Committee for P&C and Surety. Davenport can be reached at email@example.com.