What are Surety Bonds?
Who are Surety Bond Producers?
What are Surety Companies?
What are the Benefits of Surety Bonding?
Who Are Surety Bond Producers?
Surety bond producers are business professionals who specialize in providing contract surety bonds to contractors, subcontractors, and other construction project participants and/or who specialize in providing commercial surety bonds to individuals and businesses. Obtaining surety credit starts with professional bond producers. Arranging bonds and a line of credit with a surety company requires extensive, detailed work for every bid that a contractor submits. Each surety company has its own unique underwriting standards and practices, and the prequalification process to obtain surety credit can be a difficult experience if not handled by a surety bond specialist.
Bond producers must be licensed by the state(s) in which they do business by the state department of insurance. To obtain a license, bond producers must complete coursework requirement and pass a written examination and background check. Professional surety bond producers are knowledgeable about surety products, the surety market, and the business strategies and underwriting differences among sureties. Unlike most insurance agents, surety bond producers focus their main activities on the surety market and positioning construction firms to qualify for surety credit.
In addition, a bond producer can serve as an objective, external resource for evaluating a construction firm’s capabilities and, where necessary, can suggest improvements to help the construction firm meet a surety company’s underwriting requirements. A bond producer can also serve as a resource for providing the bond principal with referrals for other types of professionals, such as certified public accountants, attorneys, and bankers.
With regard to contract surety bonds, a long-term, successful relationship between the producer and the contractor can be quite beneficial for the growth and development of the construction firm. Selection of a bond producer is, therefore, critical to a firm’s success and growth. In choosing a bond producer, construction firms should consider the following (and other) information in the selection process.
- Is the producer licensed in your jurisdiction and that of the project?
- Does the producer have a reputation for integrity?
- What percentage of his/her business are construction clients?
- Does he/she understand the construction industry and the construction process, particularly the management and administration of construction contracts?
- Does he/she understand construction accounting procedures, especially an ability to analyze financial statements, work in progress, and cash flow?
- With how many sureties does the producer work?
- Is the producer specifically authorized to issue bonds on behalf of sureties?
- Has the producer developed solid relationships with surety underwriters?
- Has the producer developed solid relationships with other professional service providers, such as CPAs, attorneys, and lenders?
- How aware of and interested is the producer in local, regional, and national construction markets?
- How active is the producer in local or national construction associations, such as the American Subcontractors Association, Associated Builders & Contractors, or Associated General Contractors of America, and in local or national surety industry associations, such as the National Association of Surety Bond Producers?
- Is the producer committed to frequent client contact through newsletters, site visits, and visits to client offices?
- What other services does the producer provide clients to help them with their business needs?
Find a NASBP professional surety bond producer in your state at the NASBP Surety Pro Locator website.
NASBP's membership includes NASBP Producer Members, Affiliates, and Associates.