January 2004
A Voice Of Reason On “Wet Powers”
What’s the Issue?
As you may recall from past Pipeline articles, considerable confusion exists about the proper form for powers of attorney submitted with bid bonds on federal projects. In December of 2002, the Government Accounting Office (GAO) issued an opinion in The Matter of All Seasons Construction, B-291166.2 (12/6/02). In that case, the GAO decided that All Season’s low bid should be thrown out because the surety company’s printed signature on the power of attorney was produced at the same time the document was produced (i.e., it was part of the “form”) so the contracting officer (CO) could not determine whether the signature had been altered.
All Seasons appealed the GAO decision to the Court of Federal Claims, which upheld All Season’s disqualification, but on grounds different from those followed by the GAO. The federal court held that the rejection of All Season’s bid was proper, because the power of attorney submitted by All Seasons was a photocopy. The court did not address the GAO opinion that a printed signature on a power of attorney would never be acceptable unless it was clear that the signature had been applied after the document had been created. Consequently, GAO’s opinion in the All Seasons matter remained intact for contracting officers to rely on in future procurements.
NASBP was concerned that COs might follow the extreme conclusions expressed by GAO in the All Seasons decision. Therefore, NASBP warned its members that the use of power of attorney forms, which contained a surety signature produced at the time the document was produced (such as a mechanical signature on a pre-printed form) were at risk to be rejected.
NASBP immediately joined together with the Associated General Contractors of America (AGC), the Insurance Association of America (AIA), and the Surety Association of America (SAA), to change the Federal Acquisition Regulations (FAR) to expressly permit the use of mechanically applied signatures on powers of attorney forms. While there is optimism that the FAR may be changed, it has not yet happened.
Court of Federal Appeals Announces Recent Decision
In the meantime, the Court of Federal Claims in Washington D.C. issued a decision in Hawaiian Dredging Constr. Co., Inc. v. United States, W.L. 51318 (2004) that is helpful to the collective efforts of the surety industry to do away with the government’s unwarranted concerns about the condition of powers of attorney submitted with federal bid bonds and other bid documents.
In this case, Hawaiian Dredging submitted the low bids for two wharf and dock repair contracts at Pearl Harbor, Hawaii. With its bids, Hawaiian Dredging submitted bid bonds accompanied by a power of attorney that did not contain an original “wet” signature, i.e., it had not been hand signed by the surety. The power of attorney was “printed in blue ink to differentiate it from a photocopy, but nonetheless it was a mechanical reproduction, rather than an original document,” Hawaiian Dredging, at p. 2. Further, the surety representative’s signature on the power of attorney was a mechanically applied (facsimile) signature as was the notary’s attestation of that signature.
Relying on GAO’s All Seasons opinion, the CO rejected Hawaiian Dredging’s bids on both projects on the grounds that “the signatures on the Powers of Attorney [accompanying Hawaiian Dredging’s bid] were not original signatures.” The CO restated GAO’s conclusion in All Seasons that “pre-printed powers of attorney are not acceptable.” Hawaiian Dredging subsequently protested the contracting officer’s decision in the Court of Federal Claims.
On January 9, 2004, the Court of Federal Claims overturned the CO’s decision to reject Hawaiian Dredging’s bids. The court held that the CO acted unreasonably in rejecting Hawaiian Dredging’s bids. Furthermore, the court explained that it is unreasonable for COs to rely on the GAO’s opinion in All Seasons as a basis to reject every power of attorney containing a mechanical signature.
The court went on to provide a clear standard for determining whether a mechanically signed power of attorney demonstrates the surety’s intent to be bound by the bid bond. The Hawaiian Dredging court held that a mechanically signed power of attorney demonstrates the surety’s intent to be bound by its bid bond if the power of attorney contains:
- a mechanical or facsimile signature of the surety (not a photocopy);
- an original, raised corporate seal embossed onto the power of attorney; and
- a certificate/statement that the surety intends to be bound by a mechanically produced signature on the power of attorney
The court reasoned that the combination of these factors “in their totality establish[es] unequivocally that the surety intends to be bound,” Hawaiian Dredging at p. 10. It is important to remember that photocopied powers of attorney are not affected by this decision and may be rejected by COs.
Hawaiian Dredging Demonstrates the Need to Change the FAR
It is possible that the government or, more likely, the second lowest bidders could appeal this decision. If it stands, the decision begins the process of resolving the uncertainty surrounding powers of attorney that has plagued surety bond producers, surety companies, and contractors in federal bidding.
There is some risk, however, that COs will continue to follow All Seasons until either a GAO decision recognizes and adopts a similar approach to that employed by the federal court in the Hawaiian Dredging case, or changes are made to the FAR. As it stands, the only way to insure that a power of attorney is not rejected, is to submit a hand-signed, i.e., “wet,” signature along with a federal bid bond.
In circumstances where a CO rejects a mechanically signed or printed power, the Hawaiian Dredging decision gives bidders a reasonable hope that the Court of Federal Claims will overturn that rejection if the power meets the criteria described by the Hawaiian Dredging court. Bidders must realize that they may have to go to court, and spend a lot of money, to win their case.
The Latest Action…To Date
On January 22, 2004, an interagency working group of the Federal Acquisition Regulations (FAR) system convened to discuss the power of attorney issue. The working group agreed that amending the FAR was the appropriate mechanism for clearing up the confusion created by the GAO, All Seasons, and Hawaiian Dredging decisions. Staff from the Army Corps of Engineers (USACE) and NAVFAC will be writing a memorandum for the FAR Council to consider, which states the rationale for the amendment and suggested amendatory language. After approval from the FAR Council, the proposed amendment will be available for public comment from citizens and organizations such as NASBP.
NASBP will continue to monitor this issue and provide members and affiliates with significant updates as they occur.
Spaces Still Available for February Level I Surety School
The February 2004 Level I Surety School has limited space available at this time. The school will take place February 8-13 at the Renaissance Houston Hotel. Persons interested in attending can register via the NASBP website!
Unfortunately, the 2004 Level II Wm. J. Angell Surety School is CLOSED and cannot take additional students. Interested persons will have to wait for the next Level II School that will take place in 2005.
President’s Message
My 2004 Surety Crystal Ball
Well, I got my wish. Underneath the Christmas tree was the perfect gift. I got the one and only, 2004 edition, Surety Crystal Ball, complete with stand, users guide, and of course, the instant hand warming feature (activated only during the rubbing process).
The stand was some cheap plastic thing that would take three PE’s to assemble. I figured I could do it without the directions. After somewhat successfully completing this small feat, I only had two extra parts. How important could they be? They’re only plastic!
On to the users guide! As most things today, the users guide included a CD for an interactive tutorial. After carefully placing the CD into the correct drive, I waited. And waited. Assuming that it may take it a little while to load (after all, this product held all the answers I needed for the upcoming year) I decided to play some solitaire, Vegas style. After ‘losing’ twice my net worth, I checked on the progress of the CD. Just as I thought! Nothing. I went back to the paper user’s guide to find out what was wrong. Something about ‘auto run’. This guide was written about as clear as an insurance policy. My 15-year-old son, Tripp, strolled past the computer, saw my dilemma, and quickly got me going.
Wow! What an experience. The CD ran some sort of movie instructing me on the proper care and use of my new crystal ball. With just a little TLC, it would last the whole year, at which point I would be eligible for the 2005 upgrade.
There were still a couple of important decisions to make: Where to place this decorator’s dream piece of furniture, and when to first use it. Better wait until after supper. It could be a while once I got started.
Those who know me have correctly determined that my wife, Susan, is a great cook. After a wonderful culinary extravaganza, I was off to the game room where the new 2004 Surety Crystal Ball had been given a corner of prominence. Dessert would have to wait.
Trying to set the right ambiance for what I knew could be a life-altering event was necessary. Setting the lights just so, I moved my chair into the correct position; everything was perfect. I was ready!
As instructed, I placed my hands at the ten and two positions, palms down. I started the incantation, “All things above the line, all things below, all things liquid, positive cash flow, job schedules open, job schedules closed, Surety Crystal Ball, tell me what I need to know.” Even at that point in time, I felt like something wasn’t quite right with the chant; however, I pressed on, “All surety knowledge, both past and present, reveal the surety future to me, your poor peasant!” I circled my hands as taught by the CD. My hands didn’t get warm, nor did the crystal ball light up.
The only other occupant of the game room was my daughter Rachel, who yelled to me in my perfectly lighted, mood-inspired corner of prominence, to “Pipe Down.” After all, she was watching a very critical part of MTV’s “The Real World,” and I had “bet-ter-not-ru-in-it.”
Tripp came in, turned on the overhead light, and started juggling pool balls. He’s gotten very good at juggling. He’s now practicing juggling items of different weights and sizes, such as a piece of popcorn, a golf ball, and a tennis ball. He hasn’t quite mastered it yet, but the dog loves the popcorn even though she’s scared to death of golf balls.
Desperate to reach my goal of surety knowledge, I thought I needed to rub harder and faster. Sure enough, my hands started to warm. “This is it! I’m about to have all next year’s secrets revealed!” It was at this critical juncture that the two extra plastic pieces leftover from the stand installation made themselves obvious by their absence. A four-legged stand is not very sturdy with just three legs, made even worse by the frantic rubbing.
Susan heard the crash down stairs. The kids both yelled at the same time, “It wasn’t me!” I was left all alone. Not only had my perfect Christmas gift been ruined, I didn’t have the answers I so desperately sought. Nor was there any sympathy coming from my family. I ruined the TV show for my daughter and scared my wife to death. Tripp, however, scooped up the 2004 Surety Crystal Ball and began adroitly juggling it along with a Titliest ProV1, and the black 8-ball, saying, “Hey, Dad, look at this!”
I was so disappointed! I had so many questions I wanted answered– Hard market or soft? How will certain mergers play out? Will there be any more? What new players will enter the marketplace? What players will leave the marketplace? Will the reinsurance market improve? And now the future was reduced to a ball being tossed in the air, along with a good golf ball and the black 8-ball, by a fifteen year-old high school sophomore. Coincidence? I think not!
We really don’t know exactly what the coming year has in store for us or our industry. And as I found out so painfully, there’s no good mechanism for predicting what lies ahead. However, we have the professional skills and experience to know that we can expect some good news, some bad news, some profits, some losses, but most certainly, change. How we handle this change will help define each of us, our industry, and our association.
I hope we can each respond in the professional manner that our product deserves.
Matthew K. “Matt” Cashion, Jr. is Secretary/Treasurer of The Cashion Company, Inc. in Little Rock, AR. He can be reached at Mattc@cashionco.com.
State Legislatures Kick Off Sessions Amidst A Flood of New Bills
NASBP monitors state legislative activity in all 50 states. So far this year, 36 states are in session, and eight additional state sessions will convene during the year. To see the dates for states’ 2004 legislative sessions, please Click Here. Below is a sampling of some of the legislation that has surfaced so far this year.
AZ H 2105
School districts do not have to use competitive bidding for materials and services if contractors use the current federal supply contract prices, terms and conditions.
AZ H 2351
Eliminates the performance and payment bond requirements for the “simplified construction procurement program” (a program involving construction not exceeding $100,000).
FL H 487 and FL S 544
Revise provisions in the Local Government Prompt Payment Act regarding timely payment for purchases of construction services; revise deadlines for payment of subcontractors, sub-subcontractors, materialmen, and suppliers on construction contracts for public projects.
FL H 535
Establishes a mandatory form for public construction bonds.
IN H 1266, IN S 471, and IN S 467
Permit the use of reverse auctions for the purchase of supplies and services. Indiana Code 5-22-1-3 would still be in effect and would exclude the use of reverse auctions on public works projects.
IN H 1292
Directs the Department of Health to make recommendations to the Legislature regarding toxic mold exposure limits and creates a task force to participate in developing the recommendations.
MN H 1717
Raises the threshold for competitive bidding and bonds to $50,000 or more for local jurisdictions; permits reverse auctions for purchasing supplies, materials and equipment; and local jurisdictions may require performance and payment bonds to be furnished electronically.
MO H 1068 and MO S 1028
Authorize the use of reverse auctions in the procurement of goods or nonprofessional services, but provide no definition of a “nonprofessional service.” The Office of Administration would have the authority to promulgate rules for handling the reverse auction process.
NJ A 262
Provides that all laborers and suppliers of material on a public construction project are covered by the general contractor’s payment bond. Every person, firm or corporation with a lawful claim for labor performed or materials used on public works project, whether hired directly by the prime contractor, a subcontractor, or a sub-subcontractor of any tier, would be eligible for redress under the general contractor’s payment bond.
NJ A 629
Prohibits directed suretyship.
NJ A 631
Establishes when the State or independent State authorities may use design-build contracts (contractor responsible for project’s design and construction) or design-build-operate and maintain contracts (contractor responsible for project’s design and construction as well as its operation and maintenance).
TN H 2573 and TN S 2368
Prohibits directed suretyship.
UT H 20
Adds that if a notice of commencement is not filed for the project for which labor, service, equipment, or materials is furnished then preliminary notice to the payment bond principal is not required to file a claim.
VA H 147
Requires that within 10 calendar days of the execution of any private construction contract exceeding $250,000, the prime contractor shall furnish to the owner either a performance bond in the sum of the contract amount conditioned upon the faithful performance of the construction contract by the prime contractor in strict conformity with the plans, specifications and conditions of the contract or a payment bond in the sum of the contract amount.
VA H 148
Amends the Public-Private Education Facilities and Infrastructure Act of 2002 by requiring the comprehensive agreement (design-build contracts) to include provisions for performance and payment bonds as provided in the Virginia Public Procurement Act and specifies that a bid bond in the amount of 5% of the total cost of the project is required.
VA H 460
Requires each power-of-attorney to be attached to the bond. The power may include a printed or facsimile signature or corporate seal, from a fidelity and surety insurer to a producer authorizing the producer as attorney-in-fact to execute the bond.
WA H 2521
Subcontractors may request the contractor to submit a bond to the public owner for the portion of the contractor’s retainage pertaining to the subcontractor.
WA H 2372
Requires competitive bidding of all subcontracts on public construction projects of at least $10 million dollars. The bill intends to un-bundle state contracts.
WV H 3150
Prohibits directed suretyship.
WY S 15
Requires private schools, other than degree-granting postsecondary education institutions and private elementary and secondary schools, to provide a performance bond of no more than $10,000.
As bills are filed, Pipeline will report on the introduction of industry-related legislation. NASBP members and affiliates can access updates on 2004 legislative activity by visiting the “Member and Affiliates Only” section of the NASBP Web site at http://www.nasbp.org/membersonly_files/memlogin.cfm. Login and click on “Government Relations” and then “Bill Tracking 2004.” When asked for your User ID and Password, simply enter the same information used to access the “Member and Affiliates Only” section. Instructions on how to use the service are provided on the Web page.
NASBP Welcomes New Member
NASBP welcomes the following new member who has joined the Association since the last issue of Pipeline.
Western States Insurance
212 Main Street
Stevensville, MT 59870
Key Contact: Fred Thomas
For more details on new additions to NASBP, go to NASBP’s online membership directory, http://www.nasbp.org/bond.cfm.
NASBP Lines Up Exhibitors for Upcoming Annual Meeting and Expo
NASBP will launch its 5th Expo in as many years, offering Annual Meeting attendees a one-of-a-kind venue to explore and learn about the latest industry products and services. Attendees will have an opportunity to test drive, discuss and purchase products and services, network with their peers, and find solutions to their issues. The Expo will take place during the Annual Meeting from Sunday, April 25, through Monday, April 26. Below is a list of the exhibitors that have registered as of January 30th.
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American Institute for CPCU |
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| National Association of Surety Bond Producers (NASBP) |
SuretyPAC Thanks Contributors, Encourages Others to Join 2004 Election Efforts
SuretyPAC would like to thank the 52 members whose contributions made 2003 a record setting year. Last year SuretyPAC received over $15,000 in donations–the greatest amount NASBP members have ever contributed during the “off year” of the election cycle!
The contributions continue to strengthen SuretyPAC’s ability to support “surety-friendly” candidates for congressional seats and will go to support worthy candidates in the upcoming 2004 elections. Contributors will have the opportunity to recommend and comment on possible candidates for the dispersal of funds. In addition, contributors will have the honor of personally delivering a check from SuretyPAC to candidates chosen from their state or congressional district.
The 2004 Congressional elections are critical and last year’s record level of contributions ensures SuretyPAC will have a strong voice in these elections. If you have not contributed yet, please consider doing so. Contributions must be in the form of personal checks made out to SuretyPAC. Questions regarding SuretyPAC should be directed to Colin Chiles, Government Relations Coordinator, at cchiles@nasbp.org or (202) 464-1175.
Bill Maroney, SuretyPAC Chair, would like to recognize the following members for their contributions, and, as importantly, the dedication to the surety industry these contributions represent:
SuretyPAC Contributors 2003-2004 Election Cycle
$1000+ Agencies
| Armitage & Co.,Inc. Elmont, NY |
Howard Cowan Bond Agency, Inc. Lubbock, TX |
| K & S Group, Inc. DBA Keystone Southwest Insurance Agencies Rockwall, TX |
Minick & Company, Inc. Albuquerque, NM |
Gold Club $500+ (Individuals)
| W. W. Burke, CIC,CLU Burke Insurance Group, Inc. Las Cruces, NM |
Matthew K. Cashion, Jr. , CIC The Cashion Company, Inc. Little Rock, AR |
| Steph en L. Cory Cory, Tucker & Larrowe, Inc. Metairie, LA |
Howard Cowan Howard Cowan Bond Agency, Inc. Lubbock, TX |
| Richard W. Daiker K & S Group, Inc. DBA Keystone Southwest Insurance Agencies Rockwall, TX |
Carl Dohn Dohn & Associates Palatine, IL |
| Craig Hansen Holmes, Murphy & Associates, Inc. Des Moines, IA |
Marla Hill Howard Cowan Bond Agency, Inc. Lubbock, TX |
| J. Spencer Miller Schwartz Brothers Insurance Agency, Inc. Chicago, IL |
Richard Minick Minick & Company, Inc. Albuquerque, NM |
| Julian D. Pace M.J. Schuetz Agency Indianapolis, IN |
John Rindt JDW Insurance El Paso, TX |
Silver Club $250-$499 (Individuals)
| John Adams, CPCU T.J. Adams Group, LLC Lombard, IL |
Don K. Ardolino J.D. Kutter Insurance Associates St. Louis, MO |
| Travis E. Brown Hilb, Rogal & Hamilton Oklahoma Oklahoma City, OK |
Raymond C. Carman Armitage & Co., Inc. Carman/Armitage Elmont, NY |
| Doug Ferris The Bottrell Insurance Agency, Inc. Jackson, MS |
Sarah Finn IMA Denver, CO |
| Janice Fiscina Armitage & Co., Inc. Elmont, NY |
Robert C. Fricke Frank Siddons Insurance, Inc. Austin, TX |
| Edward J. Heine, CIC Payne Financial Group, Inc. Missoula, MT |
John D. Klein Klein Agency, Inc. Shoreview, MN |
| Martin Lyons Armitage & Co., Inc. Elmont, NY |
David McKee Constructors Bonding, Inc. Tempe, AZ |
| Steven E. Minard, AFSB, CPCU Minard-Ames Insurance Group Phoenix, AZ |
James Moore Scheer’s, Inc. Countryside, IL |
| Sam J. Mullis, Jr. Mullis Newby Hurst Dallas, TX |
John W. Newby Mullis Newby Hurst Dallas, TX |
| Thomas M. Padilla Manuel Lujan Insurance, Inc. Albuquerque, NM |
Jeffrey Reich Flor ida Surety Bonds, Inc. Altamonte Springs, FL |
| Craig Remick Acordia Bloomington, MN |
James Scheer Scheer’s, Inc. Countryside, IL |
| Dominick J. Scotto Armitage & Co., Inc . Elmont, NY |
Stephen A. Spencer Insurance Associates, Inc. Rockville, MD |
Bronze Club $100-$249 (Individuals)
| James J. Bovenzi, CIC Hilb, Rogal and Hamilton of Amarillo Amarillo, TX |
John N. Bustard King & Neel, Inc. Honolulu, HI |
| David Cassidy Cassidy’s Associated Insurers, Inc. Hagatna, Guam |
Larry J. Cramer George J. Siebers & Co., Inc. Merriam, KS |
| Jason D. Gusso Holmes, Murphy & Associates, Inc. Sioux Falls, SD |
William F. Hertel Mastors & Servant, Ltd. East Greenwich, RI |
| Kurt Lundblad Cedarleaf, Cedarleaf & Cedarleaf, Inc. St. Paul, MN |
Bob McLendon Fisher-Brown, Inc. Pensacola, FL |
| Lawrence F. McMahon Driver Alliant Insurance Services, Inc. San Diego, CA |
Aldo Pasquariello Insurance Associates, Inc. Rockville, MD |
| Steve Poleman Rich & Cartmill, Inc. Tulsa, OK |
Edworth L. Ray Ray, Inc. Tri-Cities, WA |
| Dennis E. Scully Mapes Insurance Agency, Inc. Grand Rapids, MI |
Sheryll Shaw IMA Denver, CO |
| Mike Specht Minard-Ames Insurance Group Phoenix, AZ |
Thomas W. Titsworth, CPCU Twin T Insurance Agency Colorado Springs, CO |
| Darrin Weber Dodson-Bateman & Company Dallas, TX |
Brian E. Wilcox HMS Insurance Associates Brooklandville, MD |
Briefly Noted
| APPOINTMENT
Early, Cassidy & Schilling, Inc., Rockville, MD, is please to announce the addition of David R. Summerall to its Construction Division Team on January 1, 2004. David has over 34 years of experience as an underwriter and producer of construction, surety and insurance business, particularly in the Mid-Atlantic region. David formerly was a Bond Manager at Franey, Parr and Muha Insurance Services, and prior to that, he was a Bond Manager for Collier Cobb & Associates and Willis Corporation. He began his surety career with the Travelers. He is a graduate of George Washington University and served in the U.S. Navy. |
EXECUTIVE CHANGES Olson & Olson, Ltd., established and founded by Darrell C.R. Olson, Sr. in 1983, is pleased to announce changes in its executive positions. Darrell C.R. Olson, Sr., former President for the past 21 years, has been named Chairman/Chief Executive Officer. Darrell C.R. Olson, II, who served as Olson & Olson’s Senior Vice President for Sales for the past 19 years, has been named President. After serving eight years as an Account Executive, Lance M. Olson has been named Chief Operations Officer (COO). |
| PASSING
With sadness we report the death of Thomas D. Rutherfoord who passed away on December 21, 2003, at the age of 88. Mr. Rutherfoord was a graduate of the University of Virginia and served in the Army during World War II. After leaving the Army, he returned to his family’s insurance business in Roanoke, and in 1963, he formed Thomas Rutherfoord, Inc, where he served as President and Chairman until his retirement in 1986. His agency has been a long-time member of NASBP. Memorial contributions may be made to the Salvation Army. |
Nominations Open for NASBP’s Advocacy, Policymaker Awards
NASBP is soliciting nominations for its Excellence in Advocacy Award and Policymaker of the Year Award. The Advocacy Award recognizes members and affiliates who have made significant contributions to the Association and the surety industry by influencing decisions favorable to surety in the public policy arena, while the Policymaker Award recognizes elected or appointed government officials who have been friends to surety bond producers and/or the surety industry. Both awards will be presented at the NASBP Annual Meeting in April and have the following requirements:
Excellence in Advocacy Award
Employees of NASBP member agencies or surety company affiliates who spearheaded a particular advocacy effort may self-nominate their initiative for consideration of this award. Other members or affiliates not directly involved but knowledgeable about an initiative also may submit nominations.
Individuals nominated for this award must have been involved in a collaborative effort of surety producers and surety company representatives as well as participants of other related industries. Nominated efforts also must have included one or more of the following activities or similar activities not expressly listed below:
- Advocated on behalf of the surety industrybefore state or local policymakers or groups of policymakers;
- Sought legislation, regulations, or policies that promoted suretyship; or
- Championed the resolution of an issue or issues of particular concern to surety professionals.
Policymaker of the Year Award
Public officials, elected or appointed, serving at any level of government, may be nominated. Two recommendations must accompany each nomination. Employees of member agencies or affiliate surety companies are eligible to nominate a policymaker, but at least one of the two recommendations must come from a member agency. Preferential consideration will be given to nominees recommended by both a member agency and an affiliate company.
Nominees for this award must have engaged in one or more of the following activities or taken similar action not otherwise listed below:
- Advocated on behalf of the surety industry.
- Sponsored or co-sponsored legislation that promoted suretyship.
- Held public hearings regarding surety or surety-related issues.
- Provided support or counsel regarding proposed public policies advocated by the surety community.
- Championed the resolution of an issue(s) of particular concern to surety professionals.
A complete explanation of the criteria and electronic nomination forms are available by clicking on the links to the awards above. The nominator and co-nominator must complete the electronic form no later than the close of business on March 1, 2004. Questions or comments should be directed to Connie Lynch, Director, Government Relations, or Colin Chiles, Government Relations Coordinator, at clynch@nasbp.org or cchiles@nasbp.org, or at 202/686-3700.
Marco Island Marriott & Golf Club
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- Marco Island, FL
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- April 25 – 28, 2004
- (941) 394-2511
Regions 1, 2 & 3 Annual Meeting
Hyatt Regency Lake Las Vegas
Henderson, NV
September 30 – October 2, 2004
(702) 567-1234
Regions 4, 5, 6 & 7 Annual Meeting
Royal Sonesta Hotel New Orleans
New Orleans, LA
In the French Quarter
October 14 – 17, 2004
(504) 586-0300
Regions 8, 9, 10 & 11 Annual Meeting
Hyatt Regency Newport
Newport, RI
July 22 – 25, 2004
(401) 851-1234
William J. Angell Surety School Levels I & II
Renaissance Houston Hotel
Houston, TX
February 8 – 13, 2004
(713) 629-1200
William J. Angell Surety School Level I – Summer
Dallas Fairmont Hotel
Dallas, TX
August 11 – 14, 2004
(214) 720-2020
William J. Angell Surety School Level III
Dallas Fairmont Hotel
Dallas, TX
November 10 – 13, 2004
(214) 720-2020
Sheraton Wild Horse Pass Resort
Phoenix, AZ
October 27 – 30, 2004
(214) 720-2020
SIO Presents: New PowerPoint & Informational Resource; a Look Back at 2003
| SIO Offers New Educational PowerPoint Explaining the differences between bank letters of credit and contract surety bonds to a group is easier than ever when using SIO’s latest PowerPoint, Informed Decisions: Surety Bonds or Bank Letters of Credit.The presentation, which complements SIO’s brochure, Surety Bonds Versus Bank Letters of Credit, compares these two very different forms of risk management. The presentation examines: the prequalification process; effects on borrowing capacity; duration; how to obtain; cost; coverage; and how claims are handled. Speaker’s notes will help make presenting a snap!Order a copy of the presentation on CD or color overheads by contacting SIO at sio@sio.org, 202-686-7463. To download a zipped version of the file, visit www.sio.org/ppt/zipfiles.html. Online News Room Keeps You Informed
Visit www.sio.org/new.html to learn more about SIO’s efforts and the latest materials available to help promote the contract surety industry. A Year In Review
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| 1. How to Obtain Surety Bonds* 2. The Importance of Surety Bonds in Construction* 3. SBA’s Surety Bond Guarantee Program* 4. Contractor Kit 5. 2003 ENR Surety Supplement 6. Surety Companies: What They Are and How to Find Out About Them* 7. Surety Bonds for Student CD 8. Surety Bonds Versus Bank Letters of Credit* 9. Why Do Contractors Fail? 10. Surety Bonds for Contractors CD |
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| To order any of the above publications, visit www.sio.org/fstore.html. Look for exciting new updates and resources to debut in 2004. Share your ideas and input on how SIO can help you promote the contract surety industry at sio@sio.org, 202-686-7463. Help make 2004 a record-breaking success and contact SIO for all of your contract surety promotion needs!
It’s Not Too Late! |
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Recent Changes to the T-List
The Finance and Management Services Branch, U.S. Department of the Treasury, has announced that the annual filing instructions for year-end 2003 have been released. Renewal fees have changed to $1,410 for admitted reinsurers and $3,310 for certified companies. Renewal fees are due on 2/13/2004.
Other announcements are as follows.
Additions to the Listing of Approved Sureties
American Southern Insurance Company, effective 12/18/03.
United Fire & Indemnity Company, effective 12/23/03.
For more information:
http://fms.treas.gov/c570/c570.html
http://fms.treas.gov/c570/supplements.html
State Agencies Consider and Adopt Surety – and Construction-Related State Regulations
The following is a brief report of recent activity on the state regulatory front.
Adopted State Regulations
CO 7490 2003 Procurement
Adds competitive reverse auctions and competitive negotiation to the allowable means for awarding goods and service contracts.
Adopted: 12/10/2003
MS 8988 2003 Performance Bond
Establishes the required bond form for the Mississippi Department of Transportation.
Adopted: 12/12/2003
NJ 15933 2003 Submission of Electronic Proposals for Sale of Bonds
Establishes rules regarding submission of electronic proposals for sale of bonds. Allows use of surety bonds in electronic bond sale auctions to serve as bid deposits, in lieu of a certified check, cashier’s check or treasurer’s check.
Adopted: 12/11/2003
OH 10975 2003 Bonds, Certificates of Deposits, Letters of Credit
Requires career colleges and schools to provide surety bonds to indemnify against prepaid tuition loss as the result of a school closure, program termination or other acts or omissions resulting in the cancellation, revocation, or expiration of a certificate of registration or program authorization.
Adopted: 1/7/2004
TX 90068 2003 Highway Improvement Contracts
Amends rules regarding highway improvement contracts. Provides that maintenance contracts estimated at less than $15,000 may be awarded as a purchase of service under the Purchasing Act if the project does not require detailed specifications, there is a need to expedite the project, or it would be otherwise impractical to use the letting procedures. On Department of Transportation routine maintenance contracts in which the contractor assumes responsibility for maintaining a portion of a highway facility for a set period of time, DOT may require a surety bond equal to the greatest annual amount paid under the contract and to remain in effect for one year from the date work is resumed after any default by the contractor, or equal to the amount paid the contractor during the term of the bond and for a term of two years, renewable annually in two-year increments.
Adopted: 12/19/2003
Proposed State Regulations
NE 1037 2004 Highway Construction Contracts
Establishes rules pertaining to the construction division. Allows at the Department’s discretion, submission of bids over the Internet. Three options now available for bid bonds. A project specific bid bond to be submitted with the bid, a project specific electronic bid the Department may access thru a Department authorized on-line bond registry service, or at the Department’s discretion an annual bid bond on file with the Department.
Proposed: 1/6/2004
For additional information, contact Colin Chiles, Government Relations Coordinator at cchiles@nasbp.org.
Texas Sovereign Immunity Saga Continues
Contradictory outcomes in two recent court rulings continue to place the question of sovereign immunity at the forefront in the denial of claims by cities and school districts. In October 2003, the Fifth District Court of Appeals (Dallas) upheld the dismissal of a contract claim against the Irving Independent School District on the basis that the school district was immune from suit under the doctrine of sovereign immunity. A motion for a rehearing was denied on January 12, 2004, leaving the Texas Supreme Court next in line to hear the appeal.
In a strange twist, on January 14, 2004, the Fourth District Court of Appeals (San Antonio) issued an opinion in Alamo Community College vs. Browning Construction Company completely opposite of the Fifth District Court of Appeals ruling. These contradictory rulings make it even more likely that the Texas Supreme Court will take up the issue. Currently, there are already three cases involving sovereign immunity with pending petitions for review before the Texas Supreme Court. Pipeline will continue to report on this issue as it moves through the courts or is addressed through a legislative solution.
To read the online version of Pipeline, please go to http://www.nasbp.org/pipeline_01_04/text.html
Pipeline is produced monthly by the National Association of Surety Bond Producers, 1828 L Street, NW, Suite 720, Washington, DC 20036-5104-2014, 202/686-3700, Fax: 202/686-3656, www.nasbp.org, Internet e-mail address: info@nasbp.org
February 2004
NASBP Joins Members, Affiliates in Opposing Proposed
Legislation That Would Negate NY’s Directed Surety Prohibition
Frank O’Brien, III of NASBP member agency, Fuller & O’Brien, Inc. in Albany, NY, is leading the charge to delete language from New York budget bills, NY A 9556 and NY S 6056, which would permit the use of owner-controlled or wrap-up surety programs. This new language would amend Section 2504 of the Insurance Law and would be contradictory to the prohibition against directed suretyship, which already is contained in the same section. This would create considerable confusion for those involved in the public procurement process.
NASBP’s Executive Vice President, Richard Foss, provided a Memorandum in Opposition to assist the lobbying efforts of NASBP members and affiliates to remove the suggested language related to suretyship. To view the Memorandum, click here. Pipeline will continue to report as the New York budget process proceeds.
State Legislatures Continue to Receive New Bills to Consider
NASBP monitors state legislative activity in all 50 states. Currently, 38 states are in session, one is in skeleton session, one is holding hearings, and three additional state sessions will convene during the year. To see the dates for states’ 2004 legislative sessions, please Click Here. Below is a sampling of some of the legislation that has been introduced since the last edition of Pipeline.
CO S 143
Raises the bond threshold from $50,000 to $150,000 on public construction projects. A compromise has been reached to amend the bill to a threshold level of $100,000.
FL H 581 and FL S 1742
Provide that contractors entering into specified contracts with the High-Speed Rail Authority must provide performance and payment bonds in an amount determined by the Authority.
FL H 785 and FL S 1854
Allow Hillsborough County to waive performance and payment bonds on public works projects under $500,000 if projects are awarded pursuant to an economic development program adopted by the County for small local businesses.
HI H 2041
Amends HRS Chapter 36 by adding two new sections related to state parks. The bill exempts projects under $100,000 from the new sections, 36-A and 36-B, of the Hawaii procurement code.
HI S 3010
Requires state agencies to procure concessions under the bidding requirements of Hawaii’s public procurement code, Chapter 103D. Currently, concessions are procured under a separate bidding process.
IL H 4619
Creates the Design-Build Procurement Act. Requires that requests for proposals must include the required performance and payment bonds, but does not specify what those requirements may include, i.e., whether they are for the design and/or build portions of the proposals.
IL S 3103
Allows for the use of reverse auctions for purchases made using the Illinois Procurement Code, including construction contracts. If a chief procurement officer determines a reverse auction is practical, the competitive sealed bidding process must be followed until an auction period of bid opening when responsive bidders may lower their submitted prices.
KS S 408
Allows municipalities to adopt resolutions exempting bond requirements on public works projects as a means of encouraging small businesses to bid for municipal contracts.
KY H 405
Ties the bond threshold for construction projects (currently $25,000) to the small purchase authority defined in KRS 45A.100. The new threshold would be $40,000 for construction procured by the Finance and Administration Cabinet, state institutions of higher education, and the legislative branch of government, or $10,000 for construction procured by any other state governmental body. KRS 45A.100 requires the Secretary of the Finance and Administration Cabinet to review and then issue recommendations to the General Assembly at least every two years for the revision of the current maximum small purchase authority amounts.
MN H 1918 and MN S 1824
Permit local jurisdictions to use reverse auctions for purchasing supplies, materials and equipment; and local jurisdictions may require performance and payment bonds to be furnished electronically.
MO H 1327
Creates requirements for a design-build pilot program. Requires that requests for proposals must include the required performance and payment bonds, but does not specify what those requirements may include, i.e., whether they are for the design and/or build portions of the proposals.
MO H 1362
Allows county planning commissions to accept another form of security instead of a bond for improvements and utilities for subdivisions. Does not specify what constitutes “or other form of security.”
MO S 1183
Allows city, town, or village councils to adopt regulations that allow them to accept, at the option of a developer, an escrow secured by cash or an irrevocable letter of credit, in lieu of a bond, for improvements and utilities for subdivisions.
NM S 479
Reduces the maximum allowable construction cost for design-build road and highway projects from more than $10,000,000 to more than $500,000.
OK H 2604
Raises the bond threshold from $25,000 to $50,000 on public construction projects.
OK S 1357
Authorizes the Department of Mines to proceed with bond forfeiture if the mine operator or surety fails to perform corrective work or improperly performs corrective work. After collection of the security, the Department may contract for the work to be completed.
RI S 2328
Removes language that allows an owner and obligee on a public construction project to agree to retainage in excess of the mandated 5%.
TN H 3185 and TN S 3157
Authorizes the use of design-build for the construction of public education facilities. Do not specify bonding requirements.
UT H 281
Requires Department of Health to establish minimum standard of mold exposure and require landlords to disclose to renters if a unit contains mold exceeding the minimum standards set by the Department.
VA S 688
Amends the Public-Private Education Facilities and Infrastructure Act of 2002 by requiring design-build contracts to include provisions for performance and payment bonds as provided in the Virginia Public Procurement Act and specifies that the obligee must submit a letter from its surety company ensuring the obligee’s ability to bond the project or projects.
WA H 3095
Amends public works code to provide separate sections for state agencies and local governments to award “limited public works projects,” i.e., projects under $200,000. Maintains existing code language that allows for waivers of payment and performance bonds and retainage requirements on “limited public works projects.”
As bills are filed, Pipeline will report on the introduction of industry-related legislation. NASBP members and affiliates can access updates on 2004 legislative activity by visiting the “Member and Affiliates Only” section of the NASBP Web site at http://www.nasbp.org/membersonly_files/memlogin.cfm. Login and click on “Government Relations” and then “Bill Tracking 2004.” When asked for your User ID and Password, simply enter the same information used to access the “Member and Affiliates Only” section. Instructions on how to use the service are provided on the Web page.
Program Information on NASBP’s 2004 Annual Meeting Available on Web Site
Within the next few weeks, you will receive via e-mail detailed program information on the upcoming April Marco Island Annual Meeting. In the meantime, you can review the Schedule of Events on NASBP’s web site. Please contact the Marco Island Marriott Resort, Golf Club & Spa to make your room reservations. The special hotel room rate cut-off date is March 19. Call now while there are still rooms available!
2004 NASBP Annual Meeting
Marco Island Marriott Resort, Golf Club & Spa
Marco Island, FL
April 25 – 28, 2004
(941) 394-2511
Wm. J. Angell Surety School, February 2004 — A Shared Experience
Students traveled from all over the country to attend NASBP’s February 2004 Surety School, which took place in Houston, TX. Our distinguished faculty conducted interactive sessions during the week in Level I and Level II. William E. Cheatham, President of Surety for Zurich North America, presented the luncheon keynote address.
Each level and team of the surety school selected an “Outstanding Student” for recognition during the graduation dinners. This year’s honors went to: Level I/Yellow Team- Lisa Stevens (Marsh USA, Inc.); Level I/Red Team-Eric Pelton (Infantine Insurance, Inc.); Level II/Blue Team-Kurt Bonner (United Fire Group); and Level II/Green Team-Dale (Dede) Belis (Seitlin & Company).
Congratulations to all February graduates and special thanks to the terrific faculty for all their long hours and hard work!
Reminder: Submit Nominations for NASBP’s 2004 GR Awards—Deadline Extended
The deadline for submitting nominations for NASBP’s Excellence in Advocacy Award and Policymaker of the Year Award has been extended to close of business Wednesday, March 10, 2004. These awards recognize members and affiliates who have made significant contributions to the Association and the surety industry by influencing decisions favorable to surety in the public policy arena and elected or appointed government officials who have been friends to surety bond producers and/or the surety industry.
A complete explanation of the criteria and an electronic nomination forms are available on NASBP’s web site at http://www.nasbp.org/advocacyaward.cfm and http://www.nasbp.org/policymakeraward.cfm. The nominator and co-nominator must complete the electronic form no later than the close of business on March 10. Questions or comments should be directed to Connie Lynch, Director, Government Relations, or Colin Chiles, Government Relations Coordinator, at clynch@nasbp.org or cchiles@nasbp.org, or at 202/686-3700.
NASBP Welcomes New Members and Affiliates
NASBP welcomes the following new members and affiliates who have joined the Association since the last issue of Pipeline.
NEW MEMBERS
Blueprint Bonding Insurance Services
5617 Schooner Loop
Byron, CA 94514
Key Contact: Jocelyn Y. Quirt
www.blueprintbonding.com
Rudnik Surety, Inc.
7191 Knollwood Drive
Mounds View, MN 55122
Key Contact: David J. Rudnik
www.rudniksurety.com
NEW AFFILIATES
Granite Re, Inc.
14001 Quailbrook Drive
Oklahoma City, OK 73134
Key Contact: Kenneth D. Whittington
www.granitere.com
The Gray Casualty & Surety Company
2750 Lake Villa Dr. #202
Metairie, LA 70002
Key Contact: Edmund P. Pixberg, Jr.
www.graysurety.com
Pennsylvania National Mutual Casualty Insurance Co.
P.O. Box 2361
Harrisburg, PA 17105
Key Contact: Michael F. Greer
www.pennnationalinsurance.com
Quanta U.S. Holdings, Inc. (Quanta Surety)
One Financial Plaza
10th Floor
Hartford, CT 06103
Key Contact: Brian J. Steele
www.quantaholdings.com
Congress Takes Action on Federal Highway Funding
While the House continues work on its version of the TEA-21 reauthorization, a four-month extension of the federal highway and transit programs was approved on February 11, 2004. The bill authorizes the programs through June 30 at the level in the FY 2004 appropriations bill. The House Transportation and Infrastructure Committee scheduled a tentative committee markup of the House bill for February 25. The bill is expected to be in the neighborhood of a six-year program for $375 billion.
On February 22, 2004 the Senate approved legislation to reauthorize the federal highway and transit programs (TEA-21) for six years. The measure includes $318 billion in federal surface transportation program authorization with $294 billion in guaranteed highway and transit funding. The White House is opposed to the Senate bill and is even threatening a veto if the House were to approve a similar package.
SuretyPAC Coffers Grow Because of New Contributors
SuretyPAC would like to express its appreciation to the additional members who graciously contributed to its coffers since the last edition of Pipeline. The 2004 Congressional elections are critical and last year’s record level of contributions ensures SuretyPAC will have a strong voice in these elections.
Since the beginning of the 2003-2004 Election Cycle, SuretyPAC has raised $15,876 and has Cash-On-Hand of $33,526. If you have not contributed yet, please consider doing so. Contributions must be in the form of personal checks made out to SuretyPAC. Questions regarding SuretyPAC should be directed to Colin Chiles, Government Relations Coordinator, at cchiles@nasbp.org or (202) 464-1175.
Bill Maroney, SuretyPAC Chair, would like to recognize the following members for their contributions, and, as importantly, the dedication to the surety industry these contributions represent:
SuretyPAC Contributors 2003-2004 Election Cycle
$1000+ Agencies
| Armitage & Co.,Inc. Elmont, NY |
Howard Cowan Bond Agency, Inc. Lubbock, TX |
| K & S Group, Inc. DBA Keystone Southwest Insurance Agencies Rockwall, TX |
Minick & Company, Inc. Albuquerque, NM |
Gold Club $500+ (Individuals)
| W. W. Burke, CIC,CLU Burke Insurance Group, Inc. Las Cruces, NM |
Matthew K. Cashion, Jr., CIC The Cashion Company, Inc. Little Rock, AR |
| Stephen L. Cory Cory, Tucker & Larrowe, Inc. Metairie, LA |
Howard Cowan Howard Cowan Bond Agency, Inc. Lubbock, TX |
| Richard W. Daiker K & S Group, Inc. DBA Keystone Southwest Insurance Agencies Rockwall, TX |
Carl Dohn Dohn & Associates Palatine, IL |
| Craig Hansen Holmes, Murphy & Associates, Inc. Des Moines, IA |
Marla Hill Howard Cowan Bond Agency, Inc. Lubbock, TX |
| J. Spencer Miller Schwartz Brothers Insurance Agency, Inc. Chicago, IL |
Richard Minick Minick & Company, Inc. Albuquerque, NM |
| Julian D. Pace M.J. Schuetz Agency Indianapolis, IN |
John Rindt JDW Insurance El Paso, TX |
Silver Club $250-$499 (Individuals)
| John Adams, CPCU T.J. Adams Group, LLC Lombard, IL |
Don K. Ardolino J.D. Kutter Insurance Associates St. Louis, MO |
| Travis E. Brown Hilb, Rogal & Hamilton Oklahoma Oklahoma City, OK |
Raymond C. Carman Armitage & Co., Inc. Carman/Armitage Elmont, NY |
| Doug Ferris The Bottrell Insurance Agency, Inc. Jackson, MS |
Sarah Finn IMA Denver, CO |
| Janice Fiscina Armitage & Co., Inc. Elmont, NY |
Robert C. Fricke Frank Siddons Insurance, Inc. Austin, TX |
| Frank W. Hafner, Jr. BB&T Insurance Services Inc. Boyle-Vaughan Insurance Columbia, SC |
Edward J. Heine, CIC Payne Financial Group, Inc. Missoula, MT |
| John D. Klein Klein Agency, Inc. Shoreview, MN |
Martin Lyons Armitage & Co., Inc. Elmont, NY |
| David McKee Constructors Bonding, Inc. Tempe, AZ |
Steven E. Minard, AFSB, CPCU Minard-Ames Insurance Group Phoenix, AZ |
| James Moore Scheer’s, Inc. Countryside, IL |
Sam J. Mullis, Jr. Mullis Newby Hurst Dallas, TX |
| John W. Newby Mullis Newby Hurst Dallas, TX |
Thomas M. Padilla Manuel Lujan Insurance, Inc. Albuquerque, NM |
| Richard Pratt Noack and Dean/InterWest Insurance Sacramento, CA |
Jeffrey Reich Florida Surety Bonds, Inc. Altamonte Springs, FL |
| Craig Remick Acordia Bloomington, MN |
James Scheer Scheer’s, Inc. Countryside, IL |
| Dominick J. Scotto Armitage & Co., Inc. Elmont, NY |
Stephen A. Spencer Insurance Associates, Inc. Rockville, MD |
Bronze Club $100-$249 (Individuals)
| James J. Bovenzi, CIC Hilb, Rogal and Hamilton of Amarillo Amarillo, TX |
John N. Bustard King & Neel, Inc. Honolulu, HI |
| David Cassidy Cassidy’s Associated Insurers, Inc. Hagatna, Guam |
Larry J. Cramer George J. Siebers & Co., Inc. Merriam, KS |
| Jason D. Gusso Holmes, Murphy & Associates, Inc. Sioux Falls, SD |
William F. Hertel Mastors & Servant, Ltd. East Greenwich, RI |
| Kurt Lundblad Cedarleaf, Cedarleaf & Cedarleaf, Inc. St. Paul, MN |
Bob McLendon Fisher-Brown, Inc. Pensacola, FL |
| Lawrence F. McMahon Driver Alliant Insurance Services, Inc. San Diego, CA |
Aldo Pasquariello Insurance Associates, Inc. Rockville, MD |
| Steve Poleman Rich & Cartmill, Inc. Tulsa, OK |
Patrick Pribyl Lockton Companies, Inc. Kansas City, MO |
| Edworth L. Ray Ray, Inc. Tri-Cities, WA |
Dennis E. Scully Mapes Insurance Agency, Inc. Grand Rapids, MI |
| Sheryll Shaw IMA Denver, CO |
Mike Specht Minard-Ames Insurance Group Phoenix, AZ |
| Thomas W. Titsworth, CPCU Twin T Insurance Agency Colorado Springs, CO |
Darrin Weber Dodson-Bateman & Company Dallas, TX |
| Brian E. Wilcox HMS Insurance Associates Brooklandville, MD |
NASBP to Co-Sponsor Back to Basics Claims Seminar with AGC
March 19, 2004 – Hartford, CT
May 14, 2004 – Chicago, IL
July 9, 2004 – Seattle, WA
This seminar will bring together plaintiffs’ attorneys, defense attorneys and insurance and corporate counsel for the exchange of information and ideas relative to contract surety bond claims. The seminar will be offered in Hartford, CT, Chicago, IL and Seattle, WA. For more information or to register online, please go to https://www.abanet.org/tips/backtobasicsreg.html.
SIO Update: Combine Materials for an Effective Presentation
| Contractors want to know more about it. Owners and design professionals are always curious. Lenders want to get the inside scoop. The state of the contract surety industry is an ever-popular topic, and SIO can help you turn this curiosity into an opportunity to reach out to these groups in three easy steps.
1. Order a copy of the SIO PowerPoint presentation, Contract Surety Bonds: Understanding Today’s Market, to explain the current state of the surety industry to any audience. The presentation addresses the recent history of the industry, including a look at surety in the 1990s and early 2000s; premiums and loss records from 1990-2002; a comparison of top writers in 1990 and 2002; and construction industry statistics. After explaining what led up to the current market, today’s conditions are discussed. The slides then detail today’s underwriting, premiums, claims, and value of a surety relationship. The included speaker’s notes allow for an insightful, detailed narrative. 2. Make your presentation a one-two punch by combining the PowerPoint with free copies of the November 2003 ABC Construction Executive magazine featuring a special surety bonding section, which SIO took a key role in preparing. The issue features the following articles:
3. Contact local associations and trade groups to let them know you’d be happy to give a talk on the contract surety market. SIO also has lists of groups in your area that may be receptive to such an offer. To order any of the above materials, simply send a message to sio@sio.org, call (202) 686-7463 or visit www.sio.org/new.html. |
Recent Change to the T-List
The Finance and Management Services Branch, U.S. Department of the Treasury, recently announced the following change to the Treasury List (T-List) of approved surety companies:
Deletion to the Listing of Approved Sureties
Cumberland Casualty & Surety Company, effective 2/13/04
For more information:
http://fms.treas.gov/c570/c570.html
http://fms.treas.gov/c570/supplements.html
CIAB Files Suits Against Counter-Signature Statutes
NASBP has learned that the Council of Insurance Agents and Brokers (CIAB) recently filed lawsuits challenging the counter-signature statutes in South Dakota, West Virginia, and the U.S. Virgin Islands. These statutes prevent out-of-state insurance producers from conducting business without a resident agent’s countersignature. Claiming that the counter-signature statutes violate the Privilege and Immunities Clause of the U.S. Constitution, CIAB filed the lawsuits in the U.S. District Courts of each respective state’s region.
The CIAB prevailed last year in a lawsuit against Florida’s counter-signature requirements in which U.S. District Judge Robert L. Hinkle agreed that Florida’s law was unconstitutional and issued a summary judgment in the case on Sept. 30, 2003. Another suit initiated last year against Nevada is due for a second hearing.
CIAB has a long-standing history of opposing counter-signature requirements, which, it claims, add costs to consumers without adding value to the insurance product. Some states have even required out-of-state producers to share commissions on their business with resident producers in addition to requiring resident producers’ signature. For more information, go to www.ciab.com.
Small Businesses: The Heart of the American Economy
Many of NASBP’s members work in small businesses, as do their contractor customers. The Small Business Administration recently issued its top ten list of “Reasons to Love Small Business.” The following are interesting facts you may not know.
- Small businesses make up more than 99.7% of all employers.
- Small businesses create more than 50% of the nonfarm private gross domestic product (GDP).
- Small patenting firms produce 13 to 14 times more patents per employee than large patenting firms.
- The 22.9 million small businesses in the US are located in virtually every neighborhood.
- Small businesses employ about 50% of all private sector workers.
- Home-based businesses account for 53% of all small businesses.
- Small businesses make up 97% of exporters and produce 29% of all export value.
- Over 500,000 small businesses that have more than one employee are started each year.
- Four years after start-up, half of all small businesses with employees remain open.
- The latest figures show that small businesses create 75% of the net new jobs in the US economy.
Reprinted: Office of Advocacy, U.S. Small Business Administration, February 13, 2004
Pipeline is produced monthly by the National Association of Surety Bond Producers, 5225 Wisconsin Avenue, NW, Suite 600, Washington, DC 20036-5104, 202/686-3700, Fax: 202/686-3656, www.nasbp.org, Internet e-mail address: info@nasbp.org
Disclaimer: This information is provided for educational and informational purposes only and is not intended to serve as legal advice.
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