March / April 2008
 Support from the NASBP Membership, Colleagues, and Clients Underscores the Many Returns of Being NASBP President
Before I knew it, a year had passed since I had become president. Where does the time go? When I first became president last April, I was apprehensive about what the next 12 months had in store for me. Would our members be calling me in the middle of the night to share with me their concerns? Would my clients think I am on a 12-month vacation? Would I be able to meet the “high-fashion” standards set by my fellow Executive Committee members? I had many questions. Now that my term has come to an end, I want to share the answers that became apparent throughout the year.NASBP members sleep at night and don’t call, although there are, on occasion, some late night e-mails. They do believe strongly in the value of a producer and the product we support. This became evident after receiving many e-mails regarding my Summer 2007 Pipeline column titled, “Bond Producers: Catalysts for Growth and Success.” Click here to read the article. These e-mails are testimony to our members’ and affiliates’ passion for their jobs and this industry.

Sure I was gone a lot, but I was able to stay connected to my clients through the wonders of my Blackberry®, mobile phone and lap top computer. Those clients that knew my schedule were incredibly supportive as were my fellow IMA professionals, who considered the extra work-load a fair trade for my being out of the office. Many of my clients that I had worked with for years were particularly enthusiastic, since they knew first-hand the value of the surety process and the fact that the underwriting process had benefited them and made their companies stronger.

As an NASBP officer over the last four years, I learned that there is a fellowship within NASBP that I have never seen or experienced before, and I suspect that I never will experience again. The commitment of the NASBP leaders, to each other, and to our industry was incredible. The ability of each individual to set their egos aside and to work on behalf of the surety industry was amazing. I feel honored and fortunate to have had such an experience and gained such strong friendships. Fortunately for me, I have one more year as an Executive Committee member, because the immediate past president of NASBP serves a year on the Executive Committee. By the way, Steve Cory should disregard the part about members not calling late at night. Instead, he should expect a few calls, especially when the Executive Committee is together this upcoming year. Steve will be missed.

Regarding the Executive Committee’s commitment to fashion, all I have to say is, it is a “work in process”. (How appropriate for surety producers to be described by an accounting term.) The words “fashion” and “NASBP Executive Committee” probably should not be used in the same sentence. Also, I hear that madras is the next seersucker for members of the NASBP Leadership,  and, thanks to the Executive Committee members who purchased several suits of the exact same style from Brooks Brothers, the clothier is now considering an entire line of surety apparel.

Many thanks go to the staff of NASBP for all their help and assistance. I could not have done it without you. The past year has been great. I have met lots of wonderful people who have a passion for our business and love what they do. NASBP members and affiliates, thank you for allowing me the opportunity to be your NASBP President, and I look forward to a long, continuing relationship with NASBP. It was an honor. The experiences and memories will last a lifetime. Thank you.

Sarah Finn is National Surety Senior Vice President of IMA of Colorado, Inc. in Denver, Colorado. She can be reached at sarah.finn@imacorp.com.

 AIA and EJCDC Issue Interim Revisions to Payment Bond Forms to Help Ameliorate Industry Concerns
After considerable discussion with NASBP and The Surety & Fidelity Association of America (SFAA), both the Engineers Joint Contract Documents Committee (EJCDC) and the American Institute of Architects (AIA) recently issued interim revisions to their payment bond forms in an effort to address concerns arising from recent court decisions interpreting provisions contained in the AIA A312 Payment Bond (the language of the EJCDC payment bond form is based on AIA A312 language). NASBP approached both organizations to request their consideration for the issuance of a “stopgap” measure until such time as each organization commences and concludes a full revision process for their respective performance and payment bond forms.“We are very appreciative of the fact that AIA and EJCDC recognized the seriousness of the situation and acted quickly to address our request for interim revisions to their payment bond forms,” stated Bill Maroney, President of NASBP. “At present, our members are faced with a challenging situation in convincing owners and contractors about the need for modifications to the A312 payment bond form and in administering the various amendments to the A312 payment bond form issued by different surety companies.” Dick Foss, NASBP’s Executive Vice President, related, “NASBP established a productive dialogue with AIA and EJCDC so that they heard producer concerns over the current situation.” “We plan to work closely with SFAA and others to help AIA and EJCDC enhance their bond forms further,” he added.

Indeed, both AIA and EJCDC were receptive to the idea of interim revisions to their bond forms and subsequently took action, each choosing to employ a different approach to its respective payment bond form revision. EJCDC’s revised payment bond form, issued as EJCDC C-615(A), deletes Paragraph 6 in its entirety, removing the language in the bond form that stipulated a 45-day period within which the surety must answer the claimant’s notice of claim. In the commentary accompanying the revised form, EJCDC states the following:

“The new form, EJCDC C-615(A), is intended to be used on an interim basis as a substitute for EJCDC’s standard payment bond form, EJCDC C-615, pending a full review and re-issuance of the standard form. The interim form addresses a concern regarding the misapplication of the standard form’s section on the time limit for the surety’s response to a claim on the bond. That concern arose as a result of court decisions in a few jurisdictions, and led users and sureties to request a revision of the form.”

To read the whole EJCDC statement regarding its interim payment bond form, EJCDC C-615(A), and to access a sample copy of the form, please click here.

Rather than issuing an interim version of its payment bond form, AIA chose to publish a notice of amendment, showing suggested modifications to its existing A312 Payment Bond form. The amendment makes several important changes to the form: specifically, it increases the number of days for the surety’s response from 45 days to 60 days and it states that a surety’s “failure to discharge its obligations” under Section 6 will not act as a waiver of the surety’s defenses but will entitle a claimant to seek reasonable attorneys’ fees as the sanction for such failure under Section 6. The amendment is a significant improvement over existing language, since it lengthens the surety’s response period and it addresses the potential loss of defenses for a surety’s untimely response.

However, the amendment does not address another issue raised in discussions among the three organizations—that is, the addition of language to establish an obligation on the part of bond claimants to supply the surety with supporting documentation of their claims as a condition of triggering the commencement of the surety response period. AIA felt that such an addition could not be entertained in the absence of a “full airing” with organizations representing all parties affected by the bond form. Moreover, AIA believed that any such discussion would delay publication and issuance of the amendment significantly. To provide the construction community with improved language as early as possible, the decision was made to release the amendment in its present form. AIA’s interim revision is available by clicking here. To increase awareness, AIA, NASBP and SFAA have issued a joint press release, available by clicking here, informing the construction community, including owners, about the availability of the new A312 Payment Bond amendment.

Thanks are due to EJCDC and to AIA for recognizing that the concerns and confusion generated by recent court decisions interpreting A312 Payment Bond language necessitated changes in their bond forms and for taking action to mitigate concerns ahead of the regular revision cycles for those bond forms. Both EJCDC and AIA plan to initiate full revision processes for their bond forms later this year, and they already have reserved seats at the drafting table for the surety community through NASBP and SFAA.
These materials are provided to NASBP members and affiliates solely for educational and informational purposes. They are not to be considered the rendering of legal advice in specific cases or to create a lawyer-client relationship. Readers are responsible for obtaining legal advice from their own counsels, and should not act upon any information contained in these materials without such advice.

 2008-2009 NASBP Officers, Directors, and Regional Vice Presidents Elected
New NASBP 2008-2009 Officers: (from left) Spence Miller, Todd Loehnert, Bill Maroney, and John Rindt.

At the Annual Meeting in Miami Beach the following were elected as NASBP’s 2008-2009 officers.

William F. Maroney was elected NASBP President. Bill is Senior Vice President of City Underwriting Agency, Inc. of Lake Success, NY.

Todd P. Loehnert was elected NASBP First Vice President. Todd is Sr. Vice President/Bond Manager of Wells Fargo Insurance Services of Kentucky, Inc. of Louisville, KY.

J. Spencer Miller was elected NASBP Second Vice President. Spence is President of Schwartz Brothers Insurance Agency, Inc. of Chicago, IL.

John Rindt was elected as NASBP Third Vice President. John is Executive Vice President of the Surety Division of JDW Insurance of El Paso, TX.

The Executive Committee will be comprised of the four officers listed above and two Ex Officio members who will represent the Directors and Regional Vice Presidents. The Ex Officio members are Lynne W. Cook, Senior Vice President of Early, Cassidy & Schilling, Inc. of Rockville, MD and David R. Summerall, Bond Executive of Early, Cassidy & Schilling, Inc. of Rockville, MD.

Serving on the Executive Committee as NASBP Immediate Past President will be Sarah M. Finn. Sarah is National Surety Senior Vice President of IMA of Colorado, Denver, CO.

Directors and Regional Vice Presidents serving on the NASBP Board of Directors are listed below.

Newly elected NASBP Directors are:

  • Donnie Doan, McQueary Henry Bowles Troy, LLP, Dallas, TX
  • Thomas Durkin, Durkin & DeVries Insurance Agency LLC, Burlington, MA
  • Thomas Gentile, Turner Insurance & Bonding Co., Montgomery, AL
  • Scott Hoffman, First Niagara Risk Management, Inc., Buffalo, NY

They are joining the following NASBP Directors:

  • Graham S. Beck, Wilson M. Beck Insurance Services, Inc., Burnaby, BC
  • Lynne W. Cook, Early, Cassidy & Schilling, Inc., Rockville, MD
  • Kathryn L. Corcoran, Downey and Company, Albuquerque, NM
  • Mark S. Drengler, Surety Bonds and Insurance Agency, Inc. Dba Drengler Liptak & Keller, Powell, OH
  • Charles C. Leach, Fuller & O’Brien, Inc., Albany, NY
  • Bob McLendon, Fisher-Brown, Inc., a Division of Trustmark National Bank, Pensacola, FL
  • Mark M. Munekawa, Woodruff, Sawyer & Co., San Francisco, CA
  • Carl Newman, Parker Smith Feek, Bellevue, WA
  • Richard W. Pratt, InterWest Insurance Services, Inc., Sacramento, CA
  • Patrick T. Pribyl, Lockton Companies, Inc., Kansas City, MO
  • John E. Tauer, Cobb Strecker Dunphy & Zimmermann, Minneapolis, MN

The NASBP Regional Vice Presidents are:

REGION 1: Philip O. Forker, Anchor Insurance & Surety, Inc., Portland, OR
Alaska, Idaho, Montana, Oregon, Washington, British Columbia, Alberta, Saskatchewan

REGION 2: James P. Schabarum II, Cavignac & Associates, San Diego, CA
Arizona, California, Hawaii, Nevada, Mexico, Guam

REGION 3: Richard G. Minick, Minick & Company, Albuquerque, NM
Colorado, New Mexico, Utah, Wyoming

REGION 4: Thomas M. English, Thomas McGee, L.C., Kansas City, MO
Kansas, Missouri, Nebraska

REGION 5: Terry Starks, American Agency, Inc. Minneapolis, MN
Iowa, Minnesota, North Dakota, South Dakota

REGION 6: Robert Bobo, Lockton Companies, LLC, Houston, TX
Arkansas, Louisiana, Oklahoma, Texas

REGION 7: Christopher M. McAtee, The Brower Insurance Agency, Dayton, OH
Illinois, Indiana, Michigan, Ohio, Wisconsin

REGION 8: Jeffrey Reich, Florida Surety Bonds, Inc., Maitland, FL
Alabama, Florida, Georgia, Kentucky, Mississippi, Tennessee

REGION 9: David R. Summerall, Early, Cassidy & Schilling, Inc., Rockville, MD
District of Columbia, Maryland, North Carolina, South Carolina, Virginia, West Virginia

REGION 10: Kevin Garrity, Rose & Kiernan, Inc., East Greenbush, NY
Delaware, New Jersey, New York, Pennsylvania, Ontario, United Kingdom

REGION 11: Tom Durkin (Acting), Durkin & DeVries Insurance Agency LLC, Burlington, MA
Connecticut, Maine, Massachusetts, New Hampshire, Vermont, Rhode Island, Quebec

REGION 12: Eduardo Marti Martinez, Aon Risk Services Inc. of PR, San Juan, PR
Puerto Rico, South America

 Photo-Roundup of Sessions and Programs Offered at 2008 Annual Meeting in South Beach

NASBP President Sarah Finn of IMA of Colorado presided over the 2008 NASBP Annual Meeting held April 13-16, 2008 in Miami Beach, where a record of over 700 were in attendance. The Annual Meeting’s program was based on the theme, “Building on Our Value Proposition.”

Emerging Challenges Panelists, (from left) Martha Perkins of Whiteford, Taylor & Preston, LLP; Rick Lowe of Duane Morris, LLP; Brian Seifert of CNA Surety; and, moderator, Mark McCallum of NASBPSession: “Emerging Challenges and Opportunities for Contractors and Sureties: The Performance Implications of Sustainability, Virtual Design, & Collaborative Project Environment”
This session focused on how performance implications of sustainability, virtual design, and collaborative project environment are transforming the relationships and responsibilities of the project terms, specifically indentifying risk and reward implications for contractors and sureties.

Guest Speaker, Mike Gundrum (right) of Division One, LLC made a presentation, titled “Managing and Mitigating Performance Risk.” Lynne W. Cook, (left) of Early, Cassidy & Schilling, Inc. moderated the program.Session: “Managing and Mitigating Performance Risk.”
During this session Mike Gundrum explained how today’s contractors face a growing number of issues that can erode project profits and threaten the financial health of their companies. The industry has responded by helping contractors manage some of these threats through a variety of insurance and surety products. However, many risks still fall outside the scope of these products. This session explored ways to further assist clients in expanding their own risk management processes to help lessen these potential liabilities.

TV personality and best-selling author, Larry Winget, received a lot of laughter from the audience in response to his humor and advice.

Keynote Presentation: “Shut-up, Stop Whining & Get a Life!”
Larry Winget, the Pitbull of personal development and best-selling author, described with humorous anecdotes universal principles that can work for anyone, in any business, at any time. He explained his belief that most of us complicate our life and business way too much, take them way too seriously, need to lighten up, take responsibility, and keep it all in perspective. Larry Winget can be seen on A&E’s reality television series “Big Spender” and in his appearances on CNBC’s “The Millionaire Inside.” Winget entertained by being edgy, cantankerous, sarcastic, opinionated, and hilarious.

Colonel Mike Mullane, (center) a NASA Astronaut, delivered a presentation on “Countdown to Teamwork.” Also pictured are NASBP President Sarah Finn (left) and Annual Meeting Program Chair Carl Dohn, Jr. (far right) of Dohn & Associates.General Session: “Countdown to Teamwork.”
Colonel Mike Mullane motivated the audience by describing how to successfully lead and team-build with the following fundamentals of teamwork: guarding against a “normalization of deviance”, responsibility, trust, courageous self-leadership, and courageous team leadership.

Richard A. Foss, NASBP Executive Vice President, delivered a presentation on the current state of the surety industry.

General Session Presentation: “State of the Industry”
Richard Foss described the current outlook of the surety industry by summarizing the outcome from interviews recently held with surety company executives and responses of the NASBP Leadership to a recent survey.

During the Government Relations Committee meeting, Harold Goldson, Administrator of the Miami-Dade County Department of Small Business Development, shared his successes and challenges in helping small businesses in Miami-Dade County.

Magician, Bill Herz, (left) a guest speaker at the Wednesday Awards Breakfast had Florence Maroney (right) help him demonstrate several illusions.

Magician Bill Herz (far left) recruited members of the audience including (from second from left) Judy Hansen, Richard G. Minick of Minick & Co., and Steve Freeman of Hess, Egan & Haggerty.Awards Breakfast Guest Performer: Magician Bill Herz
Bill Herz, one of the most regarded and entertaining corporate magicians and author of “Astonishing the Executive,” entertained the audience with his mix of comedy and magic. He also sidelines as a special effects creationist for Broadway shows and performs in Europe and Asia.

Sarah Finn (left) officially hands the reigns of the NASBP Presidency to William F. Maroney (right) and becomes Immediate Past President.

Incoming NASBP President William F. Maroney of City Underwriting Agency describes some of his goals for his term in office from 2008-2009.

 Retired ICW Executive Awarded NASBP 2008 Bruce T. Wallace Award
NASBP President Sarah Finn announced at the Annual Meeting in Miami Beach, the selection of John L. Hannum, former Executive Vice President of Surety for ICW Group, as the recipient of NASBP’s Bruce T. Wallace Award.John’s career in the industry spans 40 years, Sarah Finn said when she presented him with the honor. She said, “John has been totally committed to the surety industry and surety product as well as to this association.” Finn went on to describe how during his career Hannum was actively involved with NASBP and always demonstrated an unwavering commitment to the bond producer community through his presence and counsel, immeasurably enriching NASBP events and experiences.

NASBP President Sarah Finn presents the 2008 Bruce T. Wallace Award to John Hannum. John Hannum and his wife, Vicki, accept the award on stage at the Annual Meeting.

The Bruce T. Wallace Award, established in 1990 in memory of the Association’s first executive vice president, is awarded by the Executive Committee to an individual who has distinguished themselves through long and exceptional service to NASBP or the surety industry, or both. The recipient is an individual who has conducted themselves throughout their career in accordance with the highest ethical standards and demonstrated a service characterized by commitment, consistency, intensity, and impact. It is noteworthy that the Bruce T. Wallace Award is not necessarily presented every year, but rather, only when a candidate meeting these high standards is nominated. In fact, since its establishment, the Bruce T. Wallace Award has been presented only thirteen times.

Previous recipients of the Bruce T. Wallace Award include: Vincent J. Como, John J. Curtin Jr., Ted J. Adams, George T. Holbrook, Jr., Charles H. Fleck, Richard S. Beck, William E. French, John P. Martinsen, Dennis D. Flatness, George F. Thompson, Robert A. Saul, Curtis B. Roberts, and Michael C. Peters.

 2008 Annual Meeting Photo Gallery

 NASBP Releases Information Technology Survey Results
The National Association of Surety Bond Producers (NASBP) has released the results of its first information technology survey that provides information that will help members determine their technology needs in the coming year. The Automation and Technology Committee of the NASBP designed the survey, titled Information Technology Survey, with a goal of examining the current use of technology by NASBP members. With an overwhelming response to the survey, NASBP was able to produce detailed statistics from over 20 key questions. The results are broken down into four categories:

  • annual surety premiums of less than $1,000,000
  • annual surety premiums of between $1,000,000 and $3,000,000
  • annual surety premiums of over $3,000,000
  • collective results

The survey results are available for members and affiliates on the NASBP web site at http://www.nasbp.org/itsurvey As technology becomes a more important and an integral part of the day-to-day activities of surety bond producers and their agencies, NASBP will continue to develop tools and resources for members to assist them in addressing their automation and technology challenges.

For more information on NASBP’s Information and Technology Survey and the work of the Automation and Technology Committee, please contact Dave Golden, Technology Manager, at dgolden@nasbp.org.

 2008 NASBP Risk Workshop Has Sell-Out Attendance
The NASBP Risk Workshop had its first sell-out attendance with 61 participants. This interactive, professional development program, held this March, placed participants in the boots of the contractor! The 3-day Workshop was an “eye-opening” experience for participants as they created their own construction companies and experienced, some for the first time, a bidding process.

The winning bid was submitted by the “Elite” Team pictured with faculty Leslie Shiner (far left) and Brian Wasserman (4th from left).

 

Will Chapman (center) of the Insco/Dico Group in Sewickley, PA was named Most Outstanding Participant at the Friday Graduation Brunch.

A special thanks to all of the participants and the expert Workshop faculty.

 Members and Affiliates Can Save 25% Off the Price of All Job Postings Made to The NASBP Career Center Until July 31
Now NASBP members and affiliates can save 25% on all NASBP Career Center Packages until July 31, 2008. By using the 25OFF promo code, members and affiliates can save more than $175 to post their jobs.When it comes to making career connections in the surety and construction industries, the NASBP Career Center http://www.nasbp.org/careers is the only job board that is 100 percent devoted to matching individuals seeking employment with surety and insurance agencies and companies.

The NASBP Career Center gives employers and job seekers a better way to find one another and make that perfect career fit. Employers that post jobs to the NASBP Career Center can access a focused, qualified talent pool; browse resumes at their convenience; and receive resume agent alerts. See various packages and rates below.

Receive A 25% Discount Off the Price of All
NASBP Career Center Job Posting Packages Until July 31st

Single 30-day Online Job Posting Package
Includes resume database search access. With Special Discount you save $25
Members/Affiliates: $100.00 Now $75
Non Mbrs/Non Affiliates: $200.00

Three 30-day Online Job Posting Packages
Includes resume database search access. Each job runs online for 30 days. All jobs must be posted within one year of package purchase.
With Special Discount you save $68.75
Members/Affiliates: $275.00 Now $206.25
Non Mbrs/Non Affiliates: $550.00

Five 30-day Online Job Posting Packages
Includes resume database search access. Each job runs online for 30 days. All jobs must be posted within one year of package purchase.
With Special Discount you save $100.00
Members/Affiliates: $400.00 Now $300
Non Mbrs/Non Affiliates: $800.00

 Ten 30-day Online Job Posting Packages
Includes resume database search access. Each job runs online for 30 days. All jobs must be posted within one year of package purchase.
With Special Discount you save $187.50
Members/Affiliates: $750.00 Now $562.50
Non Mbrs/Non Affiliates: $1,500.00

Job Posting Add-On Package
The below package is available to purchase with each of your job postings. During the job payment process you may be given the
opportunity to select it.

Featured Job Add On
Give your job more exposure!
A “Featured Job” will appear on the job
seekers home page for 30 days. A “Featured Job” will be flagged on the results page giving you a better opportunity to get your job seen.
With Special Discount you save $12.50
Members/Affiliates: $50.00 Now $37.50
Non Mbrs/Non Affiliates: $100.00

Visit www.nasbp.org/careers today and use the Promo Code 25OFF to find the best surety professionals in the industry. The NASBP Career Center accepts: VISA, Mastercard, American Express.

For more, information about the NASBP Career Center, call 1-888-491-8833 Ext. 1670

 Service Contract Bonds: The Stepchildren of Contract Bonding
In the world of Contract Surety, the Construction Bond is the meat and potatoes of the industry. With construction bonding being the majority of the surety product, other forms of contract surety are often neglected. Among these less familiar bond types is the Service Contract Bond sometimes referred to as the Non Contract Performance Bond (Class Code 500.)Service Contract Bonds provide the guarantee of non-construction contracts, just as contract bonds guarantee construction contracts. They assure the owner (obligee) that the contractor (principal) will perform the work and pay certain subcontractors, laborers, and material suppliers. As with the construction bond, service contract bonding includes; Bid bonds, Performance bonds and Payment bonds.

The list of potential service contract account types is very long. Some of the more familiar include the following:

  • Janitorial and Maintenance Contractors
  • Solid Waste Disposal and Recycling Contracts
  • Landscape Contractors
  • Guard and Security Service
  • Road Sweeping Service
  • Staffing Contractors

Basically, any business that can provide a service to any public agency is a likely candidate for service contract surety support.

The bond form and content of the service contracts hold them apart from the construction contract bond with which most surety bond producers are familiar. Since a service contract is, more often than not, providing labor without any definable material costs, standard construction parameters for underwriting the contract size do not fit. Underwriting these specialized contracts relies more on financial strength, cash flow support, trade experience and abundance of competition. Contracts are not always awarded to the lowest bidder. Selection is also based on reputation, experience and other factors. This provides a degree of prequalification by the obligee not always seen in construction contracts.

Service contracts do not track in the same manner as construction. The bond exposure is based upon the contract term versus cost to complete. Many contracts have multi-year provisions, with sureties often executing performance bond forms that renew annually or contain a cancellation clause. Neither of these provisions is found in construction surety bonds. Another difference is that the bond amount required may only be a percentage of the total contract price.

Because service contract bonds do not fit in the customary underwriting formulas used by construction surety bond underwriters, often the commercial surety bond underwriters underwrite these bonds. You will also find that some surety companies have an easier time writing these wayward bonds than others.

As a producer, what you should keep in mind is that the costs associated with service work continually increase so the average size of these contracts continues to grow and the trend among public agencies is to outsource services. With larger bond amounts and more demand, the potential for income to you and your agency is increased and the premium generated by service contract surety can become a significant part of your portfolio.

This is the fifth in a series of articles on Commercial Surety.

Authored by NASBP’s Commercial Surety Committee Member Steve Swartz. Steve is President of South Coast Surety Insurance Services, Inc. of San Clemente, CA.

Also contributing to the article were Dorothy O’Connor of International Fidelity Insurance Company and James Crinnion of Capitol Insurance Companies.

 NASBP Co-sponsors National Honors Program of Renowned Insurance Education and Training Provider

NASBP continues two decades of sponsorship of the Institutes, also known as the American Institute for Chartered Property Casualty Underwriter (AICPCU) and the Insurance Institute of America (IIA), that provides insurance education and training for property-casualty insurance and risk management.

Since 1988, NASBP has supported the renowned Institutes through sponsorship. This year, NASBP co-sponsored with The Surety & Fidelity Association of America (SFAA), the Associate in Fidelity and Surety Bonding (AFSB) Distinguished Graduate Award, which is presented to the graduate who obtains the highest cumulative grade average on this degree’s exams.

The recipient of this year’s AFSB Distinguished Graduate Award is Robert L. Cox, Underwriter for the Cincinnati Insurance Company in Fairfield, Ohio. Of the more than 12,000 people who earned an AICPCU/IIA designation in 2008, Robert is one of 40 being recognized for exceptional academic achievement. NASBP is proud to recognize Robert’s outstanding achievement and to support the Institutes’ important educational programs.

The AICPCU/IIA established the National Honors Program over forty years ago to recognize the outstanding academic achievement of students in the designation programs and General Insurance (INS) certificate program. Robert will receive a plaque and a monetary award from NASBP and SFAA.

Some topics covered by the Institutes’ educational programs include: property-casualty insurance and risk management, insurance learning principles and coverages, claims in fidelity and surety bonding, information technology, insurance accounting and finance, insurance services, marine insurance management, personal insurance, premium auditing, regulation and compliance, reinsurance, risk management for public entities, surplus lines insurance, commercial underwriting, management and business skills, customer service, regulation, and executive education.

Visit http://www.aicpcu.org for more information about the educational programs offered by the Institutes.

 Treasury Announces Changes to the T-List
The Department of the Treasury’s Listing of Approved Sureties (Department Circular 570) as of July 2, 2007 has been updated to reflect:

  • Plaza Insurance Company (NAIC #30945), has been certified and added to the Treasury’s Listing of Approved Sureties effective 03/13/08.
  • Global Surety & Insurance Co. (NAIC #11304), has been terminated effective 02/25/08.
  • AXIS Reinsurance Company (NAIC #20370), has been certified and added to the Treasury’s Listing of Approved Sureties effective 04/07/08.
  • ProCentury Insurance Company (NAIC #21903), has been certified and added to the Treasury’s Listing of Approved Sureties effective 04/10/08.
  • A change in underwriting limitation for Guarantee Company of North America USA (The) (NAIC# 36650), effective April 7, 2008. The underwriting limitation has been increased and the new limitation is $10,976,000.
  • Financial Casualty & Surety, Inc. (NAIC #35009), has been certified and added to the Treasury’s Listing of Approved Sureties effective 04/26/08.
  • North Pointe Insurance Company (NAIC #27740), has been terminated effective 05/02/08.

For a complete listing of all states where these companies are licensed to transact surety business, please refer to the Circular 570 and its supplements at: http://fms.treas.gov/c570/c570.html
http://fms.treas.gov/c570/supplements.html

 US Ninth Circuit Affirms Trial Court Ruling Striking Down Nevada Countersignature Statute
On April 10, 2008, the United States Court of Appeals for the Ninth Circuit issued its written opinion affirming the trial court ruling that Nevada’s countersignature statute, Nevada Revised Statute Section 680A.300, is unconstitutional. Nev. Rev. Stat. Section 680A.300 provides that no authorized insurer may make, write, place, or renew any insurance policy on persons, property, or risks in Nevada “except through its duly appointed and licensed agents resident in [Nevada], any one of whom shall countersign the policy.”

The statute also required a significant commission to be paid to the resident agent for insurance policies written in Nevada. The Ninth Circuit found that the statute violated the Privileges and Immunities Clause of Article IV of the U.S. Constitution, as “Nevada’s discrimination against licensed nonresident agents is not closely related to a substantial reason for that discrimination beyond the mere fact that they are citizens of other states.” The decision is not yet final, since Nevada may seek a review of the decision within 90 days of its issuance. To read the complete opinion, please click here.

 Welcome New NASBP Members and Affiliates
NASBP welcomes the following new members and affiliates who have joined the Association since the last issue of Pipeline.

Members

Catto & Catto LLP
http://www.catto.com
San Antonio, TX
Key Contact: Steven Buffkin

Insurance Office of America
http://www.ioausa.com
Longwood, FL
Key Contact: Bill Simpson

Leavitt Pacific Insurance Brokers, Inc.
http://www.lpib.com
Campbell, CA
Key Contact: James Shea

Paffenbarger & Walden, LLC
http://www.pwbonds.com
Phoenix, AZ
Key Contact: Andy Paffenbarger

Richard F. Ferrucci & Associates, LLC
Email: mknipfing@rffassociates.com
Garden City, NY
Key Contact: Richard F. Ferrucci

Risk Solution Partners
http://www.risksolutionpartners.com
Honolulu, HI
Key Contact: Paul Botts

The Garis Agency
http://www.garisagency.com
Lederach, PA
Key Contact: Robert Garis

Worldwide Insurance Specialists
http://www.bond007.net
Phoenix, AZ
Key Contact: Wayne Gutches

Affiliates

Bluestone Surety
http://www.bluestonesurety.com
Charleston, SC
Key Contact: David Pearlstein

J.R. Olsen Bonds & Insurance Brokers, Inc.
http://www.jrolsenbond.com
Canoga Park, CA
Key Contact: James Olsen

Oryx Insurance
http://www.oryxinsurance.com
Binghamton, NY
Key Contact: Timothy Cappellett

Rockhill Underwriting Management, LLC
http://www.rhkc.com
Kansas City, MO
Key Contact: Matthew Semeraro

 Passing
With sadness NASBP reports that John E. Zervos, founder of the Zervos Insurance Agency, passed away April 16, 2008. The Zervos Agency of Southfield, Michigan has been a long-standing member of NASBP. Services were held April 19th at the Holy Cross Greek Orthodox Church in Farmington Hills, Michigan.

 SIO Recognizes Excellence in Surety Industry
Photo Gallery of SIO Award Winners
NASBP Annual Meeting

SIO honored seven surety professionals and 10 local surety associations (LSAs) with the 2007 Awards for Excellence in Surety Bond Promotion in April at the National Association of Surety Bond Producers (NASBP) annual meeting in Miami. SIO also inducted three individuals into the Tiger Trust, an elite honorary society of surety professionals who persuaded private construction owners or lenders to require surety bonds on their projects.

Platinum Award

The Platinum Award for Excellence in Surety Bond Promotion is given to members of NASBP and The Surety & Fidelity Association of America (SFAA) for their overall actions in promoting the value and benefits of contract surety bonds throughout the year. SIO recognized seven individuals with the Platinum award:

  • Mike Battenfield, The Hartford, Heathrow, FL
  • Matt Curran, CNA Surety Corp., Maitland, FL
  • Michael Dennis, Liberty Mutual Surety, Maitland, FL
  • Gary Dunbar, Great American Insurance Co., Cincinnati, OH
  • Edward Heine, Payne Financial Group Inc., Missoula, MT
  • Steve Nelson, SureTec Insurance Co., Austin, TX
  • Michael Youngblut, Hess Egan Hagerty & L’Hommedieu, Chevy Chase, MD

Battenfield, Curran, and Dennis are the driving force behind the many accomplishments of the Florida Surety Association. They have been successful in a difficult state legislatively, with lobbying and education efforts to keep onerous bond forms and increased bond thresholds at bay. Their work with emerging contractors is exemplary.

Dunbar has been outspoken in his efforts to encourage more sureties to write bond for emerging contractors and has been a champion of SFAA’s Model Contractor Development Program. He also taught classes at the University of Cincinnati and to CPAs. Dunbar, along with Heine, had a significant role in presenting SIO’s “Banking & Bonding” Webinar for the Risk Management Association, reviewing articles for the RMA Journal, and participating on an RMA panel. Heine contributed significantly to the industry by encouraging members to actively promote surety bonds. He reached out to several local surety associations to show them how they could effectively promote contract surety bonds.

Nelson can entertain the crowd when he speaks and educate them at the same time. He won top marks before the Construction Owners Association of America. He also teaches at the University of Texas and AGC’s Project Management course.

When M&T Bank bought Hess Egan Hagerty & L’Hommedieu, Youngblut embarked on a campaign to educate M&T’s 600 branch and regional offices on the benefits of surety bonds over a letter of credit. The campaign continues, but Youngblut has already convinced the Senior Regional President of the Greater Washington Region on the benefits of bonding.

Silver Award

The Silver Award for Excellence in Surety Bond Promotion recognizes LSAs that conduct five or more activities to promote the value and benefits of contract surety bonds in construction:

  • Alabama Surety Association
  • New York City Surety Association

Gold Award

The Gold Award for Excellence in Surety Bond Promotion recognizes LSAs that conduct 10 or more activities to promote the value and benefits of contract surety bonds in construction:

Tiger Trust

Three individuals were inducted into the Tiger Trust:

  • David G. Miclette, Bowen, Miclette & Britt Inc., Houston, TX
  • Matthew J. Rosenberg, Rosenberg & Parker, Bala Cynwyd, PA
  • Michael A. Viner, HRH of Northern New England, Auburn, ME

How to Join Tiger Trust

To join this prestigious group of surety professionals:

Persuade a private owner or lender to require surety bonds on project.
Obtain documentation from the project owner or lender specifying the details and your role in convincing them to use a surety bond.

Submit your entry and documentation using the nomination form available in the Surety Professionals section on the SIO Web site.

Miclette persuaded Texas Children’s Hospital to bond its new Neurological Research Institute Project. Phase I of the expansion project was bonded for a $26 million. Subsequent phases totaling $700 million also will be bonded. The hospital also says it will bond another $800 million in projects soon to be under way.

Rosenberg convinced SAP America to require bonds on its $100 million headquarters expansion project. SAP also reports that, thanks to Rosenberg’s efforts, the company will require performance and payment bonds for all of its subcontractors with contract values exceeding $100,000.

Viner persuaded LL Bean to bond its $20 million Order Fulfillment Center. As a result of Viner’s efforts, LL Bean’s risk management staff will recommend implementing a bonding policy for all construction.

The Tiger Trust plaque and Awards for Excellence in Surety Bond Promotion were announced also at the SFAA annual meeting held recently in Washington, DC.

Publish Date
March 1, 2008
Issue
Year
2008
Month
March
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