Insights from Contractors and NASBP Colleagues

Contractors Describe Experiences with their Sureties

This spring and summer I had the good fortune to spend time with contractors and NASBP colleagues. I was invited to speak in June at the Construction Financial Management Association (CFMA) Conference on the surety industry and market. The contractors in attendance expressed that the economy was improving slowly, but their profit margins were still very, very low. Several contractors wanted to know if surety companies are seeing the kind of losses they anticipated. I explained that many sureties have indicated that they had expected to see more losses in the past few years and that it is only now that sureties are seeing losses that they were expecting. Also, I described how during this post-recession period sureties anticipate that they will see more claims and more losses once the economy improves further. Many of the 100 contractors in attendance told me that my explanation helped them understand why sureties are asking for more frequent meetings and submission of financial information. NASBP appreciated the opportunity to speak at the CFMA Conference and to help educate contractors about the surety market and the surety product. Be sure to read the two other articles in this issue of Pipeline that offer benefits to the NASBP membership as a result of the excellent relationship we have established with CFMA. One describes the extended discount on the CFMA Benchmarker product and the other provides access to the entire July/August issue of the CFMA Magazine, “Building Profits” that focuses on information technology.

Launch of 1st NASBP Level III School Hailed a Success

I also am pleased to report that the first session of the NASBP Angell-Curtin Advanced Surety School Level III, held earlier this month, was a huge success and a fine tribute to NASBP activists and industry leaders, Bill Angell and Jack Curtin, after whom the Level III is named. All the teachers that knew either one of them, stated, at various times during the 3-day Level III School, how Bill and Jack would have been proud of this new NASBP educational offering. The students’ reviews showed they were in agreement. A student at the class said they had waited 10 years for the Level III class, and they are hoping they do not have to wait another 10 for our next offering!

Courtesy of NASBP Past President, Sarah Finn of IMA, Inc., Level III students had the opportunity to hear a great guest speaker, Jim Johnson, CEO and President of G.E. Johnson Construction Company. Johnson, who is a client of Finn, provided his perspective of the surety industry as a contractor including how he believes successful contractors should interact with their surety and agent. He revealed what he believes is key to his long-term relationships with his agent, Sarah, and his surety, and he described how all parties do their best to maintain trust, accountability, and frequent communications (to avoid the others being surprised).

Nothing is more fulfilling than witnessing the NASBP William J. Angell Surety School and seeing NASBP volunteers teaching and the industry’s students learning our craft. When I have been asked why we, NASBP School faculty, volunteer to teach, I have always said, our rewards are even greater than the students’. Teaching re-ignites the passion we each have for this great business. In fact, a faculty member confided in me that he is postponing retirement so he can continue to teach at the School–it means that much to him. I understand that commitment and passion. Find out more and see pictures about the first Level III session in the related article in this issue of Pipeline.

Take Time to Mentor Clients who Oversee Spending of Taxpayer Dollars

Now that the summer is nearly over and the fall season approaches, local, state, and federal government offices will soon be back in full session. This is a good time to find opportunities to educate local, state, and federal government officials and legislators about the protections that surety bonds provide taxpayers. As I have stated earlier, making a greater commitment to these groups is one of the highest goals we can set for ourselves and our industry. Remember you have access to many NASBP resources to help you.

For example, you have access to the free NASBP Resource Kit that can help you explain bonds to clients, and potential obligees, who spend taxpayer dollars on behalf of the public. The Kit’s five components help you explain the purpose and protections commercial surety bonds offer to municipal, city and state employees and elected officials, particularly when they seek to outsource services.

The time- and money-saving NASBP Resource Kit includes the following pieces: 1) a one-page flier listing how and why surety bonds safeguard third-party vendor contracts and protect taxpayer dollars; 2) a white paper that describes in depth the benefits of outsourcing as a tool to contain costs, improve services and streamline the management of public infrastructure; 3) a full-color brochure that gives the reasons for, and the function of, bonding and represents an invaluable and attractive piece to distribute at meetings held with these kinds of clients and public officials; 4) a PowerPoint presentation that can be customized to specific audiences and includes detailed notes of nearly 20 slides to assure the presenter gives a comprehensive explanation; and 5) bond language samples that include an example of a performance bond and suggested bond provisions for insertion into contracts. You can access the new NASBP Resource Kit by visiting NASBP.org. For more information, contact Cathrine Nelson at (202) 686-3700 or cnelson@nasbp.org.

In closing, I look forward to seeing you at our upcoming September Regional meetings.

Sincerely,

Lawrence F. McMahon
NASBP President

Lawrence F. McMahon is Executive Vice President/Surety Manager of Alliant Insurance Services, Inc. in San Diego, CA. He can be reached at lmcmahon@alliantinsurance.com.