Over the years I’ve been asked by different sureties some version of, “What do agents look for in a surety underwriter?” The easy answer is a “partner,” but what does that mean? A quick Google search comes up with: “Being a partner means sharing in an endeavor or responsibility with another person, characterized by mutual commitment, shared goals and teamwork.” So, how does that play out in the surety world?

When there’s an opportunity to write a new piece of business, the producer should be providing as full a submission as possible. This includes the financials, business plan, ownership, and any other information that the underwriter needs to understand the company and its bond needs. It should include why the account is on the market and what the prospect needs to switch to a new surety. Ideally, it will also identify the underwriting risks that the agent identifies and any mitigating factors or underwriting approaches to make that risk acceptable. By being proactive and transparent with the underwriter, the agent is laying the foundation of trust in the partnership. Regardless of the quality of the submission, underwriters always have questions, and open, thoughtful communication with the agent is the key to a successful agent/underwriter relationship.

Whether the account is new to the agent or an existing client, it’s on the market because there’s an issue which should be discussed in the cover memo. Underwriters should read the submission. Most agents don’t spend the time to write a full cover memo like an underwriter does. Their analysis won’t match up to the underwriter’s anyway. However, the cover memo should highlight the good, bad, and ugly on the account, along with mitigating factors and why it is a good fit for the surety. Underwriters will get a much better understanding of the agent and how they approach underwriting issues by reading the submission memo. When it doesn’t address the underwriter’s major concerns with the account, then there’s an opportunity to educate the agent on points they may not have considered. This dialogue will not only address the differences, it will help the agent and underwriter match up on future opportunities.

The best response to a submission is a quick YES from the underwriter. It’s then time to celebrate a new account. Unfortunately, I haven’t been able to find a surety that will write every piece of business I send them, so an occasional NO is inevitable. That NO is the safest answer an underwriter can give—they’ll never be fired for declining a specific account. What underwriters need to remember is that agents eat what they kill—if they can’t get the prospective account written, they don’t get paid.

A quick MAYBE or NO with a well thought out explanation of the issues and potential remedies is the next best response an underwriter can provide. It gives the agent a better understanding of: 1) any underwriting issues that need to be addressed; 2) the surety’s appetite for that type of risk; and 3) time to find a solution with you or with another surety that is more comfortable with the risk. A slow NO, without a clear understanding early in the conversation that it may be coming, is the worst response possible. Time is the limiting factor with most new account opportunities. If the underwriting concerns are not communicated and resolved, or delivery of the declination is drawn out in such a way that the agent does not have time to find another market, then the partnership between the underwriter and agent will be fractured—probably beyond repair.

How the NO is delivered is an opportunity for the underwriter to show their commitment to their producer partners. My best lesson from college was a business writing assignment to write a letter declining a client on something they wanted, but to do it in such a way that they thanked me for the declination.

Agents get told NO all the time—a lot more than we want to admit. If it’s presented in such a way to benefit them, then the underwriter-agent relationship is strengthened, and you’ll end up writing more business together in the long run. When it’s done well it can build a better foundation for a lasting and mutually beneficial relationship, which is what surety is all about.

Robert Coon is Vice President – Surety at Scott Insurance in Greensboro, NC. He can be reached at rcoon@scottins.com or 336.510.0072.