Back to the Future: How the '80s Have Directed Our Path Forward
Our trip through NASBP’s history has reached the decade of the 1980s. As the first woman bond representative to be hired in Pennsylvania, I began my career in 1979, so I actually have personal recollections of some of the events I am about to discuss. Although I entered my new position somewhat naively, I persisted as a bond professional. Sometimes being enthusiastic about learning, accepting challenges, and, yes, being lucky, enables a person to flourish in a job that blossoms into a career that is cherished and meaningful. Like you, I have days when I ask myself, REALLY? But looking over my career, the memories that resonate deepest are those of the people met and the relationships made with fabulous mentors, clients, contemporaries, and students. The daily learning, the laughter, and, of course, the challenges of finding viable solutions to problems further have enriched my experience.
Early in my career, I gained appreciation of the various volunteer activities that NASBP members tackle, because I was fortunate to have two NASBP Presidents as colleagues, Jim Byerly and John Hoffman. In the ‘80s, the economic conditions continued to deteriorate, interest rates topped out at 20%, and construction spending slowed. Surety losses climbed, and the SAA (SFAA’s acronym at that time) increased rates twice to reflect the poor loss experience.
Despite (or maybe because of) these difficult circumstances, our leadership, with the assistance of our industry partners, SAA and AGC, ramped up activity. It’s evident to me that a number of decisions and accomplishments during this period were instrumental in defining the current path of NASBP and the industry:
- The NASBP office moved to the Friendship Heights area on the border of Maryland and the District of Columbia.
- The Long-Range Planning Committee was established to define the long-range goals and objectives of NASBP.
- In 1984 the word CONTRACT was removed from NASBP’s mission statement, opening our space to all surety sectors.
- In 1984 we formed the Technology Committee and, in less than six months, developed an automated surety system that was sold to agencies.
- Membership grew from 400 to over 600 producer agencies within a 9-year period.
- The Education Committee expanded Level I of the Surety School, and, under the direction of Chair Harry Rosenberg, an advanced class was held in London and a second in Philadelphia later in 1982.
- The Government Relations Committee held the first Legislative Day, encouraging members to speak with their elected federal representatives about the importance of bonding.
- Public relation activities increased. We reached out to numerous construction and banking associations and to those responsible for claims handling to establish relationships. New publications issued included:
a. When You Build, Should You Bond?
b. Your First Bond
c. The Surety SafeGuard: How Bonding Protects Taxpayer Dollars
d. Jack Curtin and the AGC penned the Basic Bond Book and sold 10,000 copies the first year
- Charlie Fleck was instrumental in the formation of a joint NASBP/SAA Public Relations Committee, which resulted in a number of activities undertaken: establishment of a PR Advocacy award; creation of “Fedsure,” which was a primer on surety for 200 public officials who were in some capacity involved with bonds; and sponsorship of a survey on “Losses in the Private Sector due to Contractor Failures.”
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Let’s now fast forward to current times. While you and I know the subcontractor default insurance (SDI) product is not the same as a bond, some people do not understand the differences, and it has become part of a number of GCs' risk management programs. NASBP producers have and continue to experience a reduction in revenue that directly correlates to the increased use of SDI by contractors. We all know what the economy has been like since 2008, and, while improved, no clear road exists for the economy ahead. With evident challenges, NASBP members got tired of just reacting to the varied forces impacting our industry and asked leadership to “do something.” A few years ago at an Annual Meeting, a number of surety professionals kicked around the concept of an industry “Think Tank.”
One of my goals as President is to provide a platform for industry leaders to discuss and to wrestle with the continued relevancy of our product in light of the current construction environment, emerging procurement trends, and the often fickle economy. I am pleased to report this occurred in Annapolis, MD prior to the 2016 Midyear Meeting. Let me offer a public thank you to all of the participants that day and to the leaders who provided input to us in preparation for the President’s Task Forces. I cannot help but be excited and hopeful after witnessing the energy, involvement, and pragmatism that filled the rooms. As a member, affiliate, or associate, you should be encouraged to know that NASBP’s leadership is committed to the success of the industry and your futures. A few of the messages heard loud and clear during the task force deliberations were:
- The perception of the ultimate end users, the obligee and the claimant, may not be realistic; and most do not understand how to use and the processes underlying the product. The words “communication,” “timeliness,” and “expectations” were repeated often in each group.
- Construction procurement practices have changed and continue to change.
- As an industry, are we devoting sufficient introspection to what this means for our product and the marketing of our product?Some stakeholders harbor disconnect between cost and the surety value proposition.
- The need for advocacy and educational efforts is always present and likely needs to be heightened.
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The Task Force leaders want to identify a few strategic efforts to put in motion. By virtue of the level of participation in the task force groups, it was evident to me that NASBP Members, Associates, advisors, and Affiliates want to have the strongest hand in defining our future, and I think there can be no other way.
Lynne W. Cook is Senior Vice President at Early, Cassidy & Schilling, Inc. in Rockville, MD. She can be reached at cooklw@ecsinsure.com.