For any business that needs surety bonds, it is wise to find an experienced surety broker to help you navigate the industry and find the right surety company to partner with.
When you enter into a surety bond relationship, you are essentially entering into two important relationships, one with your broker and one with your surety.
These are two very different relationships.
The broker is there to educate, assist, advocate and guide you through the surety process, with the ultimate goal of finding the right surety to meet your needs.
The surety is there to take the risk and write your bonds. The surety may or may not have a close, personal relationship with you depending on the situation. However, where surety bonds are an absolutely vital part of your business, it is highly recommended that your broker assists you in developing a strong, personal relationship with your surety.
Assuming surety bonds are an important part of your business, knowing how to find the right surety broker is critical. This will be a properly licensed agent who typically works for an insurance agency that is licensed in all states where you need bonds.
However, you are looking for the right agent, not just any broker that happens to write surety bonds. This point is usually not well understood by business owners at the outset.
Most insurance agencies simply do not employ surety experts, and therefore must allow the surety companies they represent to manage the process, which can cause significant problems when you need to find the right deal.
So, how does one go about finding the right surety broker? Of course, referrals to are common, though you may still not find the best broker with a referral.
Here are some tips to consider when selecting a surety broker.
- Make sure you talk at length to your broker. Ask them questions about their business and how long they have been working in the surety industry. A good broker will share detailed insight into his approach to the surety business that makes sense to you. You can then compare brokers based on your comfort with their experience and knowledge.
- A broker that has previously spent a number of years working as an underwriter at a major surety company will usually have the right understanding of how deals get done in the surety market.
- Brokers who are members of the National Association of Surety Bond Producers are committed to the highest levels of education and professionalism in their industry.
- Your broker needs to demonstrate that they truly understand your business, both financially and operationally.
- A good broker will spend a lot of time getting to know your business, because this is what helps them sell your deal when they place a phone call to an underwriter to test the market. A good broker with the right contacts can make a phone call or two and quickly pre-sell your business to a quality surety market, with underwriting papers to follow.
- An experienced broker will explain the surety market in terms of where you fit into the market, whether it be a niche “secondary or substandard” market, or a standard surety market.
- Finally, you should feel as though you are in very good hands and can trust your surety broker with just about anything, as you will be sharing some very confidential information. Don’t be afraid to ask your insurance broker for a referral to a highly respected surety broker. You may also need to deal with an out-of-town surety broker in order to get the expertise you need.
Selecting an experienced surety broker is the first step in your process of achieving success. If you would like to learn more about surety bonds, contact me at Oswald Companies.