Surety Bonds Market
Moderators: Josh, independent guy
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InsAgentSF
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- Location: san francisco
Surety Bonds Market
I am very uneducated when it comes to bonds and always tried to refer people who needed bonds to other agencies. However, a few days ago i spoke to a friend contractor who compained about the cost of the construction bonds. When i asked him how much the bond was, he said it was 1 % of a 7 mil construction cost. So i decided to try to get to bonds market. Do you have any suggestions as what companies write construction bonds?
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volstrike3
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Bond markets
Travelers, Zurich, CNA , Financial Pacific, etc.
With bonds, finding the market is not the problem. You should probably get a working relationship with an experienced bond broker at a bond only agency. You may luck out and get in touch with a bond UW willing to hold your hand but that is unlikely. If you really want to write bonds, the NASBP has a "surety school" that can get you started. What I learned at that schools is that I would much rather write insurance than bonds. Then, I found a bond only agency that would share commission.
With bonds, finding the market is not the problem. You should probably get a working relationship with an experienced bond broker at a bond only agency. You may luck out and get in touch with a bond UW willing to hold your hand but that is unlikely. If you really want to write bonds, the NASBP has a "surety school" that can get you started. What I learned at that schools is that I would much rather write insurance than bonds. Then, I found a bond only agency that would share commission.
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LaManchaDQ
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- Joined: Thu Dec 23, 2004 11:39 am
I would agree almost completely agree with volstrike3 as the approach to take. I, though, would rather do surety than insurance. 
What I would suggest for you is to contact your insurance markets that also do surety and have them tell you what agents/brokers they get most of their "contract bonds" from. You'll get less cooperation if you simply ask for a recommendation. Make sure your contacts touch base with the folks in their surety dept.
Let me also add that the reason that surety, and especially "contract" or performance & payment bonds, can be frustrating to insurance agents is that the underlying concept of surety is one of financial guarantee and not insurance.
As to pricing for "contract" bonds, there is not the same competitive pricing environment and not the same flexible discounting structure. If your friend contractor is building in the cost of the bond to his bids/ contract, then he can be almost be 100% assured that his competition has to build in an almost exact same amount on their bids/contract. If these are public jobs then the bond company issuing the bonds of public record. He should not have any competitive disadvantage because of the bond requirement.
What I would suggest for you is to contact your insurance markets that also do surety and have them tell you what agents/brokers they get most of their "contract bonds" from. You'll get less cooperation if you simply ask for a recommendation. Make sure your contacts touch base with the folks in their surety dept.
Let me also add that the reason that surety, and especially "contract" or performance & payment bonds, can be frustrating to insurance agents is that the underlying concept of surety is one of financial guarantee and not insurance.
As to pricing for "contract" bonds, there is not the same competitive pricing environment and not the same flexible discounting structure. If your friend contractor is building in the cost of the bond to his bids/ contract, then he can be almost be 100% assured that his competition has to build in an almost exact same amount on their bids/contract. If these are public jobs then the bond company issuing the bonds of public record. He should not have any competitive disadvantage because of the bond requirement.
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InsAgentSF
- Insurance Journal Addict
- Posts: 267
- Joined: Wed Mar 15, 2006 8:48 pm
- Location: san francisco
Most bond only agencies will be able to place a $9MM bond. However, most principals do not qualify for that amount of surety credit.
You can speak to some underwriters directly at http://www.suretyforums.org if you'd like, but your best bet is to find a surety only agency as recommended above.[/url]
You can speak to some underwriters directly at http://www.suretyforums.org if you'd like, but your best bet is to find a surety only agency as recommended above.[/url]