Not an ‘Ugly’ 4-Letter Phrase

This publish is a part of a collection sponsored by Outdated Republic Surety.

Surety bonds have garnered an unlucky fame of being “ugly” or “uncomfortable” for impartial insurance coverage brokers for a lot of causes.

Not like a standard insurance coverage contract, which is a two-party settlement between an insurance coverage supplier and a policyholder, a surety bond entails three events: the principal, the obligee and the surety. The principal ensures fee or efficiency of its bonded obligation to the obligee and if the principal defaults, the surety will make good on the duty to the obligee (after which search compensation from the principal).

In some ways, bonds are extra akin to traces of economic credit score that banks prolong to purchasers than they’re to conventional insurance coverage insurance policies. For that purpose, some brokers have dismissed them as too complicated.

However with the appropriate surety associate, something is feasible. At Outdated Republic Surety, we’re there to assist brokers via each step of the surety transaction, from bond choice to issuance with assured training, communication and hand-holding alongside the way in which.

The wonder in bonds

Unbiased brokers might miss out on prime enterprise alternatives in the event that they miss out on the sweetness in surety bonds.

Brokers who can’t supply bonds danger shedding purchasers to rivals. In the meantime, those who make the leap into surety can supply extra value-added providers to present and potential purchasers, which may reap big rewards in consumer attraction, satisfaction and retention.

The expansion alternatives are important. There are literally thousands of surety bonds obtainable to assist contractors in an enormous vary of professions guarantee efficiency of an obligation and compliance with authorized necessities.

For some brokers, the sheer scope of the bond market is a catch-22 as a result of there are nearly too many choices to contemplate. However teaming up with an skilled within the area can flip that doubtlessly overwhelming pool of merchandise into focused enterprise alternatives.

Additionally it is value remembering that many surety bonds are fast and straightforward to underwrite. Brokers can typically fulfill their purchasers’ wants the identical day and with a number of clicks of a button via immediate-issue bond applications.

And the bonds themselves are additionally sticky. They usually final throughout a contract or mission, or the protection is steady till canceled. That is not like conventional insurance coverage insurance policies that might get shopped round on an annual foundation.

Lastly, there’s magnificence to behold in surety bond commissions, which may vary from 20% to 35% or larger in a tender market. That’s a pay price that shines compared to the ten% to fifteen% fee brokers usually earn on property and casualty insurance coverage premiums.

Partnership is essential

There’s quite a bit to be taught relating to providing and issuing surety bonds, however the positives for impartial brokers far outweigh any challenges related to breaking into the bond enterprise.

Brokers who contemplate “bond” to be an unsightly four-letter phrase most likely lack the help they want to reach surety. However with a devoted surety associate like Outdated Republic Surety, they’ll see the sweetness in bonds earlier than lengthy.

For extra information from Outdated Republic Surety, please go to https://www.orsurety.com/weblog.