Author, Andy Roberts, Account Executive, Rancho Mesa Insurance Services, Inc.
Over the past two years, there has been a lot of talk about a looming recession. If a recession happens, its severity remains to be seen, but regardless, it is important for contractors to be taking an active approach in building their relationship with their bond company and utilizing the services of a surety specific agent.
Surety companies are conservative and err on the side of caution when it comes to providing bonds, which makes it imperative that the contractor build a strong relationship with their management and underwriting teams. Annual meetings should be conducted, as this provides the underwriter valuable insight into the company while also allowing them to build a more personal relationship with the contractor. Additionally, it is important that there is regular communication between all parties throughout the year regarding the contractor’s financials and performance on jobs, as this type of discussion can help build trust between both parties. This may seem pretty standard, but it is not easily accomplished unless a contractor is working with a surety broker that specializes in the bonding industry.
The surety industry is specialized and relationship driven, which makes partnering with the right broker even more critical as the country moves into unprecedented financial times. Effective brokers know each carriers’ appetite; they have relationships with those underwriters and should be able to easily determine which surety will be able to provide a program to match the contractor’s needs. This type of knowledge and experience can greatly benefit a contractor in the event the economy begins to turn and surety markets begin to limit capacity and/or pull back from offering bond programs.
In this most uncertain time, contractors should begin building and, in some cases, re-building their surety relationships. With considerable work lined up in Southern California over the next few years, strengthening these bond programs can allow for maximum capacity and potentially profitable growth.
For any questions about managing your surety relationships or to discuss if we can assist with any bond-related needs, contact me at aroberts@ranchomesa.com or call my direct line at (619) 937-0166.