☰ ˟
Alliance circular logo listing Alliance services : Insurance, Payroll, Benefits, HR 
Home Page Email
  • Home
  • Business Insurance
    • Business Insurance Solutions
    • Workers Compensation
    • General Liability
    • Bonds
    • Cyber Liability
    • Professional Liability
    • Group Health
    • Payroll and HR
    • Trade Credit Insurance
    • Key Person
    • 401k
    • Safety Programs
  • Personal Insurance
    • Personal Insurance
    • Home/Auto/Life
    • Automobile
    • Homeowners
    • Valuables Insurance
    • Life
    • Motorcycle
    • Off-Road Vehicles Insurance
    • Renters
  • Industry Solutions
    • All Industries We Serve
    • Commercial Real Estate
    • Construction
    • ContractorsImage of right arrow
      • Window Cleaning Insurance
      • Fire Protection Insurance
      • Janitorial Services
      • Landscaping & Lawn Care
      • Alarm Installation Insurance
      • Tree Service & Arborists
    • Crane, Rigging, & Crane Operators
    • Manufacturing
    • Oil & Gas
    • Restaurant & Bars
    • Gym and Fitness Center Insurance
    • Medical Malpractice Insurance
    • Trucking
  • Our Team
    • About Us
    • Location(s)
    • Associate Agencies
    • Testimonials
  • Blog
  • Contact Us
Business
Insurance
Home/Auto
/Life
Health &
Benefits
Payroll
& HR
Home > Blog > Choosing the Right Bonding Agent for Growth
TUESDAY, OCTOBER 3, 2017

Choosing the Right Bonding Agent for Growth

workers outside a houseIn contract bonding (mainly construction bonds) the most common term used for a broker or producer is an “agent” or “bonding agent.” When it comes to developing a bonding program for your company, the bonding agent that you choose is one of the most key decisions you will make. This person plays an instrumental role in you obtaining a bond and also growing your bonding capabilities to larger levels, ensuring the longevity of your company over time. As such, it is important to fully understand what is entailed in the scope of the bonding agent’s responsibilities.

The most important role a bonding agent plays is in matching the surety company’s desires to the contractor’s needs. The surety bonding industry has many different carriers, each with its own standards and practices when it comes to underwriting. Additionally, they also have preferences when it comes to a type of market, geographical areas, and company cultures for which they want to issue bonds. If a contractor and an underwriter have philosophical differences or a difference in appetite for a particular type of market, this will most definitely have an effect on one’s bonding capability.

A bonding agent with industry knowledge is a must, but one that has experience as a contractor who has “lived it” is even better. Why might you ask? It’s simple: a bonding agent has to perform a number of duties in order to give underwriting the information they need to issue a bond. This process is all the better when you have a bonding agent that understands contracting. Below is a description of some of the responsibilities of a bonding agent which are key reasons for choosing an agent with a contractor background:

  • They can explain and advise the contractor about the process to acquire a bond.

  • They serve as an objective observer of the contractor’s management practices, lending expertise and advice with sound business management principles.

  • They will review and analyze the company’s financials in respect to current revenue as compared to past revenue trends, financial stability, and most importantly working capital.

  • They will review works in progress (WIP) reports in order to decipher consistencies or inconsistencies in the profitability of current projects versus historical data.

  • They will perform a review of current contracts as well as bids that have already been issued, discussing with the contractor the likelihood of obtaining those contracts. This tends to lead to a conversation of capacity and capability in respect to financial stability.

  • They will review capacity and capability with respect to personnel, by reviewing resumes of key personnel, management, and on-site provisions.

  • After such analysis, the bonding agent will match the contractor to a surety company that is best suited to helping the contractor achieve his goals.

  • Depending on the size of the bonding program, the agent will help the contractor to either put together a formal or informal presentation to the surety company.

  • Once the bonding program is underway, the agent will be actively involved with periodically obtaining and reviewing financial reports with the contractor to help ensure they are still heading down a successful path and update the surety company of the progress.

  • The will also make site visits and meet at the contractor’s office so the bonding agent will be able to maintain excellent communication with the contractor. In doing so, the bonding agent and contractor can better plan for growth or adversities as they arise.

 

A contractor should look for the following qualities and attributes in an agent:

  • Knowledge of or, even better, actual experience in construction estimating, project management, budgeting and cost accounting processes and controls

  • Integrity and a strong level of respect in the industry

  • Ability to build relationships with underwriters, bank officers, attorneys and CPAs

  • Ability to analyze financial statements and work in progress reports in order to determine cash flow and working capital

  • Ability to review and understand construction contracts and construction law

  • A track record  of successfully advising contractors through strategic planning and management systems

  • A pulse on the local, regional, and national markets

A bonding agent is a key factor in a contractor’s ability to successfully establish a bonding program that is scalable and sustainable. If you’d like to learn more about how bonding might help your company grow, please reach out to Tysen Manross, our resident surety expert here by filling out the short form below.


Posted 10:00 AM

Tags: business insurance, saving money, cost containment, bonds
Share |


NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013

  • business insurance(102)
  • personal insurance(73)
  • small business(30)
  • homeowners(28)
  • car and auto(28)
  • health and benefits(26)
  • health insurance(19)
  • cyber(19)
  • saving money(18)
  • contractors(17)
  • claims(17)
  • construction(15)
  • workers compensation(12)
  • bar and restaurant(11)
  • life insurance(11)
  • agency news(9)
  • cost containment(8)
  • general liability(7)
  • oil and gas(7)
  • payroll and hr(6)
  • roofing(5)
  • bonds(4)
  • personal lines(4)
  • commercial auto(4)
  • job(4)
  • cannabis(3)
  • hail(3)
  • recognition(3)
  • become an agent(3)
  • commercial insurance(2)
  • auto insurance(2)
  • homeowners insurance(2)
  • professional liability(1)
  • hail damage(1)
  • property(1)
  • covid-19(1)
  • alliance team(1)
  • broker of record(1)
  • colorado(1)
  • trucking(1)
  • record hail(1)
  • payroll(1)
  • hail insurance(1)
  • crane(1)
  • winter weather(1)
  • oil & gas(1)
  • motorcycle(1)
  • product liability(1)
  • commercial auto insurance(1)
  • inland marine(1)

View Mobile Version
  • Carrier
  • auto-owners insurance logo
  • Carrier
  • Carrier
  • Carrier
  • Carrier
  • Carrier
Connect With Us:
Social Social Social Social
Agency
Alliance Insurance Group
7910 Ralston Rd., Ste 7
Arvada, CO 80002

Phone: (303) 279-9700
Business Insurance
Home/Auto/Life
Health & Benefits
Payroll & HR
Home
About Us
Privacy Policy
Contact Us
Powered by Insurance Website Builder
Alliance Insurance Group Rated 4.8 / 5 based on 5 reviews. | Review Us