Best practices for midsize contractors entering the U.S. surety marketplace
By: Matt Dunning (Business Insurance) July 2013
Midsize construction contractors entering the U.S. surety marketplace will find no shortage of bonding capacity, but experts say accessing that capacity has become a much more rigorous process in the past 18 months given recent loss trends.
Recommended best practices for contractors seeking to present themselves as a more attractive risk to surety underwriters include:
• Prepare and maintain detailed financial records, including reports outlining past and current project budgets, staffing histories, pending and completed litigation, and insurance policy holdings.
• Maintain liquidity commensurate with total active workload.
• Review the project to be bonded for compatibility with core competencies and field experience.
• Provide a realistic strategy for the bonded project’s completion according to contract terms.
• Set and maintain pre-qualification standards for subcontractors and their sureties.
• Maintain consistent communication with key business partners, including the surety bond producer, project financier and internal general counsel.
