Bonds Not Insurance but Operate More Like a Bank
By: Bill Kenealy (Business Insurance) April 2014
Why is the fidelity and surety market so different from other parts of the insurance industry?
One reason is that commercial bonds are not technically an insurance product, said Kimberlee Wells, Des Moines, Iowa-based director of commercial under-writing for Nationwide Fidelity & Surety.
“Bonds are not insurance,” she said. “We have to guarantee the actions of a customer.”
Some people liken the surety and fidelity insurer to a parent co-signing on a student loan for a child.
Ms. Wells said a more apt analogy is a bank.
“We underwrite similar to how a bank would,” she said. “It’s just that we extend surety credit.”
