By now, most of you reading our blog already know the basic intricacies of the surety bond industry. But as with most things in our lives, it doesn’t hurt to dive deep into the respective roles of the producer and underwriter, since you will be working alongside them to get the surety bond you need. In order to fully understand the role of the producer and the underwriter, you must first know the ins and outs of surety bonds.
The Surety – The Principal – The Obligee
A surety bond is a contract between 3 parties by which one party, the surety, guarantees the performance or obligations of a second party, the principal, to a third party, the obligee. A surety bond is a guarantee to be liable for any debt, default, or failure of the principal.
Key Roles In The Surety Industry
Surety bond producers and underwriters are indispensable in the surety industry. With their knowledge of the industry as a whole, they’re going to become your trusted partners during every step of the process. While surety bond producers work with you during the whole process to secure you the best possible bond rate, the underwriters’ role might be the one that ultimately sets the tone for the rest of your surety acquiring process. The underwriter is going to evaluate the risks of working with you and your business to determine bond-worthiness. Once you get the hang of the industry, you’ll realize that these two industry figures will greatly improve your business and put you on a path to success.
So What Exactly is This Surety Bond Producer Doing?
A surety bond producer is a middle man who’s effectively going to walk you through the process of securing a surety bond and essentially going to make sure that all your needs were properly met so you get exactly what you want. Key features of a surety bond producer are extensive knowledge of the industry, understanding of the financial industry, great management skills, etc.
You might end up with a surety bond producer that’s only going to do his job and clock out. That’s not going to be the case if you partner with the best, such as Bonding Solutions. We’ll be at your service on a daily basis, ensuring the process of obtaining your bond is seamless.
With extensive knowledge of the surety industry and being well-informed of the industry you’re dealing with, a surety bond producer’s role is to look out for your best interests. They understand the whole process of acquiring a surety bond and before you even know it, you’ll be ready to approach the surety bond company and get your bond request approved.
The Role of the Underwriter
While surety bond producers are here to secure the perfect bond for you, surety underwriters are here to assess the risk of approving your bond. Every surety bond has its own underwriting process and for that fact alone, some might end up being approved quicker while others may require a more extensive approval process.
Once you’ve applied for the bond, the surety underwriter begins the approval process. He or she is here to determine the risks involved in a deal. Because of their computer, analytical, and decision-making skills, surety underwriters have the green light to either approve or reject your bond request. They have a curated well-thought-out process put in place to help them and that’s why they’re well-regarded individuals in the surety industry.
If the surety underwriter deems your bond request too risky, he or she will start the process of assessing your financial background. There are mechanisms set in place that help underwriters assess the person applying, as well as their financial and business background. Some of the questions a surety underwriter will ask might pertain to your experience in the industry or any criminal history. There might be a question about your credit score or your complete financial history. Whatever it is, you need to understand that underwriting exists so the surety company can help themselves by evaluating your request more properly.
Producers and Underwriters Work Closely to Find the Best Solution
With that being said, it’s not that hard to figure out these two roles in the surety industry exist to help each other and help their surety company out. In many ways, each has to look out for the interest of their respective clients/companies. The surety company and its producer(s) wish to develop strong relationships with the clients who can show their respectable track record in their specific industry. Surety underwriters verify each client so there’s no risk involved. And the deal gets done.
Bonding Solutions, Providing Surety Bond Solutions Nationwide
If you’re in need of a bond, Bonding Solutions is the surety agency for you. We focus on the unique needs of our clients and provide tailored bond programs that offer them the most competitive advantage for their business. We are here to satisfy our customers, educate our employees, and aid in the success of our partners. Call us today to speak to a surety bond specialist!