When P&C agents refer a client out for surety needs, they risk losing that account altogether. Old Republic Surety familiarizes agents with the process so it’s easy to handle the random bond request.
Why Offer Bonds?
I often hear from agents who say, “Bonds? I don’t do bonds. I refer for that.” I want every agent out there to know they don’t have to do that. For most bond submissions requested by a client, the agent can do the submission – and Old Republic Surety will help.
For example, imagine you have a prospective car dealership account and part of the sales conversation is the state requirement for a motor vehicle dealer bond. You don’t have to carve that off of your overall P&C offerings and refer it out to a third party. You can keep that business in your own stable of products and services, which profits you and makes things much more convenient for the client.
This same type of scenario may apply to a house cleaning business, a handyman or other tradesman, or a small professional office, among other typical clients.
But what if you don’t know how to do a bond submission? Believe me, for a small-account bond, it’s not that hard. Here are some of the basics agents need to know about bonds.
Bonds are different from insurance. Insurance is designed and priced based on an expectation of loss. A bond is the opposite: it is crafted with the understanding that the bond purchaser (the principal) will perform their job to specifications and within the law, thereby never needing to pay for damages. If the principal messes up and the surety (bond company) has to pay the obligee (the party harmed by the principal), the surety is entitled to repayment of that loss by the bond purchaser.
Bond submissions require different data from insurance applications. To provide a bond, the surety needs to know the creditworthiness, financials, stability and longevity of management, and general reliability of the bond purchaser (principal). A bond submission requires lots of financial data and some personnel information, and all of that gets double-checked by the underwriting team. Some bonds can be done online through Old Republic Surety’s BondStar system, and we will show you how easy that is.
A surety pays the obligee, not the principal. A bond is designed to protect a consumer from the failings of a professional, contractor, or other service provider or product dealer, and any payout goes to the party harmed by the bond purchaser. Insurance is designed to help the policyholder recover from an event, defend against an accusation, or pay for damages the policyholder caused.
Bonds may be required for business or personal purposes. We’ve looked at a few business purposes, but there are quite a few bonds that personal lines clients may request. For example, if an agent’s client is made executor of a will, it’s typical for a probate bond to be mandated by the state so there is protection for the state’s tax interests in the estate. Guardian bonds are another type of personal bond that protect the financial interest of someone whose assets are governed by a caretaker, such moneys in a trust.
| Surety | vs | Insurance |
| Three-party agreement | Two-party agreement | |
| Losses not expected | Losses are expected | |
| Losses are recoverable | Losses usually not recoverable | |
| Premiums cover expenses | Premiums cover losses and expenses | |
| Sureties are selective | Insurers write most risks |
ORS Shows Agents How To Do Bond Sales
Agents are often skittish about writing a bond submission – usually because it is unfamiliar territory. In some cases, agents are too busy to learn a new process for a one-off bond. In all cases, Old Republic Surety takes the time to help keep that business in-house and to get the submission done efficiently. We want our appointed agents to keep that business and retain that client.
Typically, the agent’s ORS contact will email a little checklist so the agent can ascertain if the client is eligible or appropriate for an ORS bond. In some cases, we can send a pre-filled submission template that gets the agent started and answers a lot of questions without a call. If an agent (or multiple agents in an agency) want to get familiar with bonds so they can write submissions for personal lines or small and midsize commercial, we can do an in-person training that gives plenty of information to get agents rolling. And we are always around for follow-up questions, both for our BondStar online platform and our standard underwriting shop. Once an agent does it a few times, they easily get the hang of it.
For Agents Who Discover The Profitability of Bonds
Once agents find out they can sell bonds, they often want to expand that side of their business. Great! I and the rest of the marketing staff stand ready to help you build your book of business.
Some agents put their names on a list at the clerk of the court’s office for probate and other personal bond referrals. Some cultivate relationships with lawyers, local business associations, and lodges or clubs to spread the word that bonds are available. Others work with us to create a direct marketing plan focusing on the specific types of businesses for which they want to supply bonds.
By increasing their familiarity with bonds and the bond submission process, agents can enhance their value with clients and prospects, bolster their own business, and save clients time and effort. And ORS will help at every level – whether you have never done a bond before or you are looking to build a bond specialty business. We’re here to help you move to that next level.
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