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Surety Bond Underwriting: An Overview

Surety bond underwriting is a pre-approval evaluation – performed by the surety – of the bond performance requirements as determined by the obligee. This evaluation also assesses the current financial situation of the principal in order to weigh up the risk related to the performance criteria and the principal's ability to reimburse the surety in the event of a claim occurring.

What Are the Stages of the Surety Underwriting Process?

The process starts with the principal applying for a surety bond through a surety bond broker or surety company. Upon application, the principal provides information to the surety regarding their business and financial history. Once this is received the surety performs a more detailed evaluation of the information provided. The surety then provides the principal with a quote for a surety bond premium, based on the risk level determined by the underwriters.

The principal has three options at this point. They can accept the quote and buy the surety bond, shop around for another quote or work with the surety to find ways of making their premium more affordable

What Are the Three Cs of the Surety Underwriting Process?

The three Cs of surety underwriting are capital, capacity and character. Capital relates to the applicant’s capital position and the assessment of the financial health of the company or individual applying for surety credit. Many bonds require an underwriter to perform a financial analysis to assess net worth, capital and the company’s trajectory. The applicant’s capacity to undertake and perform the contract is a vital part of the underwriting process, too. To this end, underwriters collect questionnaires, check previous work references, review the applicant’s business operations, get to know their processes and meet with the applicant themselves.

Finally, character. While this element can be very difficult to underwrite, there are tools that can be deployed, such as credit checks, to get a better idea of whether the potential principal is likely – or otherwise - to honour the obligations set out in a bonded contract.

Underwriting a Riskier Surety Bond

Experts in the fields of surety, such as Rob Tolley, former London broker, know that there are various ways an underwriter can approve even a riskier bond by minimising the risk to the surety. For example, additional capital may be required to approve it; this could range from a small percentage of the bond amount up to 100%. This collateral minimises the surety’s risk, as if a bond claim occurs that cannot be indemnified the surety has something to cover – or at least reduce – their loss.

#rob tolley #rob tolley london #insurance #surety #surety bonds #insurance broker #underwriting #surety underwriting #risk level

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Seven Key Steps for Business Expansion and Growth

Rob Tolley (former London broker) is the CEO of Global Specialty Underwriters LLC, leveraging more than three decades of exceptional leadership experience to develop innovative business strategies for increased productivity and profitability. This article will look at business expansion and growth, sharing pointers to help founders scale their business and take their enterprise to the next level.

A concrete growth strategy is critical to the success of any business. Without one, the enterprise will be left at the mercy of potentially volatile market fluctuations and a fickle customer base.

The growth stage of a business is a phase when the organisation experiences unprecedented and sustained increases in both profit avenues and market reach. This can occur when a company launches new products or services, increases revenue or expands its customer base. Most businesses are launched with the key objective of growth, with business decisions typically based on what would contribute to expanding the business’s reach and making it more productive and profitable.

Business owners have several avenues open to them in terms of driving growth, which generally fall into one of four categories:

Strategic growth, where the company develops initiatives to promote long-term growth

Organic growth, where the company expands by utilising its own resources

Internal growth, by optimising internal processes to increase revenue

Mergers, partnerships and acquisitions, a riskier growth type that potentially offers greater rewards

A business grows through various different stages, with each stage having crises attached to it. For example, in a business experiencing a period of rapid expansion, operations may not run as smoothly as they did previously and managers may not be as efficient as their responsibilities and span of control increases.

Corporate expansion requires careful planning to create solid foundations for the future success of the business. Key components of a sound growth plan include:

Clear objectives

Growth strategies to achieve those goals

Details of marketing strategies to reach new customers

A section dealing with operational aspects, such as the need to engage new suppliers or move to new business premises

An overview of the company’s staff structure and details on key staff and their responsibilities and competencies

It is also sensible to include details outlining the business’s financial situation including accounts, a cashflow forecast and profit and loss forecasts.

Growth businesses are not only optimally positioned to appeal to investors, innovate and take advantage of new opportunities but also have the potential to attract the best talent, enabling them to recruit people with the right credentials to take productivity and profitability to the next level.

#rob tolley #rob tolley london #business #business advice #entrepreneur #business growth #business expansion

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How to Find Your Niche as an Entrepreneur

A niche market refers to a focused set of people or businesses who are interested in purchasing a specific type of item. It’s important for an entrepreneur to find their niche: by offering specific products and services, as opposed to a wide variety, there is the opportunity to build a competitive advantage, save money and operate more productively.

How to Find a Niche

To find the best niche market, an entrepreneur should identify their own interests and the problems their business may be able to solve. It is also important to focus on individual groups rather than trying to reach everyone – finding the right customers is essential to promote profitability and build brand loyalty.

Successful entrepreneurs such as Rob Tolley (former London broker) know that when it comes to finding a niche, a level of experimentation may be required to assess what fits. Taking note of what competitors are doing can be a vital part of this.

Assessing the Niche’s Profitability

Once the would-be entrepreneur has identified a possible niche, it’s vital to ascertain its profitability before moving forward. Again, prospective competitors can offer some clues on this front. There are also online tools that can be used to figure out how others have monetized the niche.

Google Trends is a useful tool to help track trends, by allowing the user to see how many times a particular term has been searched for online. This is a good way to see if a trend is waxing, waning or staying stable, and allows the entrepreneur to assess market size and demand. Free keyword research tools also provide a detailed overview of each term searched for and help identify the best-selling products with the most online searches.

Test the Niche

The final part of identifying a niche is testing it out, and this is a vital part of the process – as understood by business founders such as Rob Tolley. A good way to test the market is to create a landing page for pre-sales of a product the entrepreneur is developing. Paid and organic advertising can be deployed to drive traffic to this page, and the volume of the pre-sales assessed.

However, even if pre-sales levels are disappointing, this doesn’t mean that the product is ‘wrong.’ It could simply be that the messaging didn’t work or the right offer hasn’t been identified yet. Leveraging A/B split testing can help to optimise conversions and highlight the reasons why the target market landing on the page isn’t taking action.

#Rob Tolley #Rob Tolley London #entrepreneur #entreprenuership #Business #Startup Business #Niche Market

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The Role of Surety Bonds in the Construction Industry

A surety bond serves as a financial guarantee that the contractor will fulfil their contractual obligations, such completing the project on time, paying suppliers and subcontractors, and adhering to specifications. Surety bonds reassure project owners that they will be protected if a contractor fails to meet their obligations.

Surety bonds involve the obligee (project owner), principal (contractor) and the surety company.

The Functions of Surety Bonds

As well as the above protections, surety bonds can smooth the transition from construction to permanent financing by removing liens and reduce the risk of a contractor diverting project funds.

Insurance experts such as Rob Tolley know that surety bonds also provide an intermediary, in the form of the surety, to whom the project owner can air grievances and complaints. In some cases, they can even lower construction costs by facilitating the use of competitive bids.

How to Obtain a Surety Bond

To obtain a surety bond, the project owner must first assess the type of surety bond they need. There are different types of surety bonds, including contract bonds, court bonds, licence and permit bonds, and fidelity bonds. Next, surety bond providers should be researched to identify a reputable provider that specialises in issuing these types of bonds. Once this has been done, the project owner will need to prepare the documentation and information needed to apply for the bond – the exact requirements regarding this will vary depending on the type of surety bond being sought.

After submitting an application, the underwriting process will begin. During this stage the bond provider will assess the project owner’s creditworthiness, financial stability and any risks involved in issuing the security bond. If the application is approved, the bond will be issued and the obligee (project owner) will need to pay a premium, which is a percentage of the bond amount. Once payment is made, the surety bond provider will deliver the bond to either the obligee or appropriate party as necessary.

Is a Surety Bond a Type of Insurance?

Insurance experts like Rob Tolley, former London broker, understand that a surety bond is not, in fact, a type of insurance. Rather, it is an enforceable agreement between parties and functions similarly to a line of credit for the party applying for it. As such, the surety will require the project owner to sign an indemnity agreement through which they will be legally obliged to pay any amounts paid out by the surety on valid claims against the bond.

#Rob Tolley #Rob Tolley London #Surety #Surety Bonds #Construction #Construction Industry #Insurance #Insurance Broker

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How to Improve Innovation in the Insurance Industry

While the insurance industry as a whole has generated pockets of innovation, pursuing innovation in a systematic way is something that has been undertaken by very few carriers. However, low interest rates, shifting customer expectations and new sources of competition have combined to put pressure on carriers to embed innovation into their operations.

Key Technologies for the Insurance Industry to Embrace

Cyber insurance is an example of technological innovation created in response to the increasing danger of external attacks on organisations’ digital information systems. Although it’s a relatively new market, it’s predicted to see an annual growth rate of more than 25% according to the 2022-2027 forecast from IndustryARC.

It’s also anticipated that the Internet of Things (IoT) market will see sustained growth worldwide. In terms of the insurance industry, this technology allows carriers to more accurately assess risk profiles associated with individual portfolios, which can ultimately improve the company’s profitability and productivity.

Directly linked to the IoT is the connected insurance model. As experts in the insurance industry such as Rob Tolley will know, this model creates a complete ecosystem that incorporates sensors, devices and IoT platforms to collect relevant data for monitoring consumer and user behaviour. This data can provide valuable insights by providing the knowledge needed by insurance companies to improve decision making. Furthermore, this model enhances customer empowerment, which could result in carriers developing a significant and sustainable digital presence in the market.

How Insurance Companies Can Enhance Innovation

For new innovation initiatives to be successful, it’s likely that new approaches will need to be developed. For example, disruptive new policies come with a host of risks, and the organisations developing them will find there is less clarity around these risks. As such, to manage the means by which an innovation process is delivered, organisations will need to develop specific pathways regarding product development.

Insurance companies should also create innovative value propositions designed to incorporate new approaches to distribution and customer engagement. Innovative value propositions tend to integrate insurance prevention and protection, distribution and marketing, and customer engagement, combining all of these elements to deliver differentiated experiences.

Keeping Things People-Centred

The people, talent and culture of insurance companies remain the key factors for success, despite the impact of data and technology. To this end, insurers should promote diversity at executive levels and embrace purposeful leadership to develop compelling employee value propositions.

#Rob Tolley #Rob Tolley London #Insurance #insurance industry #innovation #industry