Surety Check Up- NOW is the time

We all know the value of a medical check up.  Address the issues.  Prevent unsolvable problems and bad outcomes.

The health of a surety bond account is also important, vitally important for companies that need bid and performance bonds to acquire additional revenues. That’s why we offer a free “medical” check up for construction bond accounts at this time of the year.

It’s easy, fast and free, and you DON’T need an appointment.  We will provide a Surety Bonding Evaluation based on just two pieces of information.  This initial evaluation will show if the correct amount of capacity is being provided, identify problem areas that may be holding the account back, and may include advice on making strategic changes.

We guarantee a same day response and will review:

  • Amount of single bond capacity that may be appropriate
  • Amount of aggregate bond capacity the account qualifies for
  • Financial areas where the account can be strengthened
  • Red flags and issues that can hurt the bond account and how they may be easily resolved!
  • Good cholesterol / bad cholesterol screening (just kidding!)

Info needed:

  1. “draft” company year end financial statement
  2. contractor questionnaire.

That’s it!  Most construction companies have a 12/31 fiscal year end, so NOW is the time to preview the info and evaluate it for bonding – before the CPA makes the final 12/31/17 version. This process is strictly confidential.  We don’t run credit reports or contact anyone.  It’s confidential with the Bond Doctor…

Isn’t it better to have confidence going into 2018? Send to “steve@kisbonds.com” or call 856-304-7348.

 

KIS Surety Bonds, LLC is the exclusive surety underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.

We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response.

 

Claim your Gift Basket!!!*

“Hey look guys! We got an awesome holiday gift basket for Christmas, Hanukkah and (fill in your favorite holiday)! It’s from that bonding company, Great Midwest Insurance Company.  Wow that’s some great stuff!  I already see what I want.  Let’s open it now.”

“OK, this one says GREAT CAPACITY. That means they write surety bonds for contracts up to $10,000,000 each. Only a couple of our sureties can do that. Hmmm!”

“This one says WORLD’S FASTEST COMMISSIONS.  Gee, you gotta love that! Money is awesome.”

“I have FLEXIBLE UNDERWRITING. I know they can work with a variety of financial situations and may serve some difficult cases.”

“STRONG CREDENTIALS, how tasty! This corporate surety is licensed in all states and rated A-8 by A.M. Best.”

“Hey this one is mine: UNSURPASSED SERVICE.  Face it, without great customer service, you got nothin’!”

“Yeah, well a lot of companies have good service.  I have an idea, let’s call a couple of our best sureties right now and see who answers the phone. You know the drill: Your call is very important to us, the estimated hold time is 9 minutes.  Ha ha ha!

OK so do it.  The phone number for their underwriting department is 856-304-7348.  Let’s see if they answer the phone on Saturdays.”

(Try us!)

*Please enjoy your virtual gift basket!

KIS Surety Bonds, LLC is the exclusive surety underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.

We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response.

Secrets of Bonding #155: The Double Bonding Conundrum

This is America. Everyone is entitled to their opinion. But on the subject of Double Bonding (Contract Surety) we will not all agree.

So here are the facts. You will decide if this is a great idea or just a waste.

What is Double Bonding?

Also called “back bonding” or “subcontract bonding” an example would be when both a subcontract and a prime (directly with the project owner) construction contract are bonded. The prime contractor is the General Contractor (GC).

The GC gives some of the work to trade contractors such as the plumbing, electrical and HVAC. These firms may be required to give a subcontract bond to the GC guaranteeing their work. In turn, the GC provides a bond that covers everything. In other words, it too covers the plumbing, electrical and HVAC. That’s the “double” part. Sounds pretty dopey so far, right? Why would anybody do that?

Turns out this occurs often. Depending on your viewpoint, it may seem helpful / essential, or just a waste of money. Let’s evaluate it and you decide.

Why Love It:

  • Owner: Subs that have been approved by a surety may perform better.
  • GCs: May have a policy to automatically bond subs over a certain dollar value. This is intended to prevent delays and unpaid bill problems.  In addition, the GC / prime contractor is the direct beneficiary, and the potential claimant against such bonds.
  • Subcontractors: With a surety backing them, they may have an advantage when pursuing new work. These are important credentials that prove they have passed the underwriters scrutiny and have the backing of a professional guarantor.
  • Sureties:  May find it easier to support the GC bond if major subs are bonded. A portion of the risk is then covered by *another bonding company.
  • Third tier subs and material suppliers: May not be protected by a payment bond unless double bonding is in place. The GC’s bond may not go down to the third tier (sub of a sub or third tier suppliers.)
  • The most important reason: It is possible that the GC’s surety may insist that major subs be bonded as a condition of supporting the GC. This can be the key to acquiring the contract.

Why Hate It:

  • Owner: Doesn’t need sub bonds because the GC’s bond already covers all the work.  They may be forced to bear the related premium costs if the sub bonds were anticipated. If they were not, the charges may come out of the GC’s profits.
  • GC: In a competitive situation, the related costs could cause them to lose the project. Sub bonds may help GC with their surety, but they do not reduce the cost or dollar value of the GC’s bond.

Bonus Conundrum

Love it or hate it, double bonding is sometimes done voluntarily, or it may be stipulated by the GC’s surety. There is no denying that the concept is important – so important that in some cases both the GC bond and the sub bonds are written by the *same surety. Why would they do that?!

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KIS Surety Bonds, LLC is the exclusive underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.

We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response: 856-304-7348.

Flat Tires and Surety Bonds

“It’s only flat on the bottom!”  When you heard that, did it make you feel any better?  No… a flat tire is a real PIA. Nothin’ good about it!

What about “Flat line?”  Heaven forbid!  That’s real bad.

When I was a kid we had an expression, a “Flat leaver.”  That was a person who left you flat. Don’t like that either.

You can probably think of other examples: Flat footed, flat broke, flat on your back…

BUT! When it comes to surety bonds, flat can be good. Look at how major sureties typically make their decisions.  There is the field person in the branch, plus a supervisor, and a bond manager.  Then there is a home office underwriter, maybe two.  Together this “committee” makes major decisions.  Problem is, they don’t actually work as a committee, they process the decision sequentially.  Each person looks at it, then sends it on to the next.  That’s a great system, unless you need an answer in this lifetime!

This is an example of a decision making structure that is not flat.  It is multi-layer, multi-person, each with an “in” box and other priorities.  Getting a decision will take a couple of weeks.

When it comes to surety bonds, you want flat.  You want a structure where decisions are made promptly and efficiently.  Then everyone wins.  You get the answer you need, when you need it.  Isn’t this how the system is supposed to work?

KIS Surety / Great Midwest Insurance Company (GMIC) is your large capacity, most flat market.  We process decisions fast.  All new submissions receive a same day response.  Productive, creative, expert underwriting that has produced superb results for years.

Do yourself a favor.  Take a step up to surety bonds the way they should be. KIS Surety Bonds, LLC is the exclusive underwriting department for Great Midwest Insurance Company an “A – 8” carrier licensed in all states plus D.C.  We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response: 856-304-7348

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Secrets of Bonding #154: Be A Bean Counter (The Importance of Bid Results)

It’s not sexy.  Nobody has it on their business cards.  It may not be in your “official” job description.  But this article is the start of your new vocation as an official Bean Counter!

A major area of surety bonding is “Contract Surety.”  This refers to bid and performance bonds for construction contracts.  When we set up a new account, an amount of bonding capacity is established and the individual bond requests are processed within that line.  It is possible for a client to use up the full capacity of their line, then our underwriting department could consider granting an exception to support additional work.

Efficient management of the line can minimize instances where an exception is needed.  Here’s where the bean counting comes in.

We manage bonding capacity the way a bank runs a credit line.  A series of individual transactions (bonds) can equal the full capacity amount (referred to as the “aggregate”).  Bank credit lines work the same way.  For the bond or bank customer, it is advantageous to maximize the available credit.  Prompt reporting of bid results helps accomplish this objective.

Advantages Of Reporting Bid Results Promptly

  • When a bid bond is approved / issued, the underwriter debits the amount against the aggregate capacity. However, the full contract amount is used, not the dollar value of the bid bond.  For example, a 10% bid bond for $100,000 actually uses $1 million of aggregate capacity.  Therefore, when it is known that the bid is not likely to result in a contract award (the client is not “apparent low bidder”), this fact should be reported so we can restore the capacity.
  • Detailed bid results are needed on low bids in order to process final bonds. Example: Our guy has a low bid for $5,000,000. The second bidder is at $5,400,000.  Third bidder submitted $5,550,000. Because our bid is less than 10% below the second bidder, the adequacy of the contract amount is supported.  If our client is more than 10% below the second bidder, there will be an additional evaluation before proceeding with the P&P bond.
  • Bid Spreads – in cases where the bid spread is excessive, it is important to have a prompt discussion with us. If there is a bid calculation error, and the contract price is inadequate, there is a limited amount of time to withdraw the bid without penalty (such as a bid bond default / claim).  Learn more about bid spreads:  Click!
  • Low bids may be for lesser amounts than the original bid approval. Example: We approve a bid for an estimated contract amount of $9 million, but the actual bid goes in at $8,500,000 due to last minute changes and reductions. Therefore, when the low bid results are reported, $500,000 in capacity is restored to the aggregate.
  • Postponements – sometimes bids are postponed at the last minute, with no immediate reschedule date. The bid approval may never be used. If it dies on the vine we will restore the capacity immediately.
  • Withdrawal – clients may decide not to bid a project after ordering the bid bond. They may have determined that the plans are unclear or unacceptable.  Advise us so capacity can be restored.

If you are now sufficiently impressed with the importance of minding these small details, you may don your green eye shade and declare yourself an Official Bean Counter.  It’s not glamorous, but it is necessary for proper management of the bond account.  (Actually, we think it is glamorous!)

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KIS Surety Bonds, LLC is the exclusive underwriting department for Great Midwest Insurance Company an A – 8 carrier licensed in all states plus D.C.  

We have in-house authority for Bid and Performance Bonds up to $10 million each.

Contact us for creative solutions and a same day response: 856-304-7348.

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Secrets of Bonding #153: The Last Hurrah!

 

Birth and death.

Ebb and flow.

The world has a natural rhythm that affects all things, including the surety business.

So here it is, The Last Hurrah. We always knew it would come someday, and now it’s here. It is the annual cycle we experience in the world of Bonding.  The final big event of the year is approaching after which it’s all holidays, gift shopping, family visits, food and not too much business getting done.

The big day is just a couple of weeks off: September 30th.  It is the last day of the federal government’s fiscal year.

For government contracting officers, this day means “use it or lose it.” Federal funds that have been earmarked for certain projects must be used by 9/30, or the funds (heaven forbid!) go back to the treasury department.  Every year this results in a rush of contract awards on or about 9/30.  Some of our clients have received contract awards as late as 11:45 pm on the night of September 30. Crazy!

How does all this affect YOU? It could mean there will be an urgent need for performance bonds. There is always a deadline by which they must be filed.  Contractors and their surety agents must be prepared to respond.

Enter Great Midwest Insurance Company (part of Houston International Insurance Group.) We are an A-8 rated carrier (A.M. Best), licensed in all states and D.C.  Our surety department specializes in Bid and Performance Bonds for contractors.  This year we can help by providing Subcontract Bonds on federal projects. We support a wide range of construction trades, and a variety of underwriting situations with bonds up to $10 million each.

Don’t be depressed about the Last Hurrah.  It can be a great end to a successful year and besides, you’ll get another one next year!

KIS Surety Bonds, LLC is the exclusive underwriting department for Great Midwest Insurance Company.  Contact us for creative solutions and A-rated bonds.  Our underwriting experts guarantee a same day response.

For bonds from Great Midwest Insurance Company call: 856-304-7348.