Successful contractors spend time and effort establishing their first surety company relationship. Contractors that want faster answers and the benefit of the doubt from their surety in a delicate situation will always welcome face-to-face visits with their professional agent and underwriter.

Even though surety is an insurance product, qualifying for surety credit is more like qualifying for a bank loan than buying insurance. An underwriter is always evaluating the company based on the three Cs of surety:
  • character: the integrity of the contractor and its employees;
  • capacity: the contractor’s manpower, expertise and
  • experience to perform a project; and
  • capital: the financial strength of the contractor and its indemnitors.
Underwriters review a contractor’s financials to determine financial strength, but the visit from the surety team gives contractors the opportunity to demonstrate their character and capacity. It builds rapport and sets the foundation for a trusted relationship.

To prepare for that first contractor-surety meeting, a firm needs to understand what the underwriter is looking for and be ready to answer questions about the organization’s culture, operations and future plans. 

Company Organization
Presenting the company’s organizational structure, the professional backgrounds of key personnel and clear roles for them within the firm is a great way to start a successful first meeting. Underwriters like to know who handles job estimating and the review process for those estimates. They also like to know who the project managers are and how often they are on the jobsite. Underwriters might ask about adequate staffing for current work on hand and the ability to add people for planned growth. They also will look to see if there is a continuity plan to cover for any loss of key personnel. 

Underwriters also will be looking for evidence of a strong culture in which people work well together and leadership is clearly focused on successful performance and profitability. Everything from an organized office and happy employees to showing well maintained equipment that is not sitting idle can add to a successful presentation.

Company Operations
Many contractors start and fail because the person in charge is a master at his craft but does not demonstrate the same skill when it comes to running the business. Surety underwriters will not only be looking at financials, but they’ll also want to know how much time is spent managing current work verses looking for new work, how new work is acquired and whether the firm’s banking relationship is strong. Does the company have an ideal job size and scope, as well as an ideal size of backlog? Does the company bond back its subcontractors and use good prequalifying methods? The answers to these questions paint a clearer picture of the firm’s operations and its capacity to handle the work it has while continuing to grow. 

Future Plans
Sharing the company’s vision for the future with its professional surety team is a great way to take advantage of their expertise. Knowing the firm has a business plan in place helps demonstrate professionalism. Surety underwriters look for growth goals, but will caution a contractor about growing too aggressively or in areas beyond its expertise or familiar geography.

The first meeting is a contractor’s best chance at developing a strong surety relationship that can help the company grow profitably. Surety underwriters are committed to the success of contractors, and working together will bring profitability to all parties.


Jason Dettbarn is regional vice president of contract underwriting for Merchants Bonding Company. For more information, email jdettbarn@merchantsbonding.com.