Room to Grow
As an underwriter, you will be on the front lines of the $7.8 billion surety and fidelity industry.
You will play a key role in a company’s most fundamental business decisions.
You will need to exercise independent judgment and initiative while using your problem-solving skills to deliver value to the customer as you take a disciplined, informed approach to your work.
Underwriters evaluate the financial, legal and technical risk of customers and determine the terms under which the applicant should receive surety credit or a fidelity bond. They develop new business, foster relationships with agents, brokers and customers and underwrite the individual risk.
Underwriters are focused on making smart risk decisions and cultivate open lines of communication and the free exchange of ideas. Fidelity underwriting has adapted to protect businesses and consumers from computer crime and cyber threats as more of our lives are lived online. They can give small and medium-sized businesses confidence that they can remain open if they suffer a breach or take a financial hit from a business interruption.
Surety is a unique form of insurance in which the surety company’s financial resources back the contractor’s commitment to enter into a contract with an owner.
In order to obtain a surety bond, the contractor must qualify – that is meet the surety’s comprehensive underwriting standards. Bonds are a three-party agreement among the owner (obligee), the contractor (principal), and the surety company. The surety company is obligated to both the obligee and the principal.
There are three basic types of contract surety bonds in construction:
The bid bond provides financial assurance that the bid has been submitted in good faith and that the contractor intends to enter at the price bid and provide the required performance and payment bonds.
The performance bond assures the owner that the contractor is capable and qualified to perform the contract and protects the owner from financial loss should the contractor fail to meet the terms and conditions of the contract. A qualified, bonded contractor is more likely to complete the project according to the contract provisions. Default is not in the best interest of the surety, contractor, or owner. When problems occur, the surety may offer financial, technical, or managerial assistance to the contractor in order to prevent default.
The payment bond, sometimes called a labor and material bond, assures that the contractor will pay certain subcontractors, laborers, and material suppliers associated with the project.
Surety bonds are required on most public works projects let by federal, state, or local government agencies. An increasing number of private owners and construction lenders require surety bonds as well.
Commercial surety bonds are an integral part of the regulatory scheme for many businesses, occupations and activities. State agencies value the surety’s prequalification in industries such as mortgage banking, real estate, health clubs and auto sales. Commercial surety bonds can be used in a variety of situations, especially in any industry that accepts money from consumers for services rendered later. Some of the most significant types of commercial surety bonds that protect consumers and enforce public policy are:
License and Permit Bonds: State law, municipal ordinances or regulations require these bonds if a company seeks to obtain a license or permit. If a principal violates its obligations, this bond pays the obligee (the government agency) or other third party (for example, defrauded consumers).
Specific types of license and permit bonds include:
Money Transmitter Bonds: A surety bond that guarantees money transmitters offer services in compliance with state regulations.
Mortgage Broker Bonds: A bond required for a mortgage broker to be licensed in a state. The bond typically requires that the broker will conduct his or her professional activities in accordance with statutes and regulations. The bond is usually required by a regulatory agency, such as the Department of Insurance or Department of Finance.
Reclamation Bonds: Required by a state regulatory agency, such as the Bureau of Land Management or Department of Environmental Quality, for a business that seeks to mine or perform related activities on public lands. These bonds provide a financial guarantee that the cleanup costs associated with mining will be covered and that the lands will be restored or reclaimed.
Subdivision Bonds: Required by local development authorities that issue development permits. Developers are required to provide this bond if they are going to disturb a plot to sell lots or homes. They must provide a bond to guarantee their obligation to install improvements, such as water and utilities, and that the work is completed in compliance with state and local statutes and regulations.
A fidelity bond protects the insured from loss caused by the dishonest and fraudulent acts of its covered employees. A fidelity bond also typically covers the insured against the following:
Forgery or Alteration;
Loss inside the premises caused by theft, disappearance and destruction, and robbery and safe burglary;
Loss outside the premises caused by the robbery of a messenger.
This is sometimes referred to as Crime Coverage.
Annually, writers of Fidelity and Crime Coverage provide $500 million in protection for businesses that face risks every day of the week: employee dishonesty, robbery and burglary.
Fidelity bonds are divided into two primary categories:
Financial institutions (banks, stock brokers, insurance companies and finance companies)
Mercantile and governmental entities (non-financial institutions)
A HANDS-ON INSURANCE CAREER
Traits of successful underwriters: